Living and working in Estonia

18 October 2017

  •   Population: 1.3 million (2017)
  •   Real GDP growth: 2.1% (2016)
  •   Unemployment rate: 6.8% (2016)

Data source: Eurostat

Eurofound provides research, data and analysis on a wide range of social and work-related topics. This information is largely comparative, but also offers country-specific information for each of the 28 EU Member States. Most information is available in English but some has been translated to facilitate access at national level.

Eurofound strives to strengthen the ongoing link between its own work and national policy debates and priorities related to quality of life and work. Increasingly important in this context is the Europe 2020 growth and jobs strategy launched in 2010, which has five headline targets, covering employment through to social inclusion and poverty reduction. The strategy is implemented in the context of the European Semester process – the EU's annual cycle of economic policy guidance and surveillance – which ensures that Member States keep their budgetary and economic policies in line with their EU commitments through, in part, National Reform Programmes. These programmes form the basis for the European Commission's proposals for country-specific recommendations (CSRs) for each Member State.

European Commission: The European Semester
European Commission: The European Semester - EU country-specific recommendations
European Commission: European Semester documents for Estonia

2015 Eurofound EWCS survey results in Estonia: 95% of people consider themselves good at their work

Survey results

 

Satisfaction with quality of life
Data source: 2012 EQLS survey

Ability to choose or change
methods of work

Data source: 2015 EWCS survey

Possibility to accumulate overtime
for days off

Data source: 2013 ECS survey

News and quarterly country updates

Eurofound contacts in Estonia

Correspondents in Estonia

Correspondents report on topics related to developments in the countries working life and inform Eurofound’s pan-European comparative analysis. Read more

Praxis Center for Policy Studies

Eurofound governing board members from Estonia

Eurofound's Governing Board represents the social partners and national governments of all Member States, as well as the European Commission. Read more

Liina Kaldmäe​ Ministry of Social Affairs of Estonia

Eve Päärendson​ Estonian Employers' Confederation (ETTK)

Kalle Kalda Confederation of Estonian Trade Unions (EAKL)

Related content

Other country-specific information may be available in certain areas on demand. Please feel free to contact your country contact at Eurofound for this or any other information at information@eurofound.europa.eu

Working life in Estonia

About

  • Author: Ingel Kadarik and Märt Masso
  • Institution: Praxis Centre for Policy Studies

This profile describes the key characteristics of working life in Estonia. It aims to complement other EurWORK research by providing the relevant background information on the structures, institutions and relevant regulations regarding working life. This includes indicators, data and regulatory systems on the following aspects: actors and institutions, collective and individual employment relations, health and well-being, pay, working time, skills and training, and equality and non-discrimination at work. The profiles are updated annually.

Key figures

Key figures

Comparative figures on working life in Estonia

 

2011

2016

% (point) change
2011–2016

Estonia

EU28

Estonia

EU28

Estonia

EU28

GDP per capita

11900

25800

13500

26900

13.4%

4.3%

Unemployment rate – total

12.3

9.7

6.8

8.5

-5.5

-1.2

Unemployment rate – women

11.6

9.8

6.1

8.7

-5.5

-1.1

Unemployment rate – men

13.1

9.6

7.4

8.4

-5.7

-1.2

Unemployment rate – youth

22.4

21.7

13.4

18.7

-9.0

-3.0

Employment rate – total

74.7

71.1

77.5

73.0

2.8

1.9

Employment rate – women

71.5

64.8

73.2

67.4

1.7

2.6

Employment rate – men

78.2

77.5

81.9

78.6

3.7

1.1

Employment rate – youth

40.0

42.5

43.3

41.6

3.3

-0.9

Source: Eurostat - Real GDP per capita (chain linked volumes [2010], in EUR) and percentage change 2011-2016 (both based on tsdec100). Unemployment rate by sex and age - annual average, % [une_rt_a]; Employment rate by sex and age - annual average, % [lfsi_emp_a].

Background

Background

Economic and labour market context

Between 2011 and 2016, Estonia’s GDP had a substantial increase of 13.4%, well above the EU average for the same period (4.3%). During this time, total unemployment decreased from 12.3% to 6.8% (a drop of 5.5 percentage points). The largest decrease was in youth unemployment (-9.0 percentage points. Employment figures for all categories increased since 2011 and were above the EU average for 2016. 

More information on:

Legal context

The Employment Contracts Act (Töölepinguseadus) regulates employment relations in the private sector and the Civil Service Act (Avaliku teenistuse seadus) governs the public sector. In 2009 the new Employment Contracts Act and in 2013 the new Civil Service Act came into effect. As of 2014, all forms of employment (paid or voluntary) must be registered in the employment register.

