03.08.2022 Author:

The amount and importance of discretionary government transfers (state subsidies) in the Finnish economy has increased significantly during the corona pandemic. At the same time, suspicions of abuse related to the use of state subsidies have also increased.

AASA-LAW has special expertise in issues related to discretionary government transfers or state aid law. We have provided legal service to state aid recipients and also to state aid authorities (e.g The Housing Finance and Development Centre of Finland [ARA] and the Ministry of Defence).

According to subsections 1 and 2 of Section 13 of the Act on Discretionary Government Transfers (State Aid Act), state aid may only be used for the purpose specified in the state aid decision. The recipient of the state aid must comply with the conditions and restrictions adopted in the state aid decision in the aided project or activity. In addition, the state aid recipient must provide the state aid authority with correct and sufficient information in order to monitor compliance with the conditions of the state aid decision (Section 14 of the State Aid Act).

Conditions for claw back of discretionary Government transfers

Pursuant to Section 21 subsection 1 of the State Aid Act, State aid authorities must issue a decision ordering the discontinuation of the payment of a discretionary Government transfer and the claw back of a transfer already paid if the recipient of the transfer has: 1) neglected to repay a transfer or part thereof which under section 20 must be repaid; 2) used the transfer for a purpose essentially The state aid authority’s recovery obligation in the cases referred to in section 21, subsection 1, point 3 of the State Aid Act exists only if the false or misleading information given on behalf of the aid recipient was capable of substantially affecting the receipt, amount or conditions of the state aid. different from that for which it was granted; 3) provided the State Aid authority with false or misleading information in a matter that was critical to the granting of the transfer, its amount or terms, or concealed such information; or 4) otherwise essentially violated provisions concerning the use of transfers or terms included in the transfer decision in a manner comparable to paragraphs 1–3.

Correspondingly, the obligation for claw back according to Section 21, subsection 1, paragraph 4 of the State Grants Act arises only if the recipient of the aid has essentially violated the regulations regarding the use of the grant or the conditions of the grant decision. It has been held in the legal literature that such a material breach should occur due to mistake or misconduct.

According to the preliminaries of the State Aid Act, essential violations must be considered to be violations due to which the state aid would not have been granted in the amount of the state aid decision. Correspondingly, using a state aid for a purpose for which it was not granted at all or for which it would have been granted significantly less is an essential violation as meant by the section.

In the jurisprudence of the Supreme Administrative Court of Finland, financial management contrary to the terms of the aid decision has led to the claw back of aid, when the aid decision has contained an express condition on the separation of the project’s accounting from the aid recipient’s other accounting (ECLI:FI:KHO:2016:T3375).

In the decision 2016:T3375 of the Supreme Administrative Court, it was also stated that the accounting information related to the aid recipient’s project is generally an important part of the aid recipient’s reporting obligation and the state aid authority’s supervisory task. The court emphasized that the project’s accounting must be organized so that the project’s expenses and income can be verified in a reliable and transparent manner, and the connection between the expenses and the implementation of the project can be easily clarified.

False information referred to in section 21, subsection 1, paragraph 3 of the State Aid Act, refers to information that does not correspond to the facts at the time the information was provided. Misleading information, on the other hand, refers to information and the way it is presented, due to which the state aid authority does not get an essentially correct and sufficient picture of the fulfillment of the criteria for granting the aid and the purpose of use of the aid.

False and misleading information referred to in the State Aid Act has been assessed, for example, in Supreme Administrative Court’s decision 2017:T3644 (ECLI:FI:KHO:2017:T3644). The case involved a situation where, based on the inspection it carried out, the state aid grantor considered that the division of the company’s salary costs between the financed project and the company’s business was unclear. Since the grant recipient had billed salary costs to the project, for which it did not demonstrate the monitoring and allocation of working time in accordance with the terms of the funding decision, the court considered that the aid recipient had provided the state aid grantor with information which has not, in essential parts, obtained a correct and sufficient picture of the fulfillment of the criteria for granting the state aid and which therefore were misleading as referred to in section 21, subsection 1, paragraph 3 of the State Aid Act.

