Summary of legislation that entered into force on January 1
More than 300 legal acts entered into force on the first day of the year. Below we provide an overview of the most important changes for companies.
The employer has new obligations regarding occupational health
On January 1, amendments to the Occupational Health and Safety Act entered into force, which impose additional obligations on the employer in relation to occupational health. If previously the employer had the obligation to send the employee for a health examination in certain cases, now the employer must order an occupational health service from an occupational health doctor, which includes, in addition to the employee's health check, other components of the occupational health service.
It is more clearly stated in the law that when providing occupational health services, the occupational health doctor must become familiar with the risk analysis of the work environment. If necessary, the occupational health doctor must also visit the work environment. The need and frequency can be agreed between the employer and the occupational health service provider as part of ordering the service.
As a new part of the occupational health service, the occupational health doctor must analyse the company's occupational health situation as a whole. The purpose of the analysis is to provide the employer with meaningful feedback based on the specifics of the company for organizing occupational health, protecting the health of employees and creating a safe working environment. The analysis of the company's occupational health situation must be done as needed, but at least once every three years.
An integral part of the occupational health service continues to be the health check of employees, which must be organized for employees based on the results of the risk analysis. The principle that the employer must send the employee to health examination within four months of the employee starting work, remains valid. At the same time, from the new year, a point was added to the law that if an employee has undergone a health check at another employer in the last six months regarding the same risk factors in the work environment and the same type of work, then the employer can send the employee for a health check at the time specified in the previously made health check resolution.
As a result of the health check of the employees and the analysis of the company's occupational health situation, the occupational health doctor must make proposals to improve the working conditions and promote the health of the employees. The amendment to the law stipulates that the employer must implement the occupational health doctor's suggestions to improve the working environment and working conditions and to promote the health of employees, if this does not imply disproportionately high costs for the employer. The employer will include the proposals in the risk analysis action plan if necessary.
In addition, the occupational health doctor has the obligation to advise the employer and the employee on matters of health promotion.
See also: Occupational Health and Safety Act
The sick leave compensation system will be extended by half a year
On December 28, the Parliament of Estonia adopted amendments to the law, according to which the system for compensating sick leave will be extended until the end of June 2023. This means that during half a year there is a procedure in which the employee's deductible for sick leave compensation is up to one day, the employer's responsibility is from the second to the fifth day, and the Health Insurance Fund's responsibility is from the sixth day of illness.
However, from July 1, 2023, the previous system of compensation for sick leave will be restored, according to which the employee is responsible for the first three days of illness, the employer is obliged to pay the employee sick leave compensation from the fourth to the eighth day, and the Health Insurance Fund starts paying benefits for incapacity for work from the ninth day. Such system was in use in Estonia until the end of 2020.
If the Parliament of Estonia had not adopted the corresponding amendments to the law, the previous system of compensation for sick leave would have been restored from January 1, 2023.
The amendments to the law adopted by the Parliament of Estonia have not yet entered into force. The exact date of entry into force is currently unknown, but the changes will enter into force on the day following publication in the Riigi Teataja. However, the adopted law states that the changes will be applied retroactively from January 1, 2023.
You can get more information about the amendments to the law adopted by the Parliament of Estonia: Law amendments adopted by the Parliament of Estonia
Donations made to help Ukraine will also be tax-free in 2023
At the Chamber's proposal, the exception in the Income Tax Act is extended by one year, according to which a resident legal entity does not have to pay income tax on donations and gifts made for the preservation of the territorial integrity and sovereignty of Ukraine and for the purposeful provision and organization of humanitarian aid. The principle still applies that these donations and gifts are exempt from income tax only if they are made to the following legal entities: Estonian Refugee Assistance, MTÜ Mondo, Ukrainian Culture Centre, National Defence Promotion Foundation, Estonian Red Cross, Rescue Association and Tallinn Old Town Rotary Club. Donations and gifts made to help Ukraine are tax-free until the end of 2023.
