Nordia Law

The Working Time Act was amended in 2020. At this stage, there is already a degree of experience regarding its application. In multiple companies, there is still a prevalent belief that merely drafting an executive contract, and if the employee is part of the management team, the Working Time Act need not be applied at all. It is also believed that this matter is solely determined by what is written in the contract. This is incorrect; rather, the actual circumstances determine the application of the Working Time Act, as well as any potential agreement on flexible working time arrangements, and partly applicable collective agreements.

If an employee’s working time is not predefined, and the employee can independently decide their working hours, and if the employee holds a managerial position, or if the work is comparable to managerial duties, or if the work is performed under conditions where working hours cannot be monitored (meaning it is not the employer’s responsibility to supervise the arrangement of time), the Working Time Actdoes not apply (Working Time Act, Section 2, Subsections 1 and 4). In practice, this applies to a relatively small number of employee groups in addition to the CEO.

Very few hold managerial positions under the Working Time Act

However, the only individuals exempt from the application of the Working Time Act are the CEO or employees responsible for the management of the company or its independent division, or those performing comparable duties. It is not even possible to bindingly agree with others that the Working Time Act will not apply and that no overtime compensation or Sunday work compensation will be paid. The designation of the contract is irrelevant; rather, the actual circumstances are decisive. In practice, it is not easy to identify work comparable to that of the aforementioned managers.

A leading expert or similar position is generally not considered to be managing the company or its independent division, as required by the application of the law, and their work often cannot be equated with that of an employee in a leading position under the Working Time Act. The requirements outlined in Section 2, Subsection 1 of the Working Time Act are relatively high.

The Working Time Act is largely mandatory law. However, the statute contains a significant list of matters that can be agreed upon differently through a collective agreement. Issues related to working time are often addressed in collective agreements, which should be reviewed.

The Working Time Act and remote work

Remote work practices have significantly changed the nature of expert and supervisory work. Concurrently, the idea emerged that the Working Time Act does not apply, and that working hours need not be monitored when an employee is working remotely, from home for instance, particularly if the employee is engaged in substantial remote work.

This understanding is also incorrect. In most cases, the employer has an obligation to monitor working hours, even if the employee is working remotely for a significant portion of their time. If the employer fails to monitor the working hours of an employee covered by the Working Time Act, the employee may at least assert a claim for overtime compensation. The right to claim compensation is subject to a two-year statute of limitations. A breach of this obligation could imply that the employer’s representative has committed a violation of occupational safety regulations.

Generally, monitoring working hours is feasible. Current technology and practices mean that working hours can effectively be tracked in all employment relationships and circumstances.

Lump sum compensation for overtime and other allowances, and agreement on flexible working

When discussing employees to whom the Working Time Act applies, it is possible in certain situations to agree with the employee on a lump sum compensation paid monthly (Working Time Act, Section 38), which compensates for potential overtime and other allowances without further specification. This payment is made in addition to the regular monthly salary, regardless of the actual hours worked each month. Nevertheless, the employer has an obligation to monitor the employee’s actual working hours.

A prerequisite for this arrangement is that the employee’s primary responsibility is to lead and supervise the work of other employees. Lump sum compensation may also be agreed upon in cases where the employee has entered into a flexible work time agreement with the employer.

It is not permissible to stipulate in the employment contract that no overtime compensation will be paid or that overtime is included in the monthly salary without distinguishing it into two components: the regular monthly salary and a fixed compensation amount.

Agreement on flexible working time

A prerequisite for a flexible working time agreement is that the employee is able to decide, at the very least, how to allocate half of their working time and time off, subject to certain exceptions based on the specific terms agreed upon between the employee and the employer (Working Time Act, Section 13).

A flexible working time agreement must include provisions on at least the following matters:

1. The days on which the employee may allocate their working hours;
2. The allocation of weekly rest periods;
3. Any fixed working hours, which may not, however, be scheduled between 23:00 and 6:00;
4. The applicable working hours after the termination of the flexible working time

The average weekly working hours under a flexible working time agreement may not exceed 40 hours over a four-month period.

The agreement concerning flexible working hours must be made in writing. A provision regarding flexible working time may be terminated, effective at the end of the balancing period following the current one.

The employee is not obligated to accept the employer’s proposed changes to the employment contract or to the flexible working time agreement, as acceptance of such terms is solely at the employee’s discretion.

Period-based working time limited to specific roles

According to Section 7 of the Working Time Act, period-based working time can only be applied in the following roles:

1. Security, surveillance, monitoring, and traffic control duties, as well as rescue services and correctional facility operations;
2. Journalism, editorial work in radio, television, and comparable online content production and broadcasting, film production, as well as postal services and telecommunications services that require night work;
3. Family daycare as defined in the Act on Early Childhood Education and Care (540/2018), other early childhood education services that require night work, and social, healthcare, and veterinary services operating predominantly around the clock;
4. Passenger and freight transport, as well as loading and unloading tasks on ships and railway wagons;
5. Mechanical forestry work, forest improvement, and local timber transport in remote areas;
6. Dairy operations;
7. Accommodation, food service, cultural services, and camp activities;
8. Essential support functions necessary for maintaining the operations described in points 1–7.

Remember these key points

Not all working time matters fall under the employer’s right to direct and control; instead, many such issues must be agreed upon or are governed by collective agreements. Collective agreements often contain their own specific provisions regarding working time, which should be reviewed carefully.

Here are some important points to keep in mind regarding working time:

• CEOs, employees managing an independent part of the business, and comparable employees are not covered by the Working Time Act.
• A flexible working time arrangement can be made with the employee if they have the ability to determine at least half of their working hours independently.
• An agreement on a lump-sum compensation for overtime, which must be a fixed monetary addition to salary, can only be made if the employee’s primary duties involve managing and supervising other employees, or if the employee has entered into the aforementioned flexible working time arrangement with the employer.