In the same case, the beneficiary was also considered to be responsible for the correctness of the information they provided, despite the fact that the error regarding it was caused by the human error of an external actor.

In legal practice, it has been considered that even simple accounting errors can mean that the conditions for mandatory claw back are at hand. In Supreme Administrative Court’s decision 2016:T337516, the state aid had been used for the purpose for which they were granted, and the claw back was based solely on the incorrect and inconsistent way of carrying out the accounting. The court considered that the deficiencies in the project’s accounting were essential, and stated that, taking into account the recipient’s obligations regarding the project’s accounting and the explicit condition of the aid decision on the separation of projects accounting from other accounting, the authority should have, based on Section 21, subsection 1, paragraphs 3 and 4 of the State Aid Act, ordered the claw back of the granted state aid due to accounting deficiencies.

In addition to mandatory claw back, Section 22 of the State Aid Act provides for discretionary claw back. According to the subsection, paragraph 1, State aid authorities may issue a decision ordering the discontinuation of the payment of a discretionary Government transfer and the claw back of a transfer or part thereof already paid, if: 1) the transfer recipient has violated section 12(4), or section 13 or 14;

In the situations stipulated in the provision, the recipient of the state aid has acted contrary to the obligations regarding the use of the state aid or violated the obligations of the recipient of the state aid to provide correct and sufficient information.

Discretionary claw back refers to the procedure of the recipient, which is not always essential to the extent that it would systematically result in the recovery of the aid. The authority’s assessment of expediency is therefore linked in particular to the assessment of the essentiality of the situation.

For example, in the decision of the Supreme Administrative Court 2018:T1620 (ECLI:FI:KHO:2018:T1260), the court has held that because the recipient of the aid has neglected to comply with the conditions of the state subsidy decision regarding working time records in the subsidized project, the authority could order the claw back of aid based on Section 22, subsection 1, paragraph 1 of the State Subsidy Act.

Examination of the matter and responsibilities of the parties

Claw back is a matter initiated by the state aid authority, which is treated as a normal administrative matter. Since the granting of state aid and other related decisions are administrative matters, the provisions of the Administrative Procedure Act apply to recovery matters as a general law, such as the provisions of Chapter 6 on the examining of the case and the provisions of Chapter 7 on the deciding a matter, in addition to the State Aid Act.

In its claw back decisions, the state aid authority must also take into account the legal principles of administration according to Section 6 of the Administrative Procedure Act, which set substantial quality requirements for administrative activities. When initiating claw back of the state aid, the authorities must take into account the principle of proportionality in particular, as it is a significant restrictive or negative decision of the authorities. In addition, the principle of protection of legitimate expectations is also actualized in situations where the assistance granted by the authority is clawed back. Along with the principle of proportionality and the principle of protection of legitimate expectations, other legal principles according to § 6 of the Administrative Act naturally also apply in claw back situations.

Based on the official principle of administrative law, the main responsibility for investigating the matter rests with the authorities. In accordance with Section 31, subsection 1 of the Administration Procedure Act, [a]n authority shall ensure that a matter is sufficiently and appropriately examined, by acquiring the information and evidence necessary for a decision to be made on the matter. 

Regardless of the fact that the authority has the primary obligation to find out the information required for its binding decision, the State Aid Act has set extensive obligations for the recipient of the aid to provide correct and sufficient information.

Sections 12 and 14 of the State Aid Act apply in particular to the aid recipient’s obligation to clarify. According to Section 12, subsection 1 of the State Aid Act, the aid can be paid after an acceptable statement has been presented to the state aid authority about the use of the aid. In addition, according to section 12, subsection 4, the recipient of a state aid must provide the state aid authority with correct and sufficient information in order to pay the aid. According to the rationale of the law, the recipient of the state aid is obliged to ensure that the information regarding the conditions for payment is provided with sufficient scope and correct content, so that the state aid authority can get a correct picture of the fulfillment of the conditions for payment of the grant based solely on the information provided by the recipient of the grant.

