Termination of employment due to reasons pertaining to the individual employee

Finland

An indefinitely valid employment relationship may be terminated only if a proper and weighty reason exists. In Finland, a termination process must be planned carefully since, as a general rule, a warning (among other requirements) shall be given before an employment is terminated on individual grounds. A warning - whether given or not - will have an essential impact on the assessment as to the existence of justifiable grounds for termination.

A warning is however not always a prerequisite for terminating an employment - such situation may exist when the employee's breach is so severe that it would be unreasonable to require the employer to continue the employment. Similarly, case law provides that such exception may also apply in respect of employees holding managerial positions, due to the high level of trust required from them. This said, as such situations are rather rare in Finland, it is in most cases appropriate to issue a warning instead.

In order to ensure that a warning has the desired effect, one needs to carefully consider its content. In order to ensure its effectiveness and also compliance with the Finnish law with respect to the potential termination process at a later stage, legal advice is recommended - Bird & Bird's experienced employment law experts are at your service.

Lastly, on 1 July 2019, an amendment was made to the legislation concerning termination of employment on individual grounds, based on which a number of the employer's employees shall be taken into account in the overall assessment whether proper and weighty reason exists. The number of the employer's employees has, in practice, been a part of the overall assessment also before it was actually written in the law, however, the aim of the amendment is to give more weight to the special circumstances of small employers in the said assessment in the future. Since no case law exists with this respect, the actual consequences of this amendment are yet to be seen.

Sweden

In Sweden, in order for an employer to unilaterally terminate an employment (valid for an indefinite term) due to reasons pertaining to the individual employee, "just cause" for the termination is required. This said, it is generally very difficult to establish such cause. In short, the employer must prove that the reason for termination is a distinct lack of capability and/or negligence in the employee's performance of their duties. 

In these cases, the employer is required to have performed substantial effort to help the employee to improve their performance (i.e. implement a performance improvement plan), which is often a very time-consuming procedure. Furthermore, the employee must have been given an unambiguous warning regarding the fact that the employee is at risk of dismissal unless the performance improves. 

Further, before executing a dismissal the employer must consider if the employee can be transferred to any vacant position within the company which the employee is sufficiently qualified for before executing the dismissal.

Lastly, before executing the termination, the employer will need to notify the employee of the intent to execute the dismissal. The notice of dismissal must contain certain formal language.

Denmark

In Denmark, salaried employees are only protected from unjustified dismissal after one year of employment. Therefore, an employee cannot claim compensation for unjustified dismissal if they have been employed for less than one year. 

If an employer is unsatisfied with a salaried employee that has worked for the employer for a period exceeding one year, the employer can notify the relevant employee thereof by giving the employee a warning. This is in order to ensure documentation of – in case the employee shows no progress – that the dismissal is based on justified and fair reasons. 

In Denmark, there are two types of warnings; 1) an oral warning and 2) a written warning. The oral warning is the most lenient type of warning, and must typically be followed up with a written warning. The written warning is the employer's last "tool" to inform the employee of the circumstances that are not acceptable and also to ensure that the matter has been documented.

As in Finland, the content of the written warning is important. Firstly, the employee must be informed of the specific circumstances the employer is unsatisfied with (e.g. certain behavior, lack of work effort etc.). Secondly, the employee must be informed of the consequences in case the employee continues with their behavior or in case the employee does not improve their performance within a specified deadline. In this context it is important that the employer can prove that the employee has been served with the warning e.g. by ensuring that the employee signs a receipt of the warning. 

If the employee shows no signs of improvement or if the employee shows the same unacceptable behavior again, the employer must - in close connection to the above deadline - decide whether or not they want to dismiss the employee. If such decision is not made in close connection with the deadline, the documentation for justified reasons for dismissal will most likely lapse.