3 important updates to the Employment Contracts Act

As of 1 August, amendments to the Employment Contracts Act entered into force, following the EU directive on transparent and predictable working conditions. Changes to the law that governs everyday working life are always a bit worrying – will something change radically? What should you know as an employer? What should you know as an employee? Fortunately, our expert, associate Andres Kivi, has done the work for you, highlighting the TOP3 most important changes to consider.

Andres Kivi confirms that there are no fundamental changes. However, the amendment will increase the protection of employees in employment relations. The amended law will also help to ensure that employees are informed of the terms and conditions of employment that are important to them as early as possible in the employment relationship. Introducing the non-discrimination principle and the right to request suitable working conditions will increase employee protection.

1. Notification of working conditions

The Employment Contracts Act provides a list of data of which it is compulsory to inform the employee before the employment relationship starts. Before 1 August, the list included, for example, a description of the employee’s duties, the remuneration payable for the work, the place of performance of work, the duration of leave, etc.

Now, in addition, the employer is obliged to notify the employee of the following information:

  • Taxes and payments. A notable innovation is a new obligation to notify employees of the taxes and payments payable and withheld by the employer, the tax administrator (the Estonian Tax and Customs Board), and the protection accompanied by the payments. For example, a sufficient explanation is that income tax is used to finance the government activities of the state and the local government units.
  • Training. The employer should provide information on the number of training days to which the employee is entitled per year and other information on the general training arrangements. Excessive detail is not expected (e.g., date, duration of the training, etc.).
  • Holidays. Most importantly, information on the duration of the annual holiday should be provided. The employee may also have an entitlement to study leave or care leave. Of the latter, the employer must inform only the employees entitled to special leave when it is taken.
  • The formal requirement for termination. The employer must inform that the notice of termination must be given at least in a form that can be reproduced in writing (e.g., by e-mail) and that both parties must give reasons for the extraordinary termination.
  • Overtime work. Where overtime work is agreed upon, the overtime work and compensation arrangements must be made known. At a minimum, the employee should be informed that overtime work will be undertaken by agreement and will be compensated with time off or money.
  • The duration of the probationary period. The employer must inform about the duration of the probationary period. The probationary period may not exceed four months.

2. The right to request suitable working conditions

Another significant change to the law grants employees the right to request suitable working conditions.  Above all, this means the right to request entry into the employment contract for an unspecified term or full-time work. It also provides the right to request other working conditions specific to the employment relationship. On receipt of such a request, the employer must analyse whether the wishes expressed can be reasonably reconciled with the interests of the employer’s enterprise and accept them or reasonably refuse them.

3. Protection against unfavourable treatment

Finally, the law establishes a principle that an employee must not be discriminated against for relying on their rights, drawing attention to violation thereof, or supporting another employee in protecting their rights (e.g., as a witness in a labour dispute). To this end, an employee does not need to have a particular feature (e.g., sex, age, colour), but every employee is protected against unfavourable treatment.

If an employer does discriminate against an employee – for example, terminates a witness’s employment contract. It is considered a void termination, which the employee can challenge in court or a labour dispute committee.

If you need us to review your work organization rules, advise you on how to behave in light of the changes in the law, and prepare the necessary notification documents, our associate Andres Kivi is at your service.

« Back to articles
Hedman

Our memberships:
FinanceEstonia,
Estonian Service Industry Association,
Estonian Chamber of Commerce and Industry,
EstVCA, EstBan, FECC,
IBA & IBA European regional Forum