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Changes to the Posted Workers Act

7 Dec 2020

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Amendments have been made to the Posted Workers Act due to the changes to the directive concerning the posting of workers in the framework of the provision of services to the territory of a Member State. The amendments enter into force on 1 December 2020.

The aim of the amendments is to promote the equality of treatment of workers posted to Finland and Finnish employees with respect to the manner of determining the rates of pay and terms of employment, as well as maintain a climate of fair competition among undertakings.

Concept of minimum rate of pay changed to reimbursement

In the directive, the concept of minimum rate of pay has been replaced with the concept of reimbursement, which refers to pay, allowances and supplemental pay, the rate of which shall be determined in accordance with a national law, a regulation or an administrative order, or on the basis of the relevant collective agreements. The concept was changed to better cover the mandatory terms of employment applicable to posted workers. In Finland, the concept of reimbursement covers the pay components determined on the basis of the law and collective agreements, i.e., the base pay and various pay items, supplemental pay and allowances.

In the future, fulfilment of the applicable terms of employment will be assessed in Finland on the basis of a new provision which provides that, if the grounds for the payment of a supplement or an item by the employer is unclear, the paid supplement or item shall be deemed reimbursement of incurred expenditure, not pay. 

The employer’s right to set off has also been restricted with a new provision, which provides that, as an employer, the posting undertaking may use at maximum one third of the posted worker’s net pay to set off its receivables. This provision sets a minimum level of income to secure the subsistence of posted workers during the performance of work in Finland.

Expenditure on travel, lodging and meals

As a new matter, the law provides that the employer of a posted worker has an obligation to reimburse any expenditure on travel, lodging and meals arising from journeys to and from the normal place of work incurred in the country of employment in accordance with the law or practice of the country of employment. 

Contrary to this, the expenditure arising from posting a worker to Finland in the country of departure will continue to be covered by the provisions in force in the country of departure, and they will also be determined on the basis of the terms and conditions agreed in the employment contract. Derogation from this is possible, if the expenditure is not reimbursed on the basis of the law or practice of the country of departure or based on what has been agreed in the employment contract, or if the amount of reimbursement is substantially lower than what is considered to be a normal or reasonable level in Finland. In such a case, the expenditure is reimbursed with essentially the same amount, corresponding to the level set in the regulations of Finnish collective agreements.

Lodging conditions

Also as a new matter, provisions are laid down on lodging conditions. If the employer of a posted worker arranges lodging in Finland for the duration of the period of posting, it must meet the requirements for lodging conditions laid down by law and, possibly, in collective agreements. Any suspected adverse health effects are supervised by the health protection authority, and the occupational safety and health authority supervises compliance with the regulations of collective agreements.

Long-term posting

Where the effective duration of a posting exceeds 12 months, conditions other than the minimum conditions defined in the Posted Workers Act also apply to the posted worker’s employment relationship.

As a new matter, in addition to the collective agreement regulations on working hours, annual leave and safety at work, the collective agreement’s other regulations on allowances, supplemental pay and financial benefits also apply. These other regulations include the collective agreement regulations on pay for national holidays, other additional paid days off, such as birthdays or the funeral of a close relative, and other regulations on financial benefits. Not included in this scope are the regulations of collective agreements concerning the start and termination of employment, non-compete clauses or supplemental occupational pensions.  

In addition, the provisions on the granting of annual leave laid down in the Annual Holidays Act, the act declaring the Finnish Independence Day as a public holiday and day off, and the act on giving workers a day off for May Day in certain cases also apply. 

The application of the conditions on additional work is not employee-specific; the same conditions apply to a posted worker who replaces a previously posted worker to perform the same work in the same workplace. The employer should have in place a monitoring system with which to calculate whether the time working time limit has been met when a posted worker is replaced by another posted worker.  

At the request of the posting undertaking, the 12-month threshold for the application of the conditions on additional work may be extended to 18 months. The posting undertaking shall send notification of the extension to the occupational safety and health authority.

Worker-specific information to be reported in the notification of the posting of workers as of 1 October 2021

The amendment to the notification of the posting of workers to be submitted before the start of work will not enter into force until 1 October 2021. After that date, the notification must contain information on each worker to be posted, including their identification data, the tax identification number of the country of residence and the tax number issued by the Tax Administration in Finland. 

Duty to provide information on temporary agency work

In temporary agency work, the user company is obliged to inform its contractual partner, i.e. the employer of the posted agency worker, if the worker is re-posted or temporarily transferred to perform work in another work site abroad. This rule is intended to ensure access to information for the actual employer so that they can fulfil their obligations as an employer.

Entry into force

The amendments shall apply to posted workers after the act has entered into force. A transition period of 12 months shall be applied to workers who are posted at the time of the act’s entry into force. The transition period secures the position of business operators when they are adapting to the amendments. 

In derogation to the 12-month transition period, the rules on calculating working time provided in the section concerning the conditions on additional work during long-term posting shall apply immediately upon the entry into force of the act. 

The new provisions on pay, reimbursement of expenditure, long-term posting and notification of posting of workers before start of work and temporary agency work shall not apply to road transport work. The special provisions on road transport work shall be implemented in connection with the implementation of the Mobility Package for road transport. The current provisions shall continue to be applied to road transport work.

Further information:

Lawyer Anu Ikonen, +358 295 018 143, [email protected]
Occupational safety and health, Regional State Administrative Agency for Southwest Finland

Special Government Adviser Päivi Kantanen, +358 295 048 938, [email protected]
Ministry of Economic Affairs and Employment Posted Worker

Ministry of Economic Affairs and Employment: Amended Posted Workers Act to come into force in December