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Global employment briefing: Estonia, May 2013

  • Estonia
  • Employment law - HR E-Brief


Agreements about compensation may be void

A set level of compensation is payable when employment is terminated without sufficient notice or when an employee is made redundant. The employer and employee may agree that additional compensation is payable once employment has come to an end.

In a decision handed down on 24 April 2013 (Case No 3-2-1-30-13), the Supreme Court set out the circumstances in which agreements about the level of compensation will be void.

The Supreme Court’s judgment held that an agreement which entitled an employee to a termination payment when employment was terminated as a result of the employee’s breach of contract, or loss of trust in the employee or a similar reason, was contrary to the principle of good faith and the agreement to pay compensation was void.

Time limits for claims regarding restrictive covenants

The facts of another Supreme Court case (No 3-2-1-6-13) were that an employee began competing with his employer during his employment. The employer claimed damages in a claim filed over a year after learning of the employee’s actions.

All employment claims relating to dismissal must be brought within 30 days of termination of employment. Employer’s damages claims must be brought within 12 months, and salary claims within three years. All other claims must be brought within four months.

The Supreme Court’s judgment, handed down on 6 March 2013, held that cases concerning restrictive covenants are not subject to the same limitation periods as regular employment claims. Damages arising from breach of restrictive covenants can therefore be brought within the same limitation period as other civil law claims, namely three years.

Employment dispute research (27 February 2013)

The Centre for Applied Social Sciences of Tartu University has published research on judgments which have been given in respect of employment disputes brought under the new Employment Contracts Act, in effect since 1 July 2009. The research covers all 214 court judgments as well as 1523 rulings of Employment Dispute Committees (EDCs). Rando Maisvee of Eversheds participates in Committee decisions as he is a member of Tallinn Employment Dispute Committee, having been appointed by the Estonian Employers’ Confederation.

The questions addressed by the research concerned understanding the meaning of the Act, identifying provisions which are hard to interpret and identifying the provisions most frequently infringed. In addition, the research seeks to identify areas in which employees’ and employers’ rights are not protected.

Findings were discussed with judges and experts in two focus groups. As a result of these discussions, a number of suggestions have been made, namely that:

• EDCs should have the authority to order evidence to be filed;

• there should be specified monetary limits for bringing a claim in court once a dispute has been dealt with by an EDC;

• the Act should be amended with regard to giving warnings before employment is terminated;

• the Act should specify time limits for restrictive covenants;

• the law should be clarified regarding damages claims which can be filed following:

   o a termination without a valid reason;

   o an employee terminating employment because of the employer’s breaches; or

   o an employee terminating employment without notice; and

• the Act should specify the date from which a court or EDC can terminate employment.

For further information contact:

Rando Maisvee
Attorney at Law
Tel: +372 6 141 990