HR specialists do not rest in the summer i.e., what workload will the amendments to the Employment Contracts Act, taking effect on 01 August, entail?

This year has been quite interesting in terms of labour law. The second major package of amendments to the Employment Contracts Act (hereinafter the ECA) has already been adopted – the regulation, necessary for the transposition of the directive on transparent and predictable working conditions in the European Union into Estonian law will take effect from 01.08.2022.

Since the changes lead to an increase in the employer’s obligation to provide information, many employers are in a situation where they have to decide how to harmonise their company’s documentation with the changes in the law. In this article we will take a closer look at the changes coming into effect and explain the different ways of the employers for resolving the situation.

What will change?

As mentioned, the main change relates to the obligation to inform the employee about the working conditions. The current list provided in subsection 5 (1) of the ECA will be supplemented and the employee must also be informed of:

1. the institutions receiving taxes and payments and the protection arising from their payment, upon payment of remuneration;

2. the trainings offered by the employer;

3. the duration of annual leave and other holidays reimbursed by the employer;

4. the requirement of the form enabling written reproduction and the obligation to state the reasons upon cancellation of the employment contract;

5. the procedure of doing overtime and its reimbursement;

6. duration of the probationary period.

But those aren’t the only changes. As an innovation, the law includes among other things, protection against unfavourable treatment in cases where an employee relies on his or her rights or draws attention to a violation of their rights; in the case of temporary agency work, the obligation to inform the employee of the name of the user company as soon as it is known; the obligation to notify the employee of the conditions of communicating the working time schedule also of the conditions for changing it (for example, whether the employees may exchange the shifts with each other themselves) and the restriction to prohibit an employee from working with another employer without entering into an agreement on the restraint of trade clause.

How to act?

In light of the above changes, many employers are most definitely questioning how exactly to behave and what would be the most reasonable way to resolve the situation in their company in such a way that there will be no problems in August. Would it be reasonable to formalise a new version of the employment contract, to sign an amendment with all employees only on the missing information, or to regulate these issues instead of in the rules of work organisation? Let’s take a closer look at these different options.

The first option would be to formalise a new version of the employment contract. This option should be most suitable for situations where the employer has several employees employed at different times, for whom different employment contract templates have been used, or, for example, if the employees have been employed for a long time and employment contracts have not been renewed in the meantime. This solution may also be suitable for companies where many different amendments to the employment contract have been signed with the employees – duties, working hours, workload, remuneration, etc have been changed. In this case, all the changes could be summed up under one revised version, and the paperwork would be considerably simpler and clearer. Leinonen’s legal advisors, for their part, can assist in analysing whether only those provisions are missing from the employment contracts that are coming with amendments to the act or whether there is also something in the existing contract that needs to be changed. For example, case-law has emerged on the maintenance of confidentiality and restraint of trade clause, which would allow the aforementioned contracts to be written more waterproof.

The second option is to draw up an annex to the employment contract, i.e., if the current template of the employment contract complies with the act, there are no differences or problems, it is possible that the employer and the employee simply sign one annex to the employment contract, which contains all the necessary information arising from the amendment of the act.

The third option provides for the possibility of resolving the situation by renewing the rules of work organisation. Leinonen’s legal advisors, however, do not recommend this option. To be specific, the renewal of the rules of work organisation would have been an option if the wording of subsection 5 (1) of the ECA had been amended in accordance with what was planned in the draft. On this basis, the employer should have notified the employee in writing prior to employment at least of the details provided in the following list. However, since the social partners did not reach a consensus on this wording and there was no direct need arising from the directive, the existing wording of the act remained in force – the written document of the employment contract must contain at least the following information. Consequently, we recommend that you be rather conservative here and draw up renewed employment contracts or an annex for the necessary additions.

How fast should you react?

It is clear that the sooner, the better. Be sure to take the time to properly review the existing documents. Since also the summer holidays is underway, a humorous expression from the training sessions of H. Raidve is circulating that HR specialists will not rest this summer because they are formalising changes to the employment contracts.

Together with the amendment to the act, a new principle on the communication of changes in the data will also apply from 01 August. When earlier, changes in the data had to be communicated to the employee in writing within one month as of entry into force of the changes, then now the employee must be notified the latest on the day the amendment takes effect.

What happens if the employer does nothing?

All employment contracts concluded from 01.08.2022 must contain the information provided for by law. This is the obligation of the employer. If the employer has not provided the missing data to existing employees as of 01 August, the employees have the right to request this information and then the employer has two weeks to provide the information. Upon violation of its obligations, the employer may face a dispute or a fine, which in the case of a legal person may amount to 32,000 euros.

In conclusion, Leinonen’s legal advisors recommend that employers make an inventory in their employment contract documentation — whether and what is there? Would it be wiser to do a decent clean-up? Would it be necessary to make a simple correction of blemishes? Or keep your fingers crossed and hope that perhaps nothing will happen?

Leinonen’s legal advisors can assist you in introducing these changes and additions, and we will certainly find the most proper personalised approach for your business. This way, your HR specialists will also be able to rest in the summer.

Author:               Keiu Rebane

Position:             Legal Advisor


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