Section 14 of the State Aid Act, on the other hand, stipulates that the recipient of a state aid must provide the state aid authority with correct and sufficient information in order to monitor compliance with the conditions of the aid decision. In addition, the recipient of the state grant must immediately notify the state aid authority of a change affecting the realization of the purpose of use of the aid or any other change affecting the use of the state aid. According to the rationale of the law, correct and sufficient information in this context means information that is factually correct and that gives a correct and sufficient picture of the use of the aid and compliance with the terms of the grant decision and related financial matters. The section obliges the recipient of the aid to give a possibly negative statement from his own point of view.

In addition to the responsibilities of the grant recipient, the state aid authority has, according to Section 15 of the State Aid Act, an explicit duty as a state aid authority to take care of the appropriate and sufficient supervision of the state aid by obtaining data on the use and monitoring of the state aid and other information, as well as by conducting inspections if necessary. According to the rationale of the law, the appropriateness of supervision means that with the help of supervision, reasonable certainty must be obtained that the grant is used in the right way and ensure correct and sufficient information about the use of the grant and its effectiveness.

The goal of the State Aid Authority’s supervision is to state with sufficient certainty, e.g. whether the conditions for granting, using and paying the state aid have existed and whether the aid has been used in a manner required by good financial management.

The supervisory obligations imposed on the authority in the State Aid Act strengthen the authority’s obligation to investigate as stipulated in Section 31 of the Administration Procedure Act. When making a claw back decision, the state aid authority has been deemed to have the primary duty of proof that the recipient of the state aid has violated the terms of use of the state aid in a substantial way.

However, taking into account the provisions of the State Aid Act, the recipient of the grant has an active notification obligation in the investigation of the matter. In legal practice, it has been considered that it is the responsibility of the recipient of the aid to ensure the appropriate use of the state aid, as well as to correct an unclear or misleading statement about the use of the state grant.

In accordance with the principle of proportionality, the starting point for the claw back of the paid state aid is that the authority limits the recovery to the amount corresponding to the error or abuse. However, the measure may be directed at the entire granted state aid, if the aid would not have been granted at all under the circumstances of the situation or if, as a result of an error, the state aid cannot be used in essential parts in accordance with the state aid decision.

According to legal guidance from legal practice, recovery should be limited to only those costs for which no reliable explanation of their connection to the supported project has been presented.

Pursuant to Section 26 of the State Aid Act, the state aid authority may also decide that a part of the amount to be recovered, the interest calculated on it, or late payment interest shall not be recovered will not be clawed back if repayment in full is unreasonable in the light of the financial standing and circumstances of the recipient of the discretionary Government transfer or the type of the property procured using the transfer or the procedure on which repayment or claw back is based or because of a change in circumstances.

In the situations referred to in the section, the state aid authority has been considered to have wide discretion regarding the reasonableness of recovery (e.g. ECLI:FI:KHO:2020:T2214).

However, legal practice has taken a particularly negative view of rationalizing the claw back of state aids, if it is a state aid that has been received unjustifiably. In the decision-making practice of the Supreme Administrative Court, it has been considered that the provisions of Section 20 of the State Aid Act regarding the return of the grant, Section 21 of the recovery and the set-off of the state aid of Section 30 form a regulation on the obligation to return an unjustified benefit. According to the Supreme Administrative Court’s policy, this obligation does not depend on the reason why the state aid has been received excessively or unjustifiably, whether the reason is the actions of the state aid authority or the recipient of the state aid.

For example, in the decision of Supreme Administrative Court 2009:T45 (ECLI:FI:KHO:2009:T45), the court has not considered the full recovery of state subsidies to be unreasonable, even in those situations when the received aid was based on erroneous aid decisions of the authority. Since the claw back was based on the unjustified benefit received and its return, the original aid decisions did not form a protection of trust for the aid recipient towards the decisions. However, due to an official error, the amount to be recovered was moderated in terms of the interest to be paid on the amount.

Furthermore, in the decision of Supreme Administrative Court 2013:T128 (ECLI:FI:KHO:2013:T128) the Supreme Administrative Court considered e.g. the fact that the monitoring of the use of state aid had not been organized in an appropriate manner in accordance with the State Aid Act as relevant in terms of reasonable recovery. Reasons in favor of rationalization were also considered to be open to interpretation of the state aid application and decision, as well as the fact that the authority had given the recipient of the aid conflicting advice about the state aid decision. In its decision, the Supreme Court held that errors and weaknesses in the state aid authority’s procedures do not constitute grounds for not recovering state aid if the aid has not been used in accordance with the state aid conditions or the State Aid Act.

