Employment & Stock options

Our team of lawyers advises companies and individuals in various employment matters.

Hiring

  • Recommending and drafting for our clients the most suitable type of contract for hiring workforce;
  • Contract for services;
  • Authorization agreement;
  • Employment contract.

Foreign workforce and relocation

  • Advising in migration matters;
  • Applications for short-term employment registration;
  • Visas; in particular start-up visa and digital nomad visa;
  • e-Residency matters;
  • Residence permits, in particular residence permit for employment, employment in a start-up or business related to a start-up, engagement in the enterprise as a large investor, or employment as a top specialist.

Employment documents

  • Providing employment contracts;
  • Rules of work organization;
  • Confidentiality and non-competition agreements that are in line with applicable laws and are tailored to the company’s needs;
  • Drafting documents concerning breaches of employment duties or for the termination of employment relationships;
  • Warnings;
  • Declarations of cancellation;
  • Lay-off notifications;
  • Termination agreements.

Employee incentives and option agreements

  • Advising and formulating motivational packages for employees;
  • Bonus systems;
  • Stock options.

Daily advice in employment matters

  • Advising in daily employment matters;
  • Providing opinions and guidelines for understanding and complying with applicable labor laws.

Employment disputes

  • Helping to prevent disputes by providing well-crafted documents and prompt daily advice;
  • In case of an employment dispute, we outline the potential alternatives and risks to our client;
  • Helping to negotiate compromise solutions;
  • Acting as representatives in the labor dispute committee and court proceedings.

Frequently Asked Questions

How to safeguard against a competitor buying over talent?

In addition to the payment of fair wages and having a supportive and motivating work environment, an important aspect of talent management is having in place agreements restricting the employees to work for the company’s competitors. This is of particular importance with respect to the company’s key employees, if the company has invested a lot of resources into the employee’s training, or if the employee is otherwise highly specialized in their field.

Such non-competition agreements could oblige the employee to refrain from competing with the company during or even after the termination of the employment relationship. It is important to note that in Estonia such a non-competition agreement must necessarily be in writing and reasonably delimited in terms of territory, time, and objects.

The maximum duration of a non-competition obligation applicable after the termination of the employment relationship is one year during which the employer must pay reasonable compensation to the employee.

Does my agreement with a service provider actually qualify as an employment contract?

Employment contracts and service agreements are differentiated on the basis of the actual nature of the relationship between the company and the person working for the company. Therefore, depending on the factual circumstances, a contract titled „Service Agreement“ may be requalified as an employment contract by a labor dispute committee or court.

The most important aspect herein is control – how much control does the company have over when, where, and how the person performs his/her work duties? If a service agreement is concluded, but work is performed under the direction and control of the company at a time and/or place determined by the company and/or by using the tools provided by the company, the agreement is actually more like an employment contract.

In such a case, the employee may demand that his/her employment relationship be recognized as an employment relationship and claim all the payments, benefits, and social guarantees that he/she is entitled pursuant to applicable laws.

Why and when to set up a share option scheme for employees and/or service providers?

A share option scheme can be used to motivate key employees and/or service providers, to encourage them to remain involved with a company, and benefit from the company’s growth and success. In addition, share option schemes can also reduce labor costs, and thus, bring significant tax advantage for the employer. Option schemes are a more flexible option compared to an immediate grant of a direct shareholding to a new employee.

An option scheme can be a useful tool for businesses of all sizes but a more common among startups. In the early stages, startups may struggle to attract talent as they often do not have sufficient funds to pay market standard wages to the employees.

Options schemes provide an alternative to paying high salaries and bonuses. This does not restrict setting up an option scheme for the company at a later stage. Options schemes may also help to reach an agreement with employees on the reduction of wages in times of economic difficulty. You can find more information about the options here: https://hedman.legal/articles/what-is-an-option/.

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Our memberships:
FinanceEstonia,
Teenusmajanduse Koda,
EstVCA, EstBan, FECC,
IBA & IBA European regional Forum