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Estonia: 2021 changes in labour law

2021-02-04

Reimbursement of labour costs to employers in Harjumaa and Ida-Virumaa counties significantly affected by restrictions to prevent the spread of COVID-19

The Unemployment Insurance Fund reimburses labour costs to employers in Harjumaa and Ida-Virumaa if their activities have been significantly disrupted between 28 December 2020 and 17 January 2021 due to the current extraordinary circumstances.

Salary subsidies will be paid to local companies, branches of foreign companies, non-profit associations, foundations or self-employed persons:

  • entered in the Estonia commercial register or register of non-profit associations and foundations;
  • for activities significantly disrupted between 28 December 2020 and 17 January 2021 by restrictions imposed to prevent the spread of COVID-19; 
  • whose designated principal activity is among the areas most affected by the restrictions (as specified in the relevant regulation), including accommodation, catering, sports and recreational training, and the performance arts;
  • if their employees’ place of work is in Harjumaa or Ida-Virumaa county as of 22 December 2020 according to the Employment Register;
  • that did not owe national taxes as of 1 August 2020 or had either paid or deferred the tax debt by 22 December 2020.

Employers are also eligible for salary subsidies for employees with whom they had a valid employment relationship between 28 December 2020 and 17 January 2021. Subsidised employers are not allowed to dismiss employees to whom the subsidy was requested within 30 days of receiving the subsidy. 

Employers receive salary subsidies in an amount equal to their salary costs on employees working in Harjumaa and Ida-Virumaa counties in November 2020; the subsidies are capped at €180,000 per employer. The subsidised amounts are calculated based on payments subject to individually registered social tax declared to the Tax and Customs Board.

The subsidy for a self-employed person is €584, which is the minimum wage for 2020 according to subsection 29 (5) of the Employment Contracts Act.

Applications for subsidies are accepted from 1 to 28 February 2021 through the Unemployment Insurance Fund e-service. According to the Unemployment Insurance Fund, payments will start by 14 February 2021. Subsidies will be transferred to the employer’s bank account.

Sickness benefits starting from the second day

According to an amendment to the Occupational Health and Safety Act which came into force from 1 January, employers will pay their employees’ sickness benefits from the second to the fifth day of illness between 1 January and 30 April 2021. During this period, the amount of the benefit payments will remain the same as it was before the amendment – 70% of the average salary of the employee. Starting from the sixth day of illness, the responsibility for the benefit payments shifts to the Estonian Health Insurance Fund. This is a temporary amendment due to the epidemic spread of the coronavirus, and the previous regulation will be restored from 1 May 2021,whereby the employer will once again pay the employees’ benefits from the fourth to the eighth day of illness, with the Health Insurance Fund taking over from day nine.

Employer fines increased

From 8 January 2021, the maximum levels of fines for various violations specified in the Employment Contracts Act and the Employees’ Trustee Act were increased. Previously, the Labour Inspectorate could impose a fine of up to €1,300 on an employer (and up to €400 on a management board member or other representative) for violations of various restrictions on working time, requirements for calculating working time, norms protecting minors in employment, or the obligation to inform and consult; the new maximum limit is €32,000 (and €1,200 for board members and other representatives).

In practice, however, fines have rarely been imposed for minor violations, and mostly only when employers fail to eliminate the violations after receiving an enforcement order from the Labour Inspectorate. However, the possibility of a large fine should not be ruled out. Violations affecting employee health (e.g. serious or systematic breaches of working and rest time requirements) are particularly likely to be fined.

New requirements for employer risk analysis

As a new requirement in the Occupational Health and Safety Act (OHSA), the employer must now complete a risk analysis of the working environment and submit it in the working environment database or deliver it to the Labour Inspectorate in a format that can be reproduced in writing. The risk analysis must be submitted by 1 September 2021. In order to help employers prepare and submit risk analyses, the Labour Inspectorate has announced that a new risk analysis tool will be created in the self-service section of the Inspectorate’s website in 2021. It will display the relevant risks associated with the company’s area of activity and the typical measures to mitigate these risks.

The amendments to the OHSA also extended the scope of the act so as to include service providers, such as persons working under an authorisation agreement or contract for services, to whom certain provisions of the OHSA now apply. For example, if an organisation has both employees and service providers working for it, or if there are only service providers operating in the working environment, each service provider is required to inform the employer or other service providers about the risks associated with its activities. The employer is similarly required to inform a service provider sharing a workplace with the employer’s staff about the risks in the workplace, as well as the arrangements for rescue and first aid. The amendments to the act also require the employer to investigate accidents at work that have occurred with service providers.

Minimum wage not to change in 2021

In 2021, the minimum wage will remain at the current level of €584 per month and €3.48 per hour (in gross amounts).