Several amendments to the Estonian Employment Contracts Act will enter into force on 1.8.2022

The main amendment involves an increase in the amount of data of which employers must inform employees in writing upon the latter commencing work.

Employers will be obligated to inform employees of

• training offered by the employer

• compensated holidays

• the duration of the probationary period

• the procedure for the performance and compensation of overtime work

• the format of cancellation of employment contracts and the obligation to justify cancellation

• the institutions that receive taxes and charges

• the protection obtained by paying these taxes and charges.

In the case of changes in the data, information about the change must be presented on the date of the change entering into force at the latest. The explanatory memorandum of the draft Act explains that the Act will also establish the protection of employees against adverse treatment in cases where they rely on their rights and obligations, point out violations thereof or support other employees in defending their rights.

New provisions in employment contracts

First, employers must introduce amendments to employment contract templates to bring the contracts into compliance with the requirements of the amended Act.

The main amendment concerns section 5 of the Employment Contracts Act, which sets forth the data that employment contracts mandatorily must contain. The amendment supplements and specifies the list.

Starting from 1st of August 2022, employment contracts not only have to specify the taxes and charges paid from the salary, but also a reference to the institutions receiving the taxes and charges, and the protection obtained by paying these taxes and charges.

If training has been agreed with an employee, the employment contract must also state which kind of training the employer undertakes to provide to the employee.

In addition to the basic holiday, other holidays compensated by the employer also must be specified in the employment contract. These may, for instance, include additional paid holidays, training leave and carer’s leave offered by the employer.

In addition to the previously effective requirement that an employment contract must contain the terms of prior notification of cancelling the contract, it now also must state that cancellation must be made in a format which can be reproduced in writing and must be justified, if the contract is cancelled extraordinarily. Employers therefore always must justify the cancellation of an employment contract and employees must justify it when cancelling an employment contract due to the employer violating its obligations towards the employee.

Starting from 1st of August 2022, it will also be mandatory to state the duration of the probationary period and the procedure for the performance and compensation of overtime work in employment contracts.

An important update

Starting from 1st of August 2022, employees will have the right to demand suitable working conditions from employers and if the employer cannot provide such conditions, the employer must inform the employee of that in writing. Above all, this concerns temporary employees’ opportunity to request the conclusion of an indefinite contract and part-time employees’ opportunity to ask for full-time employment. But requesting other suitable conditions is also not excluded. Employers are not obligated to fulfil the requests, but they must assess the possibility and when they find that it is not possible, they must justify it in writing. An employer does not have to send a reply to an employee’s possible new requests more often than once in four months.

The Act will also establish an employee’s right to get working conditions that have improved while the employee was on a child-related leave, a leave taken for caring for an adult with a severe disability or a care leave. For instance, an employee will have the right to request a pay rise, if he or she would have been entitled to a pay rise if they had been working.

Other updates

Employers will still be obligated to present the employment contract data to employees in writing within two weeks of the request, but the amendments now add the employer’s right to receive a confirmation from the employee to the effect that the data have been presented. If the parties have concluded a written employment contract that includes all the necessary data, the employee’s confirmation of the presentation of the data is essentially given at the beginning of the employment relationship.

As a new rule, employers must inform employees of changes in the employment contract data on the date of entry into force of the change at the latest, and not within one month as previously. This obligation will also usually be fulfilled upon signing a bilateral agreement on amending the employment contract.

In addition to the obligation to store a written employment contract document for ten years, employers will now under the amended Act also be obligated to store information that employment contract data have been forwarded to employees for ten years. This obligation can also be considered fulfilled when an employer stores an employment contract signed by an employee for ten years, if all the required data are included in the employment contract. According to the explanatory memorandum to the amendments, an employer will have the right to choose whether it stores proof of forwarding the data, the receipt of the data by the employee, or both.

Regarding the probationary period, provisions have been added to the Act which specify that holidays and temporary disability for work are not included in the probationary period and a new probationary period is not applied if the employment contract is extended or a new contract is immediately concluded for continuing to perform similar work.

The former provision that holidays pay must be paid on the second last working day at the latest before a holiday, unless agreed otherwise, was specified, to state it must be done on the last working day according to the calendar. This prevents the need to make a payment on a weekend or on another day that is generally a day off for employees who work on such days.

Regarding temporary agency workers, employers will be obligated to inform workers of the name of the user undertaking. Formerly they only had to inform workers of the fact that the employment contract is concluded for performing temporary agency work.

So, what do employers have to do starting 1st of August 2022?

Starting from 1st of August 2022, employees must, in addition to the previously applicable working conditions, also be informed of the new conditions that will be implemented from 1st of August 2022. However, it must be noted that informing does not mean the conclusion of bilateral annexes on amending or supplementing the employment contract. This is not necessary, even though some personnel work instructors mistakenly claim so. As well as that pursuant to the new Act the new data must among other things be included in the written employment contract document. The written employment contract document may consist of several separate documents, and it is entirely sufficient if the employer forwards the new employment contract data required as of August to employees as a unilateral notification. However, the notification must bear the employer’s signature and the employer must be able to prove that it has delivered the notification to every employee.

Employers must amend their formerly used contract templates for use for the conclusion of new employment contract so that the new contracts are concluded in consideration of the wording of the new Act. The employees working based on employment contracts concluded before 1st of August 2022 must be given the beforementioned notification.

Fondia can help with changing the drafts of the employment contract used and preparing the notification documents to be presented to the employees.

Contact Andres Kees andres.kees@fondia.com