On the basis of the cases of the Supreme Administrative Court, it can be stated that the recipient of the state aid themself has a strict reporting and review obligation in matters related to the use of the aid.

Suspension of the payment of the state aid

According to Section 19 of the State Aid Act, the state aid authority may, by its decision, order the suspension of the payment of the state aid if there is a reasonable reason to suspect that the recipient of the state aid does not proceed in the manner referred to in section 12, subsection 4, or in sections 13 or 14, or the grounds on which the state aid has been granted, have substantially changed.

According to the detailed rationale of the State Aid Act, the suspension of payment is intended as a temporary security measure, which allows the payment of the granted state aid to be suspended while the matter is investigated in more detail. A decision must be made to suspend the payment. After the investigation, the state aid authority must make a decision on continuing the payment or stopping the payment of the state aid and recovering it.

Suspension of payment requires a justified suspicion of a procedure contrary to the behavioral obligations set in the State Aid Act. Based on the law, the payment cannot be suspended for any doubt, but the state aid authority must have sufficient and reasonably acceptable grounds for its action. However, the legal section does not require that the state aid authority have sufficient proof of an illegal procedure, but a reasonable and generally acceptable suspicion justifies the state aid authority to start suspending the payment.

A decision to suspend the payment of the state subsidy is always followed by a decision to stop the payment of the subsidy or to continue the payment based on preliminary works. The decision to stop paying the grant ends the payment of the grant for an activity that is currently underway.

30.05.2022 Author:

According to the Criminal Code of Finland Chapter 29 section 5:

A person who

(1) provides an authority deciding on subsidy false information that is conducive to essentially affecting the granting of a subsidy or the amount or conditions thereof, or conceals essentially relevant information, or

(2) neglects to provide information on a change in circumstances that is conducive to essentially affecting the granting of a subsidy or the amount or conditions thereof, and a duty for the provision of such information has been expressly provided in connection with the decision to grant the subsidy or otherwise,

and in this way obtains or attempts to obtain personal financial benefit or financial benefit for another shall be sentenced for subsidy fraud to a fine or to imprisonment for at most two years.

The main purpose of criminalizing subsidy fraud is to prevent the misuse of social support systems and to direct public funds distributed free of charge to the purpose for which the aid was intended.

The misuse of the subsidy is suitable for situations where the aid funds have been applied for and received for a proper purpose, but the recipient of the grant has decided to use them for something else. In order to enable the aid to be misused, the aid decision should contain conditions or provisions of the purpose for which the grant is to be used. If the grant were used contrary to this purpose, it would be a misuse of the aid. Misuse should be essential, i.e. in practice the usage of the money should be clearly distinguished from that for which it was granted.

The realization of subsidy fraud requires that the perpetrator has acted intentionally. The intent required of the author is that the author must be aware of the inaccuracy of the information and the essentiality of the incorrect information or, in the case of negligence of the obligation to report and the essentiality of the failure to do so.

The fulfillment of the intent required for the punishment of subsidy fraud is also linked in particular to the purpose of the aid fraud. The appropriateness of aid fraud presupposes that the perpetrator, by acting in the manner mentioned in the provision, acquires or attempts to obtain an economic advantage for himself or for another. In order for the intention to be fulfilled, the perpetrator must at least have considered the act of obtaining the benefit to be a certain or at least quite probable consequence.

The assessment of the right to compensation in this case is affected by the fact that the authority is required to recover the aid. What matters is whether the authority can simultaneously recover unduly paid grants from the Community and claim damages from the person responsible for the intentional crime. Preliminarily, such a situation, in which one is entitled to compensation in respect of one and on the other hand the right to recovery of aid in relation to another, can be assimilated to a situation in which two debtors are jointly and severally liable for a debt.