Industrial relations are regulated by the Trade Unions Act (Ametiühingute seadus), the Employees’ Trustee Act (Töötajate usaldusisiku seadus), the Collective Labour Dispute Resolution Act (Kollektiivse töötüli lahendamise seadus) and the Collective Agreements Act (Kollektiivlepingu seadus).

Industrial relations context

The current industrial relations system in Estonia was developed at the beginning of the 1990s. Although much has changed over the decades, only a few amendments have been made to the legislation on collective bargaining and collective dispute resolution. For example, since 2007, Estonia has had a dual channel of employee representation: employees can be represented by a trade union and/or employee trustee. In 2013 and 2014, government and social partners discussed new legislation on collective bargaining and collective dispute resolution; however, the discussions came to a standstill and the topic has not been brought up again recently.

In Estonia, collective bargaining has always been decentralised, as the collective bargaining mostly takes place at company level. At sectoral level, there are only two agreements: in transport and in healthcare. At national level, national minimum wages are usually negotiated annually (although two-year agreements were concluded in 2013 and 2015) between the Estonian Trade Union Confederation (EAKL) and the Estonian Employers’ Association (ETTK) and cultural workers minimum wage is negotiated annually between the Estonian Employees’ Unions’ Confederation (TALO) and the Ministry of Culture (Kultuuriministeerium). The latter covers all cultural employees with higher education who are working in public authorities, state-owned private foundations and public law agencies in a position of their specialty requiring higher education, but is recommended for the private sector cultural field as well.

Today, the trade union membership level in Estonia is one of the lowest in the EU.

Social dialogue in general is functioning in Estonia (that is, the social partners are involved in policy-making, are members of the supervisory bodies of the main organisations related to working life, etc); however, the social partners are not always satisfied with the level of their engagement by the government or with the extent to which their proposals are taken into account.

Actors and institutions

Actors and institutions

Trade unions, employers’ organisations and public institutions play a key role in the governance of the employment relationship, working conditions and industrial relations structures. They are interlocking parts in a multilevel system of governance that includes the European, national, sectoral, regional (provincial or local) and company levels. This section looks into the main actors and institutions and their role in Estonia.

Public authorities involved in regulating working life

The Ministry of Social Affairs (Sotsiaalministeerium) deals with employment policy in general by preparing legislation and cooperating with social partners. The Ministry also developed and maintains a database of collective agreements.

The main institution responsible for the enforcement of employees’ rights is the Labour Inspectorate (Tööinspektsioon), whose role is to supervise compliance with the requirements of legislation regulating labour relations. The Labour Inspectorate informs employees and employers, investigates serious occupational accidents and analyses their causes, and exercises supervision. The Labour Inspectorate also monitors the occupational health and safety, and puts effort into prevention. Within the local inspectorates, there are labour dispute committees which resolve individual labour disputes (pre-court mediation). Employees have also the right to turn to court when their rights have been violated.

In cases of discrimination at the workplace, a person can turn to the Gender Equality and Equal Treatment Commissioner (Soolise võrdõiguslikkuse ja võrdse kohtlemise volinik) whose role is to monitor compliance with the requirements of the Gender Equality Act and the Equal Treatment Act.

In cases of collective industrial dispute, if the parties cannot reach an agreement by negotiation, they can turn to the National Conciliator (Riiklik Lepitaja).

Representativeness

There are no specific rules regarding representativeness of social partner organisations at national level. According to the Trade Unions Act, a trade union may be founded by at least five employees and a federation of trade unions may be founded by at least five trade unions. There are no criteria for employers’ associations. Collective agreements can be extended in respect of wages, working time and rest time in the case of multi-employer agreements: that is, if the agreement is concluded between an association or a federation of employers and an association or a federation of employees or a confederation of employers and a confederation of employees.

More information on representativeness of the main social partner organisations can be found in Eurofound’s representativeness study of the cross-industry social partners or in Eurofound’s sectoral representativeness studies.

Trade unions

About trade union representation

Trade unions operate under the Trade Unions Act and the Collective Agreements Act. The first Act provides for the general rights of and bases for the activities of trade unions, and their relations with state and local government authorities and employers, while the latter determines the legal base of concluding and performing the collective agreements.

People have the right to freely found, join or not to join trade unions, except members of the Defence Forces (Kaitsevägi) who are in active service.

Both trade union membership and density have been decreasing over the last 10 years.

