Indemnification

An employer who has terminated an employee’s contract, laid off an employee or reduced an employee’s contract to a part-time contract or has unilaterally changed an essential condition of an employee’s employment contract and deliberately or negligently failed to observe the provisions on change negotiations, must be ordered to pay to the employee in question a maximum indemnification amount of EUR 35,000.

Indemnification does not require that the violation of the obligation would have caused the employee material loss or damage, neither is it significant whether the employer has had legal grounds for the employment contract termination, the lay-off or the reduction of the employment contract to a part-time contract or the unilateral change to essential conditions of the employment contract. Indemnification will be payable on the basis of the violation of the procedure provisions of the Act on Co-operation. However, the manner in which the employer’s violation has influenced the outcome of the topic being negotiated will be taken into account as one factor when determining the indemnification amount.

Imposing liability for indemnification is a duty of a general court of law. Action related to indemni-fication must be brought within two years of the end of the calendar year during which the right to indemnification arose. However, if the employment relationship ends, action must be brought within two years of the end of the employment relationship.

The amount of indemnification is influenced by the nature and extent of the employer’s violation as well as how objectionable it is, the employer’s efforts to remedy its practices, the nature of the measure applied in respect of the employee, the general circumstances of the employer and other comparable matters.

For the nature of the violation, it is relevant which obligation the employer has violated. The severity of the obligation violation – such as the degree of negligence – may also influence the amount of indemnification.

The violation against the employee may be assessed to be more severe when the employee’s employment contract has been terminated compared to a situation in which the employment relationship still continues.

The amount of indemnification may also be influenced by the general circumstances of the employer. The larger the employer, the deeper its knowledge of the content of law is expected.

If the employer’s negligence, taking into consideration all relevant factors, can be considered insignificant, it is possible to exceptionally refrain from imposing liability for indemnification.