The joint and several liability of an obligation means the coexistence of liability, i.e. the creditor may, at his option, recover the full amount of the debt from either. The staggering of liability or the primacy of the liability of one debtor over another requires a clear specific legal basis. In some cases, section 21 of the Act on Discretionary Government Transfers imposes an explicit obligation on the State Aid Authority to recover unduly paid aid. The obligation to recover appears to constitute a specific legal basis for the staggering of liability and the priority of recovery.

12.02.2021 Author:

In a civil case the parties involved have a duty to remain in the truth. The duty of truth creates an obligation to be honest in procedural actions, which means that a party shall keep to the truth when making statements on the circumstances invoked by him or her in the case, and in commenting on the circumstances invoked by the opposing party (Code of Judicial Procedure chapter 14 section 1).

In a criminal case, the complainant has a so-called negative truth duty, which means that the complainant has no obligation to answer any questions. However, if the complainant decides to do so, he or she has an obligation to tell the truth (Government proposition to the Finnish Parliament 46/2014 p. 95).

In a criminal case, the defendant has no duty of truth. The duty of truth would contradict the principle that no one can be compelled to incriminate themselves (the privilege against self-incrimination).

The process fraud, or its attempt, is often considered when a party gives false information to the court. Most typically, the process fraud is done when giving a false statement at a trial.

A false statement in court can be a fraud in the statutory definition. Process fraud is a specific form of fraud and it does not have its own definition in our criminal law, hence the process fraud must be evaluated in the light of the frauds statutory definition in the Criminal Code (The Criminal Code of Finland chapter 36 section 1).

There are five basic characteristics of fraud: mistaking or taking advantage of a mistake, a mistake to the alleged victim as a result, an act of deception carried out by mistake, financial damage caused by mistake and the act is intentional. The requirement for intentionality means that the person knows the information they provide is quite likely to be inaccurate or misleading.

Process fraud causes the error of a court or other judicial authority in a criminal, dispute or administrative law case to issue an incorrect decision which is financially favoring or damaging a party. Process fraud is a fraud in the statutory definition, when the court, due to the misleading, ends up with a worse settlement for the other party than what it would be entitled to if the court had not been mistaken.

 What makes a basic form of fraud a process fraud is the fact that the misleading occurs in front of a judicial authority.

Aasa-Law Ltd assists in cases where there are reasons to suspect that a false statement has been given to the court. We also have experience in situations where a person is unjustifiably suspected of presenting false information to the court.

21.12.2020 Author:

The corona epidemic has had a significant impact on the ability of companies to pay. Restaurants and cafes have been closed by the government. Sales at several companies have ceased altogether or shrunk to just a fraction of the earlier one. Several of these companies do business in rented commercial premises.

The fixed-term lease of a business premises is valid for the agreed rental period. The legal practice has imposed a rather severe obligation on the tenant to pay the agreed rent throughout the duration of the contract. An indefinite lease may be terminated after the termination period agreed upon in the contract; at the same time, the obligation to pay rent is terminated.

The Act on the Rental of a Business Premises provides that the tenant may refer the reasonableness of the rent amount to the court for examination (The Act on the Rental of a Business Premises, Section 25). Reduction of rent can also be assessed on the basis of reasonableness provision (The Act on the Rental of a Business Premises, Section 5).

There is a higher threshold for changing the terms of the tenancy of a business premises than when renting a residential apartment, where, again, social aspects can be given bigger importance. This is because, in general, the rental of business premises is about the creation of a business relationship in which both the lessor and the tenant are engaged in business. In such a situation, the court intervenes in the agreement of the parties on the amount of rent only if the unreasonableness is clear (Government proposition to the Finnish Parliament 304/94 p. 115). During the corona epidemic, a situation may arise where the payment of the rent agreed in the lease becomes unreasonable. Any unreasonableness should be assessed on a case-by-case basis.

Matters about the amount of rent, including disagreements, make sense to settle primarily among the parties. Often the interest of both the lessor and the tenant is that the tenant’s business continues and, as a result, the continued payment of rent in the future will also be secured by mutual agreement. In such a situation, parties may agree, for example, to waive rent increases or a periodic rent reduction (Government proposition to the Finnish Parliament 304/94 p. 115).

