Roschier successfully assisted the City of Kajaani in a complex legal dispute involving civil servants’ rights after a transfer of undertakings

Insights|June 4, 2024

The case concerned the transfer of a certain educational function (University of Applied Sciences) from the City of Kajaani to a private limited company on 1 January 2014. Two civil servants who had been made redundant by the City before the transfer claimed that they should have been employed by the transferee or reappointed to another position within the City. They filed claims in both general and administrative courts, seeking retrospective salaries and reinstatement.

The general courts rejected their claims, finding that no employment relationship had been established after the transfer. Roschier’s employment team lead by Counsel Jukka Paloheimo successfully represented the transferee in those proceedings, resulting in another landmark ruling in the Finnish Supreme Court (KKO 2020:35).   

However, as regards the administrative proceedings commenced by the civil servants, the Administrative Court of Pohjois-Suomi granted their claims and ordered the City to pay them salaries and appoint them to another position. The City of Kajaani, represented by Roschier’s employment team (Counsel Jukka Paloheimo and Senior Associate Elmiira Kutvonen), appealed to the Supreme Administrative Court.

The Supreme Administrative Court issued its final ruling, KHO:2024:57, on 15 April 2024, repealing the decision of the Administrative Court of Pohjois-Suomi. The Supreme Administrative Court held that, under the circumstances, the civil servants’ status could not have remained unchanged after the transfer of undertakings, as their positions had been made redundant. The Court also held that the City was not obliged to inform the civil servants with an additional note of termination, as they had already been notified of the termination of their service relationship before the transfer. The Supreme Administrative Court concluded that the civil servants had no right to claim wages or demand reinstatement, as the transfer of undertakings was based on the provisions of the Municipal Civil Servants Act that allows for the abolition of positions in such cases.

The Supreme Administrative Court rejected all the claims of the civil servants, which amounted to 1.2 million euros.

The ruling of the Supreme Administrative Court clarified the legal status of civil servants in situations involving transfers of undertakings. The ruling also confirmed the validity of abolition of all positions due to the transfer issued by the transferor (the City of Kajaani). The ruling was a significant victory for the City of Kajaani, which avoided a substantial financial liability and potential disruption to its organizational structure.

You can find the ruling here (in Finnish).