On 10 November 2021, the Finnish Parliament approved a change to the Employment Contracts Act concerning non-competition agreements. As of 1 January 2022, employers shall have an obligation to pay compensation to employees for the period of the non-competition restriction after the employment.
Pursuant to the change, as mentioned in our previous alert, employees will be entitled to receive compensation from the non-competition restriction period. The compensation shall equal to a minimum of 40% of the employee’s regular salary for a non-competition period of up to six months. For a non-competition period longer than six months, the amount of compensation will be at minimum 60% of the employee’s regular salary. The compensation shall be calculated from the entire restriction period and therefore, the amount of compensation shall not be lower during the first six months.
The compensation shall be payable during the non-competition restriction period on the employer’s regular pay days. The payment schedule can be mutually agreed otherwise after termination of the employment.
However, the obligation to pay compensation from the non-competition period cannot be agreed otherwise. The employer will be allowed to terminate the non-competition agreement during the employment relationship without specific grounds – but not after the employee has resigned. The notice period will be one third of the non-competition restriction period agreed in the non-competition agreement, or a...
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