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Global employment briefing: Estonia, January 2013

  • Estonia
  • Employment law - HR E-Brief



New right to cancel collective agreements

Despite opposition from the unions, the Estonian Parliament ("Riigikogu") has adopted amendments to the Collective Agreements Act which introduce a new right to cancel expired collective agreements by giving six months' notice.

The parties to an effective collective agreement must refrain from lock-outs and strikes. Until the recent amendment, that obligation did not survive the expiry of the agreement, although other parts of the agreement did. Consequently, under previous legislation, although expired collective agreements remained in force to some extent, the unions could strike until a new agreement was concluded.

According to the amended legislation, either party to the agreement has the right to declare, at least three months before the date on which the agreement comes to an end, that it does not want the agreement to remain in force following its expiry date. If neither party takes this step, then the agreement will remain in force indefinitely, though either party can serve a cancellation notice up to six months in advance. Once notice is served then the right to lock-out and strike returns.

Paid paternity leave

The new father of a baby due on or after 1 January 2013 now has the right to ten working days of paternity leave. This leave must be taken within the four month period from the expected date of childbirth. Paternity leave is paid according to the father's average salary, but the maximum payable is three months' average salary.

Supreme Court clarifies termination of employment

The termination of an employment contract can be contested before the Labour Dispute Committee or before a court. One potential remedy is that the termination is declared void. If this happens, the committee or the court will terminate the employment contract itself and the claimant will be paid compensation of three months' average wages. The amount of compensation can be increased or decreased, depending on the circumstances.

In case No 3-2-1-82-12, the Supreme Court clarified:
(i) when termination of employment by the committee or the court takes place;
(ii) when compensation falls due; and
(iii) in what circumstances compensation will be increased or decreased.

Firstly, the court concluded that notice of termination must be given so that the employment contract will terminate when that notice expires, not on the date of the committee or court ruling.

Secondly, compensation is due as soon as employment is terminated by the committee or the court (i.e. the date on which notice expires).

Finally, as regards the circumstances which can be taken into account when deciding whether to decrease or increase any award of compensation, the Supreme Court has suggested that these are likely to depend upon the circumstances and manner in which the contract is terminated. In this case, the Supreme Court upheld the lower court's ruling that short term  employment may justify a decrease of the three month figure. However, a decrease may not be appropriate if the employer has behaved badly during the termination process.

For further information, please contact

Rando Maisvee
Tel +372 614 1990