How the Amendments to the Annual Holidays Act Will Affect Employers

Authors: Klaara Lähteenoja and Mikko Tuovinen

This blog post is available in Finnish here.

Until now, an absent worker in Finland has not been entitled to accrue days of annual holiday after 75 days of sick leave. Consequently, a long sick leave might have affected the length of an employee’s annual holiday significantly. The situation will change as of 1 April 2019 when the amendments to the Annual Holidays Act enter into force.

The amendments will apply already to the holiday credit year that starts on 1 April 2019, however, any holidays accrued before that date, e.g. for the summer holiday period of 2019 or for the winter holiday period of 2019, shall be calculated in accordance with the Annual Holidays Act that will be in force until 31 March 2019. These amendments passed in the Finnish Parliament on 26 February 2019 and they render the act compliant with the recent interpretations of the Court of Justice of the European Union (CJEU) on the Working Time Directive.

Extra Days of Annual Holiday Are Given For a Limited Absence

The purpose of the amendments to the act is to ensure a sufficient annual holiday for employees by implementing so-called extra days. These extra days complement the annual holiday of an employee in situations where the employee has not been able to accrue the minimum of 24 days of annual holiday due to a sick leave. However, the right is limited in time, as the employee does not have the right to these extra days after the absence has lasted over 12 months.

The employer must pay attention to the difference between these new extra days and the accrued days of annual holiday, as the extra days shall not be taken into account when calculating the annual holiday pay (Fin: vuosilomapalkka). Instead, the extra days are subject to a separate compensation mechanism, which is not part of the annual holiday pay and which does not entitle the employee to receive a holiday bonus (Fin: lomaraha) unless otherwise agreed in the applicable collective agreement. The compensation is based on the salary at the time when the extra days are used for a holiday. Therefore, the employer shall keep a separate record of both the extra days and the conventional days of annual holiday.

Time for an Overall Reform of the Annual Holidays Act?

In the discussions at the Finnish Parliament, both the members of the opposition and the members of the government have expressed that there is a need for an overall reform of the Annual Holidays Act and that the amendments at hand were only the minimum required by EU law. The Employment and Equality Committee stated in its report on the new act (TyVM13/2018) that the Annual Holidays Act constitutes a rather complex piece of legislation as it is, and the new amendments do not simplify it. Therefore, it remains to be seen whether the act will be subject to another, broader reform following the Finnish parliamentary elections.

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