See also: Income Tax Act
The minimum salary increased to 725 euros
The minimum salary for full-time employment increased from 654 euros to 725 euros per month. The minimum hourly rate is 4.30 euros from January 1 (currently 3.86 euros). The increase in the minimum salary will affect more than 30,000 employees.
See also: Minimum salary for 2023
Foreigners working in Estonia for a short time can apply for a residence permit outside the quota
From January 1, foreigners can apply for a temporary residence permit for short-term work. Such residence permit can be obtained for up to two years and does not go under the immigration quota. In order to obtain a residence permit for short-term work, four conditions must be met: immediately before applying for a residence permit, the foreigner must have worked in Estonia for at least nine months based on the registration of short-term work, the foreigner's work must continue with the employer who registered the short-term work, the employer must be reliable, and the employer must have paid the foreigner for the period of short-term work salary that meets the requirements (as a rule, average Estonian salary). After the expiration of the residence permit for short-term work, a foreigner cannot apply for a new residence permit for short-term work before one year has passed. It is also not possible to extend this residence permit. A foreigner is also not allowed to work in Estonia for a short time within one year after the expiry of this residence permit.
See also: Aliens Act
The minimum social tax liability increased
From the new year, the monthly rate on which the minimum social tax obligation is based is 654 euros. This means that the employer must pay a social tax of at least 215.82 euros per month in order for the employee's social insurance to be established, even if the employee works part-time. The change concerns employees whose salary is below 654 euros. In addition, the change affects board members who want health insurance. This means that in the future the board members will have to pay 215.82 euros instead of 192.72 euros to get health insurance.
See also: State budget law of 2023
New diseases were added to the list of occupational diseases
From the new year, post-traumatic stress disorder and other diseases caused by psychosocial risk factors in the work environment were added to the list of occupational diseases. Psychosocial risk factors are, for example, work with the risk of accidents or violence, unequal treatment, bullying and harassment at work, work that does not correspond to the employee's abilities, long-term work alone and monotonous work, and other factors related to management, work organization and the work environment that can affect the employee's mental or physical health. Therefore, in the future, the occupational health doctor will be able to diagnose an occupational disease if a causal relationship between the illness and the psychosocial risk factor of the work environment has been identified.
See also: List of occupational diseases
The immigration quota decreased
The immigration quota for 2023 is 1,307, which is four fewer than last year. This is the maximum amount that the Aliens Act allows to be established at the moment.
The largest part of this year's quota is intended for work in the processing industry (600 residence permits). 200 residence permits are provided for working in the construction sector and 100 residence permits for working in the transport and storage sector. 5 residence permits have been allocated for entrepreneurship in the new year. There are 30 residence permits for sports and 19 for culture. 35 residence permits have been allocated for journalists. In addition, 5 residence permits are prescribed on the basis of a foreign agreement. Thus, from next year's quota, nearly a thousand residence permits are directed to specific areas, and 313 residence permits are freely available for distribution.
Temporary residence permits granted to citizens from third countries, which are granted for work, entrepreneurship, on the basis of a foreign agreement or on the basis of a compelling national interest, are subject to the immigration quota. As an exception, several residence permits are exempted from the quota. For example, foreigners who are granted a temporary residence permit to work in a professional position in information and communication technology, in a start-up company and as a top specialist do not go below the immigration quota.
Growth companies can hire foreigners more easily than before
From this year, several amendments to the Aliens Act will come into effect, which will allow a growth company to employ foreigners more easily than before. For example, in the future a growth company does not have to pay its foreign employee the average Estonian salary, but it is sufficient to pay 80 percent of the average Estonian salary. This distinction applies both to those foreigners who have been granted a residence permit to work in a growth company, as well as to those whose employment in a growth company is registered as short-term employment. In addition, the amendment will enter into force, according to which a fixed-term residence permit for working in a growth company is exempted from the immigration quota. Also, a permit from the unemployment fund is no longer necessary to obtain a residence permit for a foreigner working in a growth company.
