Employees in many companies in Finland already have a right to representation in the decision-making structures of their companies, in a form which is normally agreed between unions and the employer. The proposals in the directive for employee involvement in European companies were, therefore, non-contentious.
For further information on the SE legislation, such as the choice of SNB members, click on the more button.
Workers in companies with more than 150 employees in Finland have the right to participate in management decisions. However, how this is done, whether in a single-tier board, a supervisory board or at operating level, is left to local negotiations. There should be between one and four employee representatives, who must be employees of the company and they should make up a quarter of the body in which they sit. If agreement is not possible, the company itself chooses the form of involvement. However, it must guarantee that employee representatives take part in decision making on the economic future of the company.
Both unions and employers were involved in detailed discussions on the implementation of the directive and the final legislation was not contentious.
Form of transposition
Directive was transposed by law and in time for the October 2004 deadline
The directive on employee involvement in European companies was transposed through the following legislation passed on 13 August 2004 which entered into force on 8 October 2004: Act on the involvement of employees in European companies (No 758) (Laki henkilöstöedustuksesta eurooppayhtiössä (SE)). Separate legislation covering the changes necessary to adapt Finnish company law to the Regulation on European companies was passed on the same date (13 August 2004) and also came into effect on 8 October 2008.
Special negotiating body (SNB)
Selection of national members
Finnish members of the SNB are chosen by means of “agreement or elections”.
Finnish SNB members are to be chosen “by means of agreements or elections”. This is in line with Finnish practice, in which many of the arrangements for the choice of employee representatives are agreed between unions and employers rather than being laid down in legislation. In practice this will normally mean that the unions in the company choose the members of the SNB. If the employees are unable to agree the procedure to be used, the health and safety officers representing the largest number of employees organise an election or set up some other procedure to allow all employees to choose the SNB members (§8). In choosing Finnish members of the SNB, as far as possible all companies should be represented. If this is not possible or if there are more seats than companies, companies with the largest number of employees should be given priority, although the employees themselves may agree to different arrangements (§7).
External trade union representatives
The presence of external union representatives on the SNB is neither specifically prohibited nor specifically permitted by the Finnish legislation.
The section of the legislation on the choice of the Finnish members of the SNB does not refer to the issue as to whether or not they may be external union representatives (§8).
Financing of experts
There is no specific limit on the number of experts who are funded.
The section of the Finnish legislation on funding states that the costs relating to the SNB’s activities and negotiations, “including reasonable costs for the services of experts”, are to be borne by the participating companies (§34). Elsewhere the legislation states that the SNB may call upon “experts of its choice” (§14).
Standard rules under the fallback procedure
Allocation of national seats on SE representative body
Same arrangements apply as for SNB members – members are chosen by “agreement or elections”.
The same arrangements which apply for the choice of Finnish members of the SNB also apply for the choice of Finnish members of the SE representative body – known as the representative body (Edustava elin) in the Finnish legislation. In other words, the mechanism for appointing them is agreed with the employees and normally they will be chosen by the unions in the company. Only if there is no agreement is there an election or some other method of choosing the members involving all employees. However, here the legislation is specific and states that only employees may be members of the representative body (§20).
Budget of representative body
The company should bear the expenses of the representative body, including – potentially – several experts.
The company is obliged to cover the costs of the representative body. These specifically include organising meetings, interpreting services, accommodation and travel expenses of members as well as “the reasonable costs for experts” (§27).
National procedure for the allocation of board seats
Arrangements for the election of employee board members are the same as those for the SNB – members are chosen by “agreement or elections”.
Finnish employee representatives at board level are to be chosen in the same way as Finnish SNB members and Finnish members of the SE representative body. The mechanism for appointing them is agreed with the employees and normally they will be chosen by the unions in the company. Only if there is no agreement is there an election or some other method of choosing the members involving all employees. The legislation is silent on whether only employees may be members of the board (§29).
Misuse of procedures and structural change
Misuse of procedures
If there are significant changes in an SE in its first year which would have had an impact on employees’ rights to board-level representation, the agreement should be re-negotiated, unless the company can provide an acceptable reason for the changes.
There should be new negotiations, if, in the first year of the SE’s existence, there are significant changes whose nature “is such that the employees should have had greater involvement”. These new negotiations are not needed if the company is able to demonstrate that “there is an acceptable reason for the significant changes and that such changes could not have been implemented prior to its registration” (§36).
Structural change
Other than in the first year and where it can be shown that there was no acceptable reason for them, structural changes in the SE are not specifically covered in the Finnish legislation.
There is no automatic right to renegotiate the agreement if there are changes in the structure of the SE, unless they are in the first year, they reduce employees’ involvement, and there is no acceptable reason for them (see section on misuse of the SE procedures).
Position of trade unions and employers
Unions and employers were consulted on the introduction of the legislation and they were broadly supportive of the proposals.
Unions and employers were involved with the government in developing the legislation transposing the directive in Finland. The proposals were discussed in a tripartite working group before being presented to parliament. Both unions and employers appear satisfied with the outcome.