An action about the reasonableness of the rent amount must be brought to the court during the tenancy (The Act on the Rental of a Business Premises, Section 25).

Attorney office Aasa-Law has handled several legal conflicts over the amount of rent in a commercial apartment, acting as legal counsel to both the lessor and tenant.

09.11.2020 Author:

The law office Aasa-Law Ltd has assisted the The Housing Finance and Development Centre of Finland (ARA) in the Oulu district court, in the Rovaniemi Court of Appeal and in the Supreme Court in the years 2007-2019 for the financial crime and matter of compensation for damage to the Riihi foundation.

The housing fund of the government has granted ARAVA and interest subsidy loans to the real estate company owned by the Riihi foundation in the years 1995-2001. It is about a procedure in which the public authority has been given false information and the public authority has been deceived financial support to activity that has not been purposed and the public authority does not even have a right to grant the support. By giving false information, it has had a significant effect on granting of the assistance.

The legal proceeding in question has been demanding and wide. The case entirety of the Riihi foundation is the biggest economic offense matter proceeding in the area of Oulu and Northern-Finland.

The Supreme Court gave its sentence to the matter at 25.5.2012. In this sentence, the Supreme Court accepted the statement of the reason presented by the ARA and ARA’s own summary penal orders on part of the forwarding loan of Arava- and interest subsidy loan assets. This matter has a common import. The common principles of the court decision impact other grants and support of the state, municipal and other common communities.

ARA has also presented compensation for damage claims of the size of 3,6 million euros. The damage done to the ARA is in its entirety credited interest paid to the real estate office and the investment expense to the government on the part of the Arava loan. Damages are demanded from the previous Riihi foundation board president Toivo Kanninen.

The Supreme Court awarded compensation for damage to ARA 6.2.2019. Toivo Kanninen was ordered to pay damages worth approximately 5 million euros including interest on delayed payments.

Aasa-Law assists with issues that are related to financial crimes and compensations for damages. We have years of experience acting on the behalf of both plaintiffs and suspects.

This matter was taken care of by advocate Simo Ellilä.

09.11.2020 Author:

In December 2017, the Helsinki Court of Appeal handed down a judgment on the violation of a business secret. The case concerned two former employees and the former owner of Tarha-Tuote Ltd, who were sentenced to imprisonment. At the same time, they were ordered to pay substantial damages. Tarha-Tuote Ltd is an import and wholesale company.

According to the Court of Appeal, the former employees and the former owner copied Tarha-Tuote Ltd’s business to its most profitable core. The defendants had begun to import and sell the products that had the best demand and the best sales margin. The defendants had detailed information on the business of Tarha-Tuote Ltd.

The competitive advantage of Tarha-Tuote Ltd was based on the utilization of data related to the acquisition and sales of product chain. This information Tarha-Tuote Ltd has received as a result of years of development work. Tarha-Tuote Ltd has purchased information concerning supplier and customer relationships through several business trades. The respondents directly copied those acquisition and sales chains of Tarha-Tuote Ltd’s products, which accounted for almost half of the net sales of Tarha-Tuote Ltd and which the profitability of Tarha-Tuote Ltd’s sales was largely based on. The business of Tarha-Tuote Ltd has later been transferred to Schetelig Ltd’s ownership.

Pursuant to Chapter 30, Section 11 of the Criminal Code, a business secret refers to a business or professional secret that and entrepreneur keeps secret and the disclosure of which would be conductive to causing financial loss. The definition of a business secret also requires that the information holder has both the will and the interests to keep the information undisclosed and that information is factually kept secret.

The Helsinki Court of Appeal considered that the defendants were guilty of the violation of a business secret. They were ordered to compensate for the damage suffered by Schetelig Ltd as a result of the loss of the sales margin over two years. Aasa-Law successfully represented Tarha-Tuote Ltd in the Court of Appeal.

Aasa-Law assist with the issues that are related to the protection of business secrets, to the drawing up a non-disclosure agreement or possible misuse of business secret. We also have expertise in a situation where a person or a company is groundlessly suspected of the illegal use of the business secret.

09.11.2020 Author:

The Employment Contracts Act determines when an employer has the right to terminate an employment contract.

