FAQ about the emergency situation regarding employment

17.03.2020

The employers and employees are facing an extraordinary situation due to the emergency situation declared by the Estonian government. Employment lawyers are busy answering questions related to redundancies, decrease of salary and unpaid leave. We have summarized the questions which have been most recently asked over the weekend and today. Hope you find the information useful.

Can I ask the employees to use their annual holiday?

The approved holiday schedule may be amended only by mutual agreement. However, the law provides that the holiday schedule must be drafted by the end of March each year. In case the schedule is not yet drafted and approved by the employer, you are still entitled to make unilateral changes to the schedule considering the interests of the company. In case the schedule has already been drafted and communicated to the employees, the changes can be made upon mutual agreement.

However, the employees should consider that the holiday pay shall be calculated based on their average salary of last 6 months (unless the company has some other specific rules). In case the employer uses the opportunity to reduce the salary, as explained below, the employees lose in their holiday pay if the holiday is used during the summer and therefore it is also reasonable from employees perspective to use the holiday now.  

Can I send the employees to an unpaid leave?

The unpaid leave can only be applied by mutual agreement of the parties. It is also possible to make a compromise, that the leave shall partially be compensated. Considering the situation many employees may prefer this to the lay-off.

Such situation has never occurred in Estonia before and therefore there is no  relevant practice on whether the employees can be sent to unpaid leave referring to force majeure. The current position expressed by experts in this field is that the employer may not ask the employees to use unpaid leave and in case there is really no work to offer and the parties don’t reach any other agreements, the employee must be made redundant.

Can I reduce the workload and salary of the employees?

It is temporarily possible to reduce the workload and salary of the employees. Article 37 of Employment Contracts Act provides that if the employer, due to unforeseen economic circumstances beyond its control, fails to provide an employee with work to the agreed extent, the employer may, for up to three months over a period of 12 months, reduce the salary to a reasonable extent, but not below the minimum salary, if payment of the agreed salary would be unreasonably burdensome for the employer. Before reducing salary the employer has to consider, if it is possible to offer the employees other work. The employees must be notified at least 14 days in advance about the salary reduction and they have the right to refuse to perform work in proportion to reduction of the salary. The consent of the employees is not needed to enforce this clause and the salary may be terminated unilaterally by the employer. 

As second option it is also possible just to amend the employment contracts and agree on temporary part-time work, however, his requires employees consent. The exact workload and the period thereof (given that the change is temporary) is set by mutual agreement.

Can I impose sanctions in case the employee doesn’t come to work?

Although an emergency situation has been declared, the healthy employees are not excused from not coming to work in case the work cannot be performed remotely.

It must be considered thought that the employer and employee must act in good faith and in case the employee is suffering from weak immune system or is at higher risk to suffer severe consequences of the virus, the employer must take all reasonable measures to protect the health of such employees, including to reorganise the work if necessary. The same applies in case the employee is staying home due to the fact that the kindergartens have been closed and there is no other reasonable possibility to organise the childcare or for some other good and justified reason.

Can I change employees tasks unilaterally?

Acoording to the Employment Contracts Act an instruction not related to the employment contract, collective agreement or law is valid if arising from an emergency. An emergency is presumed in case of possible damage or a threat of such damage to the employer’s property or other amenity caused, above all, by force majeure.

Based on this provision, the employer may instruct the employees to temporarily perform tasks which are necessary to avoid the damage potentially caused to the employer or permance of which can be expected in accorance with the priciples of good faith (e.g. activities necessary to protect the public interest or health and safety of other persons).

Do I need to make changes to the employment contract if the remote work is used? Does the employee has to agree with the remote work?

As a general rule the remote work must be agreed in the employment contracts, i.e. employee’s consent is needed. However, in force majeure situation, the employee must follow the instructions of the employer and work from the home office if this is requested to follow the rules applicable in emergency situation.

Are there any exceptions from general provision of Employment Contracts Act in current situation?

Spread of coronavirus can be considered as force majeure and the provision of force majeure also apply to the employment contracts so the employers may be excused on non-performance. However, where possible, the provisions of the Employment Contracts Act must still be followed and in situation where there is no more work to offer and no suitable agreement with the employee can be reached, the employee should be made redundant in accordance with the Employment Contracts Act. The Unemployment Insurance Fund has also promised to take promised to provide financial support for the employers.

Can I expose sanctions to employees who doesn't come to work while not feeling well/are back from travelling etc.?

The employer is responsible for secure working conditions of all employees. There have been very clear and much communicated instructions from the Estonian Health Board  to avoid any contact if there is a suspection becoming ill or any symptoms of illness or if the employee has returned home from a foreign country.

If the employer has given the same clear instructions to the employees as well and the employee fails to meet the instructions by coming to work ill or with back from travelling, the employer is entitled to give a warning. In case the employee still comes to work and is due to his or her tasks is in contact with other persons, this (in consideration of the emergency situation in the state) can be considered as severe breach and there might be a possibility to terminate the contract.

I have no other option that to make employees redundant. What I need to know?

Before cancellation of an employment contract due to lay-off, an employer shall, where possible, offer other work to the employee. The employees must be notified about a lay-off in advance. The exact notification period depends on the lenght of employee’s service with the employer:

  • less than one year of employment – no less than 15 calendar days;
  • one to five years of employment – no less than 30 calendar days;
  • five to ten years of employment – no less than 60 calendar days;
  •  ten and more years of employment – no less than 90 calendar days.

It is also possible that the employer will pay the compensation equal to the salary of notification period and terminates the contracts with immediate effect.

Upon lay-off an employer shall pay an employee compensation to the extent of one month’s average salary of the employee regardless of the length of service. In case the employee has worked for the employer more than 5 years, he/she is entitled for further compensation from Estonian Unemployment Insurance Fund.

The rules of collective redundancy may potentially apply (the Unemployment Insurance Fund must be informed and information and consultation process with the employees followed). Collective lay-off occurs when the employment contracts will be terminated with:

  • 5 employees in an enterprise where the average number of employees is up to 19;
  • 10 employees in an enterprise where the average number of employees is 20–99;
  • 10 per cent of the employees in an enterprise where the average number of employees is 100 to 299;
  • 30 employees in an enterprise where the average number of employees is at least 300.

Should you have any further questions feel free to contact our experts!

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