A growth company is a company registered in Estonia growing its activities within the meaning of the Aliens Act, the purpose of which is the further development of such technology-based, innovative and repeatable business model with high global growth potential, which significantly contributes to the development of the Estonian business environment, and which meets the following conditions: has been operating for at least ten years, at least 50 employees work in Estonia, have paid at least one million euros in labour taxes in Estonia in the last year, and the growth of labour taxes in the last three years is 20 percent. These conditions must be met immediately before applying for a residence permit or registering for short-term employment.
See also: Aliens Act
The tax-free income of old-age pensioners can also affect employers
From January 1, a separate tax-free income in the amount of 704 euros per month began to apply to people who have reached old-age pension age. This amount does not depend on the amount of a person's income. If the pension is smaller than the average pension, the pensioner has the option of using the remaining tax-free income for salary income. For example, if the amount of the pension is 600 euros and the salary is 900 euros per month, then the Social Insurance Board calculates the income tax-free minimum of 600 euros from the pension, i.e., the entire pension is income tax-free, and the remaining income tax-free minimum (104 euros) can be used for the salary. For this purpose, the employee of old-age pension age must submit a corresponding application to the employer. The change also applies to those persons who will reach the old-age pension next year or who are of retirement age but have postponed receiving their pension.
Platforms must start reporting to the state about the revenue of service providers
From this year, amendments to the Tax Information Exchange Act entered into force, according to which platform managers became obliged to provide the state with information about natural and legal persons providing services on the platform and the income they earn through the platform. A platform is a software that allows a service provider to connect with other users to provide a service, as well as a structure for collecting and paying fees related to such activities. So, the platforms are, for example, Airbnb, Bolt, Uber and Booking.com.
The data that all platforms must start transmitting to the state are, among other things, the bank account numbers used by the platform, the place of operation of the platform and the revenues earned through the platform.
Platforms that mediate accommodation service offers are under special attention. In addition to general data, the data transmitted by these platform managers includes, among other things, data about the service providers on the platform and the accommodation spaces they offer and the number of days the accommodation space was rented out.
All the mentioned data must be submitted once a year, by January 31 of the following year. The data must be submitted for the first time no later than January 31, 2025.
Currently, the platforms do not have a reporting obligation to the state, which is why the state does not have an accurate overview of the economic activity taking place through the platforms.
See also: Tax Information Exchange Act
Additional data must be submitted to the packaging register
From this year, packaging companies and recycling organizations must submit data on the weight of each type of packaging material in the reusable packaging to the packaging register. Previously, this had to be done only with regard to single-use packaging, and with regard to reusable packaging, data is currently collected only on packaging removed from circulation. In addition, data on the average number of times a reusable packaging is used in one year must be entered in the register.
See also: Statute of the Packaging Register
The procedure for submitting data related to the employment of minors has changed
If earlier, when registering a minor between the age of 7 and 12, the employer had to enter in the register data on the consent of the legal representative of the minor, the working conditions of the minor, including the place of work and job obligations, as well as compulsory schooling, starting this year the employer must present this data to the labour inspectorate through the work environment database or in a document that allows its written reproduction.
See also: Employment Contracts Act
The fairway dues are cheaper than usual this year as well
From this year, the current support measure for maritime transport will be extended, according to which the fairway dues payable for January to December 2023 will be 37.5 percent lower for all ships arriving at an Estonian port or a roadstead of an Estonian port. The purpose of the change is to continue supporting international maritime transport through Estonian ports and to motivate shippers to direct their cargo flows through Estonian ports. This year the fairway dues were reduced by 50 percent.
