Finland’s firing threshold bill cleared the Finnish Parliament’s Employment and Equality Committee (Työelämä- ja tasa-arvovaliokunta) on 11 December 2025, setting up a plenary vote on a reform the government says could make it easier for small firms to hire in a weak economy. The proposal would lower the legal threshold for dismissing an employee on personal grounds, a change the opposition and several labour groups argue would weaken job security without clear evidence it will create jobs.
What changes in Finland’s dismissal threshold
Under the draft reform, employers would be allowed to terminate an employment contract on individual (person-related) grounds when there is a “proper reason”, rather than the current requirement that the reason be “proper and weighty”.
In practice, the shift is intended to widen the set of situations where termination can be justified, while keeping a legal test in place. According to previous government statements, the reform is not meant to enable dismissals based on personal preference, and minor or arbitrary reasons should still fall short of the threshold.
Why the Orpo government links the reform to SMEs and hiring
Committee chair Arto Satonen (National Coalition Party, NCP) said the reform is primarily aimed at improving the operating conditions of small and medium-sized enterprises (SMEs).
The government’s argument is that recruitment can be a high-risk decision for smaller employers, especially during economic downturns. By lowering the dismissal threshold, the coalition believes more SMEs will be willing to expand payrolls.
Satonen also said Finland’s current threshold is among the strictest in the OECD, and described the bill as a way to reduce barriers to employment—an approach that fits into Prime Minister Petteri Orpo’s broader labour market agenda.
Why critics call it a “firing law”
Opposition parties have criticised the proposal as a “firing law”, warning that the reform could tilt power further toward employers at a moment when layoffs and uncertainty are already rising.
Committee vice-chair Lauri Lyly (Social Democratic Party, SDP) argued that there is no solid evidence the legislative change will increase employment. He said the reform weakens protection across the labour market and would likely hit more vulnerable groups harder, including young workers, women, and employees in lower-paid jobs.
Lyly also pointed to the scale of dismissals already happening under existing rules: around 12,400 people lose their jobs each year on personal grounds (not related to redundancy or restructuring), and a further 14,600 are dismissed during probationary periods.
Safeguards, parental leave monitoring and legal uncertainty
Even supporters acknowledge that the real-world impact will depend on how courts interpret the new wording. Satonen said that only several years of legal practice will show how much the dismissal threshold changes in practice.
The committee also issued a unanimous statement that the law’s impact on people taking pregnancy and parental leave must be monitored closely until 2028—a signal that lawmakers expect the reform to carry potential equality risks that will need to be assessed with data over time.
A reform landing in a fragile Finnish economy
The timing is politically sensitive. Finland has faced a prolonged period of weak growth, and unemployment has risen to levels among the highest in the euro area in 2025.
Against this backdrop, the government is trying to present labour market reforms as a way to stimulate hiring and improve competitiveness. Critics counter that easing dismissal rules may increase insecurity without addressing the structural problems behind job losses—particularly in a country where collective bargaining and workplace protections have historically been central to the Nordic social model.
The bill now moves to parliament’s main chamber. If approved by MPs, it could enter into force at the beginning of 2026—making it one of the most consequential labour law changes of Orpo’s term, with implications likely to be closely watched across the Nordic region and in the wider EU debate on competitiveness, worker protection and social cohesion.