Trade union membership and trade union density

 

2009

2010

2011

2012

2013

2014

2015

Source

Trade union density in terms of active employees

10.7

7.65

6.80

6.41

n.a.

n.a.

7.2

2010-2012: OECD/Visser (2014), based on Visser, 1991, 1992, 1993 and 2006, Eurofound and European Social Survey (2002 and 2004 waves).

2009 and 2015: Estonian Work Life Survey

Trade union membership in 1000

51.7

39.82

37.783

36.45

n.a.

n.a.

38.1

2010-2012: OECD/Visser (2014), based on Visser, 1991, 1992, 1993 and 2006, Eurofound and European Social Survey (2002 and 2004 waves).

2009 and 2015: Estonian Work Life Survey

Note: The Estonian Work Life Survey 2009 and 2015 included only employees of economically active companies with 5 or more employees.

Main trade union confederations and federations

EAKL is the largest trade union in Estonia and the main national level trade union, also the partner in national minimum wage negotiations.

The second largest trade union organisation is Estonian Employees’ Unions’ Confederation (TALO), which mostly represents cultural workers and public servants.

Main trade union confederations and federations

Long name

Abbreviation

Members

Involved in collective bargaining?

Estonian Trade Union Confederation (Eesti Ametiühingute Keskliit)

EAKL

21,211 (2016)

Yes

Estonian Employees’ Unions’ Confederation (Teenistujate Ametiliitude Keskorganisatsioon)

TALO

Around 3,000 (since 2011)

Yes

There have no major developments in the past three years, but in 2013 the first trade union was established in the financial sector (the Union of Estonian Financial Sector Employees, EFL).

Employers’ organisations

About employers’ representation

The rights and obligations to establish or join employers’ associations are not specifically regulated in legislation. However, the Constitution (Põhiseadus) stipulates the right to freely join the associations.

In recent years, there have not been any significant changes or developments on the employers’ side and employers’ organisations density has remained stable.

Employers’ organisations - membership and density

 

2012

2013

2014

Source

Employers’ organisation density in terms of active employees

n.a.

n.a.

n.a.

Visser (2014), based on Visser, 1991, 1992, 1993 and 2006, Eurofound and European Social Survey (2002 and 2004 waves).

Employers’ organisation density in private sector establishments*

n.a.

18%

n.a.

European Company Survey, 2013

*Percentage of employees working in an establishment which is member of any employer organisation that is involved in collective bargaining.

Main employers’ organisations

The only employer organisation recognised as a national-level social partner is ETTK, which overall represents around 25% of all employees in Estonia. Its members include associations as well as enterprises. Although there are no representativeness criteria set in Estonia, ETTK is the largest employer organisation involved in collective bargaining and the only employer organisations involved in national level collective bargaining and hence it is considered to be a national-level social partner.

The biggest employer association in Estonia is the Estonian Chamber of Commerce and Industry (Eesti Kaubandus-Tööstuskoda), but it does not take part in collective bargaining, and concentrates on developing entrepreneurship and the economy as a whole.

Main employers’ organisations and confederations

Long name

Abbreviation

Members

Year

Involved in collective bargaining?

Estonian Employers’ confederation (Eesti Tööandjate Keskliit)

ETTK

114 (altogether directly and indirectly it represents around 1,500 companies)

2016

Yes

Estonian Chamber of Commerce and Industry (Eesti Kaubandus-Tööstuskoda)

ECCI

3,211

2016

No

Tripartite and bipartite bodies and concertation

The system of tripartite concertation is not specifically regulated in Estonia. Social partners take part in the consultation phase of drafting legislation. In addition to that, the social partners are members of the supervisory boards of the Estonian Health Insurance Fund (EHIF), which is responsible for managing health insurance, covering the costs of health services, paying sickness benefits and participating in the planning of healthcare; the Estonian Unemployment Insurance Fund (EUIF), which is responsible for public employment services (PES) and for implementing active labour market policies; and the Estonian Qualification Authority (EQA), which is responsible for developing the professional qualifications system in Estonia. In the EUIF, for example, they make proposals about the rate of unemployment insurance premium and approve temporary employment programmes.

The aim of tripartite concertation is to come to an agreement that satisfies all parties. Still, in recent years social partners have quite often expressed their dissatisfaction as they are not included in the political decision-making process as often as they would like, or they are included only in later stages of the process. There have also been cases where a tripartite agreement was reached but later changed unilaterally by the state, regardless of the social partners’ opinions (see recent examples: ‘Parliament ditches changes to unemployment benefit rules’ and ‘Government refuses to reduce unemployment insurance premiums’).