See also: Maritime Safety Act
The excise duty exemption for e-liquids has ended
As of this year, there is no excise duty exemption for e-liquids. This means that from January 1, tobacco liquids will be taxed with an excise tax of 0.2 euros per millilitre of liquid. The sale of untaxed tobacco liquids that have been in free circulation outside the excise warehouse in Estonia before January 1, 2023 is allowed until January 31, 2023. In addition, the excise duty on cigarettes, smoking tobacco and solid tobacco substitutes will increase by five percent from the new year.
New sanctions against Russia came into force
On December 31 of last year, new sanctions against Russia imposed by the state of Estonia entered into force, according to which it is prohibited to import and purchase natural gas from Russia with commodity code 2711 21 00 and to provide related transmission services. It is also prohibited to import or purchase liquefied natural gas with commodity code 2711 11 00 for the purpose of entering the transmission or distribution network. The new sanctions apply to all legal entities on the territory of Estonia and to legal entities registered in Estonia also outside the territory of Estonia.
Short-term employment contracts with the unemployed can be concluded more flexibly
On December 24 of last year, an amendment to the Employment Contracts Act entered into force, which gives the employer the opportunity to conclude successive short-term employment contracts with a person registered as unemployed, without the employment contract becoming indefinite. The amendment stipulates that the duration of a short-term employment contract may be up to eight days, and such contracts may be entered into indefinitely within a period of six month. For example, an employer can conclude a short-term employment contract with an unemployed person every month for six months in a row. Fixed-term employment contracts concluded during this period do not become indefinite. If the employer and the unemployed person enter into a new fixed-term employment contract within the following six months after the end of this period, this employment contract is considered indefinite. The principle that the conclusion of a fixed-term employment contract is only allowed for a good reason arising from the temporary, fixed-term nature of the work, in particular in the case of a temporary increase in the volume of work or seasonal work, still applies.
See also: Employment Contracts Act
It is allowed to deviate from the rules of working and rest time for an employee with independent decision-making competence
Starting from December 24, 2022, an employer and an employee with independent decision-making competence are allowed to enter into an agreement that the employee is not subject to the rules arising from the Employment Contracts Act regarding compensation for night work and work performed on public holidays, organization of working hours, on-call time, limitation of night work, daily rest time, weekly rest time and shortening of working hours.
Such agreement is only allowed to be concluded with an employee with independent decision-making competence, i.e., an employee who is free to organize his/her working time based on the nature of the work. This means that such employee must have a greater opportunity to organize working hours according to his/her wishes and needs. In addition, the amendment to the law stipulates that such agreement must be in writing and signed by both parties. Such agreement must also not harm the employee's health or safety. The conclusion of the agreement is also based on the fact that the employer pays the employee at least the Estonian average salary. The law also requires that a one-month calculation period must be applied to the calculation of the working time of an employee with independent decision-making competence. The employee and the employer are also allowed to cancel such agreement, but the other party must be notified at least two weeks in advance.
See also: Employment Contracts Act
A new exception applies to the rules of on-call time
Regarding the regulation of on-call time, an exception came into effect on December 24 for an employee whose job is to ensure the consistent operation of information and communication technology services and infrastructure or information security. The Employment Contracts Act now stipulates that the employer is allowed to conclude an agreement with the above-mentioned employee in a form that enables written reproduction, for example by e-mail, that the daily and weekly rest time limit is not to be observed in the case of on-call time. However, the law contains additional points that this agreement must comply with. First, the duration of on-call time in one month must not exceed 130 hours, and the employee must be guaranteed two weekends free from work and on-call time per month. In addition, it is very important that the on-call agreement does not harm the health or safety of the employee. The parties must also agree on a reasonable response time, during which the employee is obliged to start performing work tasks. In addition, it is allowed to implement the on-call time agreement only if the employee can perform work tasks that require response during the on-call time using information and communication technology tools without appearing at the workplace. There is also a clause in the law that allows the parties to cancel the agreement at any time by giving 30 days’ notice.
See also: Employment Contracts Act
You can contact the lawyers of the Chamber of Commerce with questions about the soon-to-be-enacted legislation at the e-mail address firstname.lastname@example.org.