Exceptions concerning consecutive fixed-term employment contracts with people registered as unemployed

2022 - 12 - 16
Article by: Karina Paatsi, Johanna-Britt Mikk

Starting from September 2020, individuals registered as unemployed are allowed to take up short-term work without this ending their unemployment status. The current legislation only allows for two consecutive fixed-term contracts for similar work and for extending a fixed-term contract no more than once every five years in order to avoid the contract becoming open-ended. As an employee cannot currently take up consecutive short-term jobs for the same employer under an employment contract, short-term work is done under service and agency contracts. These, however, deprive the employee of labour law protection. To improve protection, an exception now applies to consecutive fixed-term employment contracts with people registered as unemployed.

According to the new regulation, a person registered as unemployed may, during a six-month period, take up an unlimited number of fixed-term employment contracts with a duration of up to eight calendar days each. These contracts, signed during a six-month period, do not become open-ended. The six-month period begins on the date of the first employment contract signed for a term of up to eight calendar days. If the same parties sign a new fixed-term employment contract during the next six-month period, the new contract will be considered open-ended.

As with any other fixed-term employment contract, the conclusion of a fixed-term contract for the performance of a short-term job is only justified by reasons arising from the temporary, fixed-term nature of the work. Such reasons typically involve a temporary increase in workload or the seasonal nature of the work.

The employer must make sure that the employee qualifies for the short-term work exception. To do this, the employee must disclose and confirm their unemployment status to the employer. To avoid later disputes and misunderstandings, the employee should be asked to provide written confirmation. The employer should also ask the employee to present an unemployment certificate issued by the Unemployment Insurance Fund.

Any restrictions arising from the Labour Market Services and Benefits Act should also be taken into account. According to the restrictions, a registered unemployed person may work temporarily for up to eight days per calendar month and for a maximum of 12 calendar months within a 24-month period. The 24-month period is understood as the 24 calendar months preceding each temporary employment. If the temporary working time of a registered unemployed person exceeds these limits, the Unemployment Insurance Fund will terminate the person’s unemployment status. The employer must keep the above in mind, as the Unemployment Insurance Fund may cancel a person’s unemployment status retroactively after learning of a violation of the restrictions. This may lead to the entire employment relationship being considered open-ended.

The remuneration paid for temporary employment in one calendar month in total and for each employment episode must not exceed 40% of the minimum monthly salary. In 2023, the minimum wage will be 725 euros.