Laying off means that, when the conditions laid down in the Employment Contracts Act are met, your company can interrupt the employee’s work and the payment of the employee’s wages and your employee their work. The employment relationship continues during the lay-off.
Grounds for laying off
You can lay off an employee until further notice if your company has financial or production-related grounds for terminating the employment contract. This means that the financial situation of your company has weakened or the amount of work has diminished significantly and permanently, and you cannot provide the employee with any other work or training.
You can lay off an employee for a fixed term if your company’s potential to provide work has diminished temporarily and you cannot provide the employee with any other work or training. A fixed-term lay-off can last a maximum of 90 days.
You are allowed to lay off a fixed-term employee only if the employee is substituting for a permanent employee that you would have the right to lay off.
Notifying the employee of the lay-off
If your company employs at least 20 people, arrange cooperation negotiations before the decision to lay off employees and also inform the TE Office about this. If your company employs fewer than 20 people, provide the employee with an advance report of the planned lay-off.
Notify the employee of the lay-off in person at least 14 days before it begins, unless otherwise agreed in the collective agreement for the sector. The employee is entitled to written proof of the lay-off.
When the employment situation improves, inform the employee of the continuation of work at least seven days before work begins, unless agreed otherwise.