Ending employment: notice period, final pay and the certificate

When employment ends, arrange the handover and handle final pay, holiday compensation, access rights and retained records. This guide covers the practical steps. Grounds for termination by notice are governed by Chapter 7 of the Employment Contracts Act and cancellation by Chapter 8.

The notice period follows the length of service

Chapter 6, section 3 of the Employment Contracts Act contains two lists: one for the notice periods the employer observes and one for those the employee observes. The employee’s periods are shorter and the steps coarser. Both are counted from an employment that has continued without interruption.

Both lists begin with the words “unless otherwise agreed”. The Act therefore gives a default that applies when the employment contract or the applicable collective agreement has no provision of its own. Collective agreements often have notice periods of their own, so the agreement is read before relying on the table.

What is counted in hours and days by the end date

The end date stops four accruals, three of them in hours and one in days. They have to be settled before the last payroll run, because once the employment has ended, an action concerning a claim under the Working Hours Act must be brought within two years of the employment ending, or the claim lapses (section 40 of the Working Hours Act).

Flexitime balance. Reconcile the balance to the end date and agree on any time off in advance. Final treatment must consider section 22 of the Working Hours Act, the flexitime agreement and collective agreement. A positive or negative balance alone does not determine its monetary treatment. Retain the calculation basis in the working-time records.

The working-time bank. A working-time bank means an arrangement in which working time, earned time off or monetary benefits converted into time off can be saved and combined with one another (section 14 of the Working Hours Act). The bank is agreed in writing, and the agreement must cover at least four matters, one of which is exactly this: the termination of the working-time bank and the compensation of the items in the bank at the moment of termination. The answer for the balance of an employment that is ending is therefore already written into the bank agreement, and that is where it is read. The employee has the right to take leave saved in the bank for at least two weeks per calendar year, and at the employee’s demand the employer must give the leave during the following six months. If the employer determines the timing of the leave, the employee has the right, if they so demand, to receive compensation in money instead of the leave.

Overtime exchanged for time off. The pay for additional work or overtime and the increment for Sunday work may, by agreement, be exchanged for corresponding time off during the employee’s regular working hours (section 21 of the Working Hours Act). The length of the time off is calculated from the compensation rules in section 20, so an hour of time off and an hour of work are not equivalent: for the first two hours of daily overtime the compensation is increased by 50 per cent. The time off must be given within six months of doing the work unless otherwise agreed. If the employer and the employee do not agree on the timing, the employer determines it unless the employee demands compensation in money.

Unused holiday. Compensation under section 17 of the Annual Holidays Act covers unused previous holiday and current accrual not already taken or compensated. If employment has lasted at least a year at its end, the current period accrues at 2.5 days per month. Full months follow the applicable 14-day or 35-hour rule; fractions of days are rounded up in the final total. The first and last months can be combined if their total work meets the rule and no holiday or compensation has already been received for those months. Unused saved leave is also compensated (section 27).

Holiday compensation follows the applicable holiday-pay rules and collective agreement. The Act’s weekly- and monthly-pay calculation uses divisors of 6 and 25 (section 17); these are not universal divisors for all pay arrangements. Supply payroll with verified holiday days and necessary employment data.

Example: an employment of 3 years and 4 months ends on 30 November

The employee has been employed since 1 August 2023. The employment ends on 30 November 2026, when it has continued without interruption for three years and four months. November is a whole calendar month and a full holiday credit month on its own, so no combining of the first and the last month is needed. Of the eight months of the current accrual period (from 1 April), seven are full; one month fell below 14 days at work because of unpaid leave.

The hour accruals are worth handling before the holiday days, because taking overtime leave and flexitime affects which days of the final period are working days.

Final pay and the last period’s payroll data

The pay period ends with employment unless another final-pay arrangement has been agreed. Delay can entitle the employee to interest and up to six calendar days of waiting-time pay. If the claim is unclear or disputed, or delay results from a calculation error or similar mistake, the employee must notify the employer within one month of employment ending. The employer then has three working days to pay before waiting-time pay starts (Chapter 2, section 14).

Payroll needs five things from the last period:

1. The last working day and the end date separately, if the notice period runs without an obligation to work.
2. The state of the final period’s workdays up to the end date: which are confirmed and approved and which are still drafts.
3. The balances projected to the end date in hours: flexitime, the working-time bank, the overtime bank and working-time reduction as separate figures.
4. Untaken holiday days and saved-leave days itemised by accrual period.
5. The absences of the ending month by day type, because they affect both the last pay period and the number of full holiday credit months.

