Remuneration compensation – applications can be submitted as of 1.04.2021

The Government of the Republic of Estonia has established nationwide strict restrictions as of 11.03.2021 to prevent the COVID-19 pandemic and ensure the functioning of the Estonian health care system. Due to restrictions, the economic operation of many businesses is extensively disrupted.

In order to alleviate the situation of many employers who now find themselves in financial difficulties and to ensure continued employment and payment of wages, amendments were adopted to regulation of the Government of the Republic No. 87 of 19.11.2020 Employment Program from 2021 to 2023. These amendments to the regulation entered into force on 22.03.2021.

Employers have the right to claim remuneration compensation from the Unemployment Insurance Fund if the following conditions are met:

• The employer's turnover or, in the absence thereof, income in the calendar month for which the compensation is claimed has fallen by at least 50% in comparison with: the average turnover or income in the period December 2019 through February 2020 or ​ the average turnover or income in the period July 2020 through December 2020;
• The employer applies to an employee in the calendar month for which the remuneration compensation is claimed § 35 of the Employment Contracts Act (the employer pays average wages to the employee) which results in the reduction of the working hours of the employee, or the employer has reduced wages on the basis of § 37 of the Employment Contracts Act; the employer is not the subject of compulsory dissolution, liquidation or bankruptcy proceedings;
• At the moment of submitting the application the employer has no tax arrears or they have been deferred.

The Unemployment Insurance Fund pays the employee remuneration compensation for a calendar month in the amount of up to 60% of the employee's average monthly wages but not more than 1000 euros (gross) per calendar month. The employer pays the employee at least 200 euros (gross).

  The remuneration compensation and the employer's cost-sharing must ensure at least minimum monthly wages to a full-time employee.

An employee is entitled to receive remuneration compensation for up to two calendar months from 1.03.2021 through 30.04.2021.

Remuneration compensation can be applied for an employee whose date of commencement of employment is 01.01.2021 at the latest and about whom an entry on beginning of employment has been made in the employment register on the same date at the latest.

Applications for remuneration compensation can be submitted by employers via the e-Unemployment Insurance Fund starting from April 2021.

The Legal Advisors and Accountants of Leinonen provide every kind of assistance to customers when claiming remuneration compensation, both in terms of employment law issues and submitting of applications for remuneration compensation.

Find our contacts from here.

Helen Kaur, Legal Advisor, helen.kaur@leinonen.ee