Cancellation of Employment Contract During Probationary Period - International Law Office

International Law Office

Employment & Labour - Finland

Cancellation of Employment Contract During Probationary Period

August 19 2009

Introduction
Facts
Lower Court Decisions

Supreme Court Decision


Introduction

In May 2009 the Supreme Court made a key ruling regarding the use of probationary periods, cancellations of employment contracts during such periods and the allocation of the burden of proof in disputes arising from contracts terminated during probation periods.

According to the Employment Contracts Act 2001, the parties to an employment contract can agree on a probationary period during which either party may terminate the employment relationship without notice. However, the grounds for cancellation must not be inappropriate given the aim of the probationary period.

Facts

The plaintiff employee had worked for the defendant employer for two months in 2004. After eight months' employment with another employer, he returned to the service of his former employer, in which connection the parties agreed on a probationary period of three months. Based on the probationary period, the employer cancelled the contract of employment.

The employee contested the cancellation of his employment relationship, arguing that the use of a probationary period was illegal in the second of two consecutive employment relationships with the same employer where the employee's duties were similar. He further argued that, in any case, there were no legal grounds for cancelling his contract because the employer had become aware of his professional abilities during the first employment relationship. On this basis, the employee claimed for salary for the notice period and for compensation for unlawful termination of his employment contract.

The employer argued that substantially more demanding tasks had been agreed upon between the parties under the second employment contract. Further, the employer stated that the first employment relationship of just two months had been so short that the purpose of the probationary period could not have been fulfilled. The employer also stated that the employee had made several mistakes and neglected his work, which led to his dismissal.

Lower Court Decisions

Both the district court and the court of appeal found that it was lawful to agree on a probationary period in this case. However, the courts found that the errors made by the employee could have been corrected by giving him appropriate guidance and therefore held that the employment contract had been cancelled without appropriate grounds.

Supreme Court Decision

The Supreme Court ruled that the parties to an employment contract may generally agree on a probationary period in consecutive employment contracts, provided that the contracts do not immediately follow each other and that the aim of such a period is not to elude the employee's protection from dismissal. The court agreed with the lower courts and concluded that the use of a probationary period in this case was lawful.

Regarding the alleged inappropriateness of the termination of employment contract, the court referred to the preparatory material of the Employment Contracts Act and stated that an employment contract may be cancelled during the probationary period by the employer without the need to present any particular evidence that there are no inappropriate grounds for termination. Instead, the burden of proof lies within the employee, who must show the alleged infringement by providing the court with evidence from which it may be presumed that the grounds behind the termination were inappropriate. In order to disprove this presumption, the employer would then need to prove that sufficient grounds for termination existed.

The court noted that in this case the employer had cancelled the employee's employment contract during the probationary period and outlined out its dissatisfaction with the employee's performance. In contrast, the employee had presented no evidence of the alleged inappropriate reasons behind the termination of his contract. As a consequence, the court reversed the lower court decisions and concluded that it had not been shown that the employee's contract of employment had been terminated inappropriately.

For further information on this topic please contact Seppo Havia at Dittmar & Indrenius by telephone (+358 9 68 1700), fax (+358 9 65 2406) or email (seppo.havia@dittmar.fi).


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