| Project Detail |
TEM007:00/2023
Case numbers
VN/31875/2021
Setter
Ministry of Employment and the Economy
Tenure/Schedule
14/12/2021 – 31/12/2023
Date of installation
The Ministry of Labor and Economic Affairs has decided to start a report, the purpose of which is to produce information for the preparation of the report required by the Parliament to be given to the Working Life and Equality Committee. The report primarily answers the following questions:
- what is the estimated total number of non-compete agreements and how has the number of non-compete agreements changed with the change in the law?
- in which industries are non-compete agreements used the most and how many non-compete agreements are there in these industries?
In addition, as far as possible, we try to find out
- how is the number of non-compete agreements distributed by employee groups? –- how many non-compete agreements have been terminated during the transition period due to the new regulation?
- have employers changed their practices due to the new regulation and in what way?
– How have employees and employers experienced the changed practices?
- Other possible related questions
The survey is primarily intended to be carried out in the Ministry of Labor and Economic Affairs as official work, and in terms of data collection, in liaison work with Akava, STTK, SAK, EK, SY and the Central Chamber of Commerce.
Starting points
The regulation regarding non-compete agreements in the Employment Contracts Act and Maritime Labor Contracts Act has changed. The employers obligation to pay compensation for non-compete agreements was extended to all non-compete agreements. The amount of compensation is either 40 or 60 percent of the employees usual salary for the restriction period agreed in the non-compete agreement. For situations where the circumstances and the need for a non-competition agreement change during the employment relationship, provisions are made on the employers right to terminate the non-competition agreement and the notice period to be observed. The changes in the law entered into force on January 1, 2022.
The goal of the changes in the law is to reduce non-competition agreements that violate the conditions laid down in the law, especially by preventing them from being made. At the same time, the possibility of using non-competition bans is maintained when they are justified in accordance with the conditions laid down in the law.
The law includes a transition period of one year, after which the new provisions will also apply to non-competition agreements concluded before the entry into force of the new law. The transition period gives employers the opportunity to prepare for regulatory changes and terminate unnecessary non-compete agreements.
In connection with the adoption of the law, the Parliament issued a statement (EV 157/2021 vp). Parliament requires the government to give a report to the Working Life and Equality Committee on the effects of the legislation by the end of 2023.
The Working Life and Equality Committee stated in its report on the proposed law (TyVM 14/2021 vp) that more comprehensive statistical or research data on the prevalence of non-compete agreements in Finland is necessary. The effects of legislative changes and the use of non-competes must be actively monitored after the law enters into force, and if necessary, measures to correct any deficiencies must be taken promptly. |