Prepare final-pay data in advance and agree on how to add hours and expenses from the last working days. This helps include items arising up to the end date in the correct payment.

The employment certificate is given on request

When the employment ends, the employee is entitled, on request, to a written certificate from the employer on the duration of the employment and the nature of the duties (Chapter 6, section 7 of the Employment Contracts Act). These two pieces of information make up the limited employment certificate, and it is enough when nothing else is asked for.

Include the reason for leaving only at the employee’s express request. An assessment of skill and conduct also requires an express request; asking for one item does not automatically request every addition. The certificate must not contain hidden messages or markings conveying more than its wording states.

The time limits are long, and they differ from each other. The employer has an obligation to give an employment certificate if it is requested within 10 years of the ending of the employment. A certificate on the employee’s skill and conduct must, however, be requested within five years of the employment ending. The duration of the employment and the nature of the duties therefore have to be retrievable even a decade later, which is worth taking into account in the retention periods for personnel data.

Access rights and equipment are returned on the end date

Access to systems, employment benefits and work equipment end on the same day as the employment. The employer may process only personal data directly necessary for the employment (section 3 of the Act on the Protection of Privacy in Working Life), and closing the accounts is the practical implementation of that requirement: the former employee no longer sees their colleagues’ data.

Alongside the accounts, the return list covers equipment, keys, access passes, means of payment and customer data in the person’s possession. The same occasion is also the time to deal with the employee’s own requests: on request they are entitled to a written account of the entries concerning them in the working-time records (section 32 of the Working Hours Act) and to a corresponding account of the entries concerning annual leave and saved leave (section 29 of the Annual Holidays Act). Both are easier to produce before the end date than after it.

Personal data after the employment ends

The ending of the employment does not empty the person’s data; it splits it in two. One half is to be kept, the other erased.

The working-time records are kept until the limitation period for claims has expired. Once the employment has ended, an action concerning a claim must be brought within two years of the employment ending (section 40 of the Working Hours Act), so the records must be kept employee-specific and readable for that whole time. Annual leave records are kept at least until the limitation period laid down in section 34 of the Annual Holidays Act has expired (section 29). Both sets of records must survive a change of system as well.

Other data is erased when the basis for processing has ended. Health data must be kept separate from other personal data and erased immediately once there is no longer a basis for processing as referred to in section 5 of the Act; the basis for and the need for processing must be assessed at least every five years. The storage limitation principle of the General Data Protection Regulation leads to the same outcome: the retention period is tied to the purpose, and each data category is given a time limit of its own. In practice this means three different clocks – the working-time records by the limitation period, the basic facts of the employment certificate by the 10-year right to request, and the rest by their purposes.

A collective agreement may depart from the statutory rules

A collective agreement can affect notice periods, holiday compensation and working-time compensation within legal limits. It does not override every duty in this guide: privacy necessity requirements and statutory records still apply. Check the provisions for the particular employment relationship.

The employer may apply the provisions of the collective agreement also in the employments of employees who are not bound by the agreement but in whose employments the employer must observe it on the basis of its general applicability (section 30 of the Annual Holidays Act, section 34 of the Working Hours Act). A non-organised employer therefore reads the generally applicable agreement of its sector before relying on the statutory default.

Checklist

• The notice period has been checked against the employment contract and the collective agreement. The table in the Act applies only when neither says otherwise.
• Notice has been given in a verifiable way and the notice date has been recorded.
• The end date and the last working day have been recorded separately, if the notice period runs without an obligation to work.
• The final period’s workdays have been confirmed and approved up to the end date; drafts have been handled before the last payroll run.
• The flexitime balance has been calculated to the end date and taking the excess as time off has been agreed in time.
• The working-time bank balance has been handled under the termination clause of the bank agreement.
• Overtime exchanged for time off has been given or compensated, and the six-month time limit has been checked for each item.
• Untaken holiday days and saved-leave days have been calculated by holiday credit year to the end date.
• Check combining the first and last months: total work meets the accrual rule and no holiday or compensation has already been received for those months.
• The payroll data for the last period has been compiled: the states of the workdays, the balances in hours, the holiday days and the absences by day type.
• The employment certificate has been drafted, or is ready to be drawn up on request. The reason for the ending and the assessment of skill and conduct are included at the employee’s express request.
• The accounts requested by the employee have been delivered on the entries in the working-time records and the annual leave records.
• Access rights, equipment, keys and means of payment have been returned and access ended on the end date.
• Retention periods have been recorded by data category: the working-time and annual leave records beyond the limitation period, the basic facts of the employment certificate for the 10-year right to request, other data by its purpose.