Amendments to the Employment Contracts Act
The Chamber has sent to the Parliament its proposals related to the Draft Amendment Act of the Employment Contracts Act and related acts, transposing the Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions (hereinafter referred to as the ‘Directive’).
Employers need to submit data on taxes to the employees
According to the draft act, employment contracts will have to contain data on to which entities are the taxes and payments withheld by the employer paid and which cover is provided for the employees in relation to the taxes or payments. According to the explanatory memorandum to the draft act, employees need to be informed, among other things, that the social tax is paid to the Tax and Customs Board and it is used to finance medical treatment insurance and the first and second pillar of funded pensions, and that the income tax is paid to the Tax and Customs Board to finance the governance activities of the state and local municipality units.
In the Chamber’s opinion, the draft act should not impose on employers the obligation to submit data in relation to the income tax. First, such amendment would mean an additional obligation for the employers. Secondly, there is no practical need for this amendment, and the information related to the income tax, in our opinion, does not provide any additional value. Additionally, the requirement does not arise from the Directive. Therefore, the Chamber has made a proposal to leave the amendment related to the income tax out of the draft act. In the case of other taxes and payments, the Directive establishes a requirement that employers are required to provide additional information on them to employees.
Chamber supports the amendment related to probation period
The Chamber finds that the amendment in the draft act, which establishes that probation period would not include the time when an employee’s ability to perform their duties was hindered, primarily when the employee was temporarily incapacitated for work or used the vacation time, is very positive, because this will help to achieve the goal of the probation period better, i.e. allow the employer and employee to asses if they are suitable for the work.
According to the draft act, employees will have the right to request suitable working conditions from the employer
For example, if a person is employed part time, they have the right to request full-time employment from the employer. The right to request suitable working conditions arises from the Directive, but according to the Directive, employees have this right only if they have passed their probation period, if applicable, and if they have been employed with the same employer for at least six months.
The Chamber considers it reasonable to transpose this provision as it is worded in the Directive. The solution set out in the draft act may mean unreasonable burden on employers. For example, if the employer and employee have concluded a temporary employment contract for one working day, according to the draft act, even in such case the employee would have the right to request employment on the basis of an employment contract without a term. In such case, the employer has to consider if the request made by the employee is reasonably matched to the interests of the employer. And if the employer refuses to amend the working conditions, the refusal has to be justified within 14 working days from the receipt of the request. In case of the example set out above, the employer is forced to justify the refusal even if, for example, 10 days have passed from the expiry of the employment contract. Such obligation is definitely not reasonable in the case of very short-term employment contracts and such obligation is not foreseen in the Directive either.
Term for advance notice must be longer than 14 days
The draft act foresees that if an employee requests suitable working conditions, but the employer refuses to change the employment contract, the employer is obliged to justify the refusal in a format that can be reproduced in writing (e.g. by email) within 14 calendar days from the receipt of the employee’s request.
An article of the Directive provides that the employer shall give their response within one month from the receipt of the request. In case of micro, small and medium-sized companies, member states can, according to the Directive, foresee extension of this term by not more than up to three months and allow for responding orally if the same employee has submitted a similar request again and the justification of the response in relation to the employee’s situation does not change.
The Chamber does not see a good reason why Estonia should transpose the provision in a stricter manner, i.e. establish a term that is significantly shorter than that set out in the Directive for the response of the employer. We find that a 14-day term for response may be unreasonably short in some cases, therefore we have made a proposal to replace the 14 days with 30 days.
At the same time, we consider it positive that the drafters of the draft act have taken into account the Chamber’s proposal and added a principle to the Employment Contracts Act, according to which if an employee submits more than one request for suitable working conditions within four months, the employer is obliged to respond to one of the applications.
In exceptional cases, employers could have the right to prohibit an employee to work with another employer
The draft act clearly states that employers are not allowed to prohibit employees to work with other employers, except in cases where the parties have signed a restraint on trade clause.
Based on feedback from entrepreneurs, the Chamber would like to point out that in addition to the restraint on trade clause, there must be other options to restrict, in certain justified cases, an employee from working for another employer. Such need may arise, for example, in order to ensure protection of an employee’s health or safety, or in case of conflict of interest. Due to that, the Chamber requested that the Employment Contracts Act be updated with a provision that allows employers to restrict employees from working for another employer if it is necessary for the protection of health and ensuring safety, or preventing conflict of interest. Such exception is also allowed with the Directive.
The Draft Act updates the Occupational Health and Safety Act with the requirement that an employee is obliged to ensure that working or providing a service at another employing person does not risk their own life and health or those of others. The Chamber considers adding this provision as a positive sign, at the same time, we are concerned that many employees might not observe this provision in practice. Therefore, employers should have the right, in exceptional cases, to restrict an employee’s working for another employer.
Rules for overtime work could be more flexible
Additionally, the Chamber would like to draw attention to the fact that the regulations of the European Union could contain a contradiction in relation to the on overtime work and employer’s prohibition to limit an employee’s working beyond the working ours for another employer. For example, the law does not allow employers and employees to agree that the employee would do 15 hours of overtime work per week. At the same time, the law allows an employee to perform one and the same work for 40 hours for one employer and another 40 hours for another employer, whereas, the other employer does not have to pay an additional fee for it. In practice, the other employer might not even know that their employee is working full time also for another employer. The Chamber finds that if the employer has no right to restrict an employee’s working for another employer, the overtime regulation should be much more flexible, too.
The planned amendments to the Employment Contracts Act are to enter into force on 1 August 2022. At the moment, the proceedings on the draft act are ongoing at the Parliament and therefore it is not known if the Parliament will take the Chamber’s proposals into account or not.