Contract of Employment

An employment contract confers the rights and obligations under the Employment Contracts Act on both the employer and the employee.

There is no fixed format for a contract: it may be written, oral or electronic. As a rule, however, an employment contract should be written to avoid any later differences of interpretation on what was agreed. If you agree on employment orally, the employer must provide a written explanation of the key working conditions to the employer no later than the first payment of wages.

Employment Contracts Act

The Employment Contracts Act lays out the key rights and obligations of the employer’s and employee’s employment relationship. The Act includes rules on establishing an employment relationship, the obligation to pay wages, probation, payment of sick leave wages, family leave and terminating employment.

Read more: Employment Contracts Act (Finlex)

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Permanent or fixed term, full-time or part-time?


The main type of employment contract and employment relationship is valid until further notice, commonly called permanent. The contract and employment relationship are valid until further notice unless otherwise agreed.

An employment contract may also be for a fixed term. A justified reason is as a general rule necessary for the signature of a contract that is fixed-term contract on the employer’s initiative. A fixed-term contract that is signed without a justified reason is considered valid until further notice. Acceptable bases include a limited job (such as a specific project), a need based on season fluctuation, peak demand or substitution. A contract may also be signed for a fixed term on the employee’s initiative without specific grounds. You may also sign a fixed-term employment contract without justification when hiring a long-termed unemployed person.

Important points of an employment contract


You should always agree with your employee on work duties in the employment contract. The primary work duties agreed in the employment contract are thus the duties the employee is obliged to perform when employed. The employment duties are worth describing comprehensively in the contract. The contract may also state that the employee is obliged to perform other tasks as directed by the employer.

You should always agree with your employee on work duties in the employment contract. The primary work duties agreed in the employment contract are thus the duties the employee is obliged to perform when employed. The employment duties are worth describing comprehensively in the contract. The contract may also state that the employee is obliged to perform other tasks as directed by the employer.

On employment conditions, the employer must, as a minimum, adhere to the generally binding collective bargaining agreement in force in the sector, if one exists. The employee must also be informed of the collective bargaining agreement being used, and this may be recorded in the employment contract

Probation is a trial period at the start of employment which allows both employer and employee to cancel the employment contract immediately without specific justification. However, the employment relationship may not be terminated during the probation period on a discriminatory or unjust basis.

You may agree on probation when signing both a permanent and a fixed-term contract. Probation at the start of a fixed-term contract may be no longer than six (6) months. Probation at the start of a fixed-term contract may be no longer than half the employment period and in no case longer than six (6) months. You should also check whether the relative collective bargaining agreement contains regulations on probation. Always remember to fix the length of probation in the employment contract.

Employment contracts generally define working hours as X hours/day or X hours/week.

However, an employment contract may define average working hours, periodical work hours, additional work, start and end times, floating working hours and Sunday work, depending on the situation.

An employment contract may also define “fluctuating working hours”. A clause on “fluctuating working hours” means a working hours arrangement in which the employee’s working hours in a specific period vary between the contractual minimum and maximum. It could also mean a working hours arrangement in which the employee commits to work for the employer when specifically asked to do so. However, fluctuating working hours may not be agreed on the employer’s initiative if the employer’s labour needs per the contract are permanent.

Note that the Working Hours Act is being amended as of 1 January 2020. The new Working Hours Act gives broader opportunities for floating working hours, “flexitime” and working hours banks. If you are unsure how you should agree on working hours, contact our advice service.

Naturally, the wages paid for work must be agreed in the employment contract. Employment legislation does not define minimum wages in euros, but the employee’s wages must be at least normal and reasonable. And even though the law does not define wages, collective bargaining agreements always specify minimum wages and other wage-related matters, to which exceptions cannot generally be made, even by agreement with your employee.

In addition, it is worth recording the day of wage payments and the basis for calculating wages in the employment contract.

Other conditions, such as sick leave wages, notice period, defining annual holidays, employment benefits.

There is good reason for also agreeing on things like pay during sick leave, notice periods, the definition of annual holidays, employment benefits and other employment conditions. In these matters, keep in mind that legislation and collective bargaining agreements often limit what employers and employees can agree on.

As a member, you can take advantage of ready-to-use document templates and forms.
Member pages (in Finnish)

Read about the obligations you have as an employer

Checklist for Employee orientation

Collective Bargaining Agreements