What is the Employment Contract Act?
Basically, the Employment Contract Act requires employers to inform employees in writing about all essential conditions for the conditions of employment.
Why should the rules be changed?
European Parliament and Council Directive 2019/1152 on transparent and unpredictable working conditions (the so-called “Working Conditions Directive”) has brought changes to the Employment Contract Act. Some of these provisions have already been implemented in the Employment Contract Act, while newer obligations arising from the directive are still awaiting implementation.
The introduction of the new rules is based on an increased need for employees to be fully informed about important working conditions, which should contribute to creating transparency and predictability of working conditions.
When does the new act take effect?
On the basis of the above, in November 2022, the Ministry of Employment sent a draft of a new bill on employment contracts and certain working conditions for consultation.
The law is expected to take effect on 1 July 2023 and will replace the current Employment Contract Act.
Who does the new act cover?
Previously, the legislation applied to all employees whose employment had a duration of more than 1 month and an average weekly working time of more than 8 hours. The current bill contains a proposal that the law must apply to all employees with conditions of employment where the predetermined or actual working hours amount to more than an average of 3 hours per week in a reference period of 4 consecutive weeks. When the new rules are implemented, more employees will therefore be covered by the rules.
What will be changed?
An extension of the employer’s duty of disclosure
The new rules on employment contracts and certain working conditions entail, among other things, an extension of the duty of disclosure and that information must be provided earlier.
The employer’s duty of disclosure contains the rule that the employer must provide the employee with information on all essential terms of the conditions of employment, including information about the nature of the work, the employee’s title, the start date of the employment relationship, holiday rights, notices of termination, salary and working hours.
Some of the information must already be provided no later than 7 calendar days after the employment relationship has begun, while other information must be provided no later than 1 month after the employment relationship has begun. The information must be given in writing in the form of one or more documents and must either be handed out and forwarded on paper or in electronic form under certain detailed conditions.
Subsequent changes to the conditions of employment – shortened deadline for information
If the employer makes subsequent changes to the conditions of employment, the current deadline for notifying the employee of this in writing is as soon as possible and no later than 1 month after the date on which the changes take effect. The new rules result in a significant shortening of this period, after which the employer must notify the employee in writing of the changes at the earliest opportunity and at the latest on the date on which the changes take effect.
Minimum rights for the employee
The bill also contains a number of minimum rights for the employee, including establishing a maximum trial period of 6 months in the conditions of employment as well as a protected right to secondary employment for the employee. This means, among other things, that the employer must not, as a rule, prevent the employee from taking up parallel employment or, on that basis, treat the employee unfavourably as a result of the secondary employment.
Please be aware that the implementation of the new rules will have particular significance for the employer’s handling of employment contracts, which also means that several current employment contracts must be adjusted so that they comply with the new legislation.
Do you need advice?
If you, as an employer, need advice regarding the Employment Contract Act or other employee/HR-related matters, you are welcome to contact us.