The Finnish Supreme Court issued a precedent ruling (KKO
2012:10) concerning sufficient reasons for the use of a fixed term
employment agreement for hired employees. The Supreme Court ruled
that the duration of the assignment of the user enterprise
regarding a certain employee as such shall not always be deemed as
a sufficient reason for using a fixed term employment
agreement.
In the case at hand, after the user enterprise notified the staff
service provider of the termination of the assignment relationship,
the staff service provider informed the hired employee about the
expiry of the employment agreement due to the lapse of the agreed
fixed term. The Supreme Court stated, however, that the contractual
practice commonly applied in the staff hiring business alone may
not override mandatory legislative provisions.
The Supreme Court found that sufficient reasons for a fixed term
employment relationship take place, also with regard to hired
employees, only when the work assignments of the hired employee are
available for a restricted time period. Thus, if the hired employee
works on assignments which is of a permanent nature the employment
agreement may be deemed to be open ended.
The agreement between the staff service provider and the user
enterprise regarding the duration of the assignment was not as such
relevant when evaluating whether the employment agreement between
the employee and the staff service provider is deemed to be of a
fixed term nature or open ended.
In the respective case the termination of the employment agreement
(to be precise: lapse of fixed term) had been made solely based on
the decision by a party outside the employment relationship, i.e.
the user enterprise and was thus not based on any objective
grounds.
The precedent ruling raised large scale of public discussion about
whether staff service provides can or can not use fixed term
employment agreements in future. However, this was not the lesson
of the case. The precedent ruling of the Supreme Court only
clarifies some of the reasons that are deemed to be sufficient when
a staff services provider is using fixed term employment agreements
with its hired employees.
Finally, it is worthwhile to note that the Supreme Court
indirectly confirmed the already commonly accepted interpretation
that the user enterprise is not liable for any consequences in case
where a fixed term employment of a hired employee it is using is
deemed to be against the Employment Contracts Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.