An employment contract may terminate at the employer’s initiative either as a result of dismissal or cancellation of the employment. The employer has the right to terminate an indefinitely valid employment contract (permanent contract) only with proper and weighty reason. Reason for termination can be related either to the employee’s person or related to financial and production reasons.

The employee’s own proceeding entitles the employer to terminate the employment when the employee has seriously breached or neglected obligations that have essential impact on the employment relationship (Employment contracts act 7:2 §). The sphere of the regulation includes the worker’s delays, dishonesty and carelessness. Also, the fact that an employee can no longer cope with his or her assignments can justify dismissal. Termination of an employment contract requires that the employer has first issued a warning to the employee and allowed the employee to rectify its proceedings. No warning is required only if the case is particularly harmful.

The employer may terminate the employment contract if the work to be offered has diminished substantially and permanently for financial or production-related reasons or for reasons arising from the reorganization of the employer’s operations (Employment contracts act 7:3 §). The so-called collective ground may appear for example if the employer has a need to save costs or as a result of merging or termination of duties. The termination is permitted even if the employer’s business is profitable. However, if the employee can be placed in or trained for other job tasks the employer shall primarily offer that work.

Cancellation of the employment contract is much more severe and exceptional way of ending an employment contract. The employer is only upon an extremely weighty cause entitled to cancel an employment contract with an immediate effect regardless of the applicable period of notice or the duration of the employment contract (Employment contracts act 8:1§). Such a cause may be deemed to exist in case the employee commits a breach against or neglects duties in such a serious manner as to render it unreasonable to expect that the employer should continue the contractual relationship even for the period of notice.

Before ending an employment contract, the employer shall provide the employee with an opportunity to be heard regarding the grounds of the cancellation. The employee is entitled to use an assistant.

Several openly interpretable questions are connected with the ending of the employment. It is strongly recommendable to exercise due caution when terminating an employment contract as groundless termination or cancellation may lead to a notable liability for damages.

Law office Aasa-Law Oy have special expertise on all forms of termination of the employment. Aasa-Law oy advise clients on assignments relating to Finnish employment legislation.

19.07.2020 Author:

The business secret means secret information on various subjects which the company controls and which produces an economic competitive advantage to the company. The business secrets are valuable capital for companies and they allow the company’s competitiveness and standing out on the market.

The competitive advantage of the company may consist of numerous different factors, so the suitable business secret can be of any form as long as it is economically valuable within the branch of the company. The disclosure of the business secret would give the competitors an economic interest and thus would bring economic defeats to the company.

The concealment will of the holder of the information, the concealment interests of the holder of the information and the real concealment of the information have been set as the characteristics of the business secret. The company can protect its business secrets with agreements, with technical and physical protective measures (for example the usernames and passwords of computers and access control) and by avoiding the unnecessary sharing of the information.

The business secrets are often the combination or collection of information that separately is not necessarily a business secret. The business secret cannot be individual well-known information or individual information that is easy to find out, but it is possible that the business secret is the combination of itself well-known information.

Employment Contracts Act, Unfair Business Practises Act and The Criminal Code of Finland protect business secrets. Employment Contracts Act prohibits employee from utilizes the employer’s business secrets during the term of employment. If the employee has obtained such information unlawfully, the prohibition continues after the termination of the employment relationship. Pursuant to The Criminal Code of Finland 30:5, a person who unlawfully discloses the business secret or unlawfully utilizes such a business secret can be sentenced for the violation of a business secret.

Pursuant to the Criminal Code of Finland 30:5 the drawing up of the concealment agreement is no more an essential condition in the situations where employer wants to protect the business secrets after the termination of the employment of the employee. The Criminal Code of Finland 30:5 improved the level of the protection of business secrets in Finland. The offences of the business secrets are usually dealt with in the courts as criminal cases. However the concealment agreement often clarifies the situation.

Law office Aasa-Law Oy helps to identify the business secret. We help in the matters which are related to the protecting of business secrets, to the drawing up of the agreement or to the possible abuse of the business secret. We have special expertise also in the situation if the person and the company are groundlessly suspected of the illegal use of the business secret.

We provide services to individual people and companies. Contact us, we're happy to help!