Lower threshold for dismissal if employee breaches obligations

As of 1 January 2026, an employment relationship may be terminated on less weightier grounds if the employee violates the obligations arising from the employment relationship. Whether sufficient grounds for dismissal exist will continue to be based on a comprehensive consideration, and dismissal may not take place for a minor or discriminatory reason.

Lowering the threshold for dismissal is one of the labour market reforms of Prime Minister Petteri Orpo’s Government. 

“Our aim is to remove barriers to employment and encourage recruitment. This is an important change for small businesses, which find the legal risks associated with dismissals to be significant barriers to hiring staff. We want to remove barriers to employment for companies so that as many people as possible can find work,” says Minister of Employment Matias Marttinen.

Proper reason required for dismissal – arbitrary grounds remain prohibited

Previously, an employer was able to terminate an employment contract of indefinite duration for proper and weighty reasons related to the employee. In future, a proper reason will be sufficient for terminating an employment contract.

A proper reason can at least be deemed to exist in situations where 

• the employee breaches or neglects obligations affecting the employment relationship or 
• the employee’s capacity to perform work has changed so significantly that they can no longer manage their duties.

In practice, the neglect of obligations can include failure to comply with the employer’s instructions, neglecting work, absences for no valid reason, inappropriate conduct or carelessness in performing work.

Not every instance of reproachable behaviour or inadequate performance will constitute sufficient grounds for dismissal. As is the case currently, a minor or discriminatory reason will be not considered a proper reason for dismissal. The existence of sufficient grounds will continue to be determined on the basis of a comprehensive consideration of the circumstances of both the employer and the employee.

As was the case previously, the employer must also take into account other obligations that apply to both employers and employees and the prohibited grounds for dismissal.

An employee may not be dismissed without first being given a warning and the opportunity to amend their conduct. Exceptions will apply in cases of serious misconduct where the employer could not reasonably be expected to continue the employment relationship.

Previously, an employer was required to investigate whether the employee could be reassigned to other tasks or duties before dismissal. In future, the employer’s obligation to reassign the employee will apply only in cases where the employee’s capacity to work has changed during the employment relationship. This will apply, for example, if the employee’s ability to work has deteriorated due to illness, injury or occupational accident.

Effects of legislative amendments will be monitored

On 23 October 2025, the Government submitted to Parliament a proposal for legislation on dismissals based on individual employee-related grounds.

Parliament adopted the legislative proposal on 19 December 2025. In its reply, Parliament issued three resolutions requiring the Government to take action by the end of 2028. The Government must monitor the effects of the legislative amendments on the increase of discrimination based on pregnancy and family leave, the position and employment of employees, and the practical impacts on the threshold for dismissal. Parliament also requires that the Government assess the need to extend the amendments to cover work performed in a public-service employment relationship.

The Government discussed the parliamentary reply at its plenary session on 22 December 2025. The President of the Republic approved the legislative amendments at the presidential session on 22 December 2025. The amendments will enter into force on 1 January 2026.

Inquiries:
Jaakko Aromaa, Special Adviser to the Minister of Employment, tel. +358 295 047 110 (questions to the Minister of Employment)
Nico Steiner, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 049 001 
Katja Honkonen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 171