Main tripartite and bipartite bodies

Name

Type

Level

Issues covered

Estonian Health Insurance Fund (EHIF, Eesti Haigekassa)

Tripartite

National

Health insurance, sickness, temporary incapacity for work

Estonian Unemployment Insurance Fund (EUIF, Eesti Töötukassa)

Tripartite

National

Unemployment, permanent incapacity for work

Estonian Qualification Authority (EQA, Kutsekoda)

Tripartite

Sectoral, national

Skills, training

Workplace-level employee representation

Since 2007, Estonia has had a dual channel of employee representation – employees can be represented by a trade union and/or employee trustee. Employee representation is regulated with the Trade Unions Act and the Employees’ Trustee Act. Trade union representatives are elected from among the trade union members, and employee trustees are elected by the employees at a general meeting in the company. Both may be present in a given company at the same time; however, the trade union has the prior right to take part in collective bargaining and collective dispute resolution. If no trade union exists in the company, the trustee has the right to conclude agreements or represent employees in collective dispute resolution. Employee trustees mainly operate in the area of information and consultation procedures. Trade union representatives are also allowed to participate in this process, regardless of the presence of a general representative.

Employees are also represented by a working environment representative, who is a representative in occupational health and safety (OSH) issues: monitoring that OSH measures are implemented, participating in the investigation of an occupational accident or disease; informing employees, and so on. In a company with 10 or more employees, the employees elect one working environment representative from among themselves. If an enterprise employs fewer than 10 employees, the employer is required to consult with the employees in matters of occupational health and safety. Also, in companies with 50 or more employees, the employer has the obligation to set up a working environment council, which shall comprise an equal number of representatives designated by the employer and representatives elected by the employees (altogether at least four members). The Labour Inspectorate has the right to demand that a working environment council be set up also in a company with fewer than 50 employees depending on the hazards present and the number of occupational accidents and cases of occupational disease in the enterprise. The council analyses regularly the working conditions, participates in preparing the OSH development plan of the company and analyses occupational accidents. The rights and obligations of the working environment representative and council are stipulated in the Occupational Health and Safety Act (Töötervishoiu ja tööohutuse seadus).

Regulation, composition and competences of the bodies

 

Regulation

Composition

Competences of the body

Involved in company level collective bargaining?

Thresholds/rules when they need to be/can be set up

Trade union (Ametiühing)

Law

Employees

Yes

A trade union may be founded freely by at least five employees.

Employees’ trustee (Töötajate usaldusisik)

Law

Employees

Yes, if trade union is not present in the company

Trustees can be elected by the general meeting of the employees of the employer in case at least half of the employees participate in the meeting.

Working environment representative (Töökeskkonnavolinik)

Law

Employee

Yes, in OSH issues

Must be elected among employees in the case of companies with 10 or more employees.

Working environment council (Töökeskkonnanõukogu)

Law

Representatives of employees and employer

Yes, in OSH issues

Must be set up in the case of companies with 50 or more employees

Employee representation at establishment level

In the figure, we see a comparison between Estonia and European Union for the people with 'Establishment size : All' when asked 'Official structure of employee representation present at establishment'. For the 'Yes' answer, Estonia's score is higher than the European Union score. For the 'No' answer, Estonia's score is lower than the European Union score. The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: ECS 2013. Private sector establishments with more than 10 employees. Eurofound data visualisation.

Collective bargaining

Collective bargaining

Bargaining system

Collective bargaining in Estonia is very decentralised, and the dominant level of collective bargaining in Estonia has been and still is the enterprise level. After signing, the collective agreement becomes legally binding and is valid for one year, unless the parties agree otherwise. The only public source of official information on enterprise-level collective agreements is the collective agreements register administered by the Ministry of Social Affairs (Sotsiaalministeerium). However, the register does not include comprehensive data on all concluded collective agreements and not all collective agreements have been registered. Although the legislation obliges the parties to register the agreements, the parties do not always do so. In some sectors, sectoral-level collective agreement has been achieved, but this does not happen very often. There are only two sectoral-level collective agreements currently concluded in Estonia – one in transport and the other in healthcare (see 3.3.1). At national level, only minimum wages are negotiated. Since 1992, the national minimum wage has been agreed between social partners – bipartite meetings between Estonian Trade Union Confederation (EAKL) and Estonian Employers’ Confederation (ETTK) – and thereafter determined by government decree. Usually social partners bargain annually, although the last two agreements were negotiated biennially. Since 1999, the national monthly minimum wage has increased from €79.90 in 1999 to €470 in 2017. In addition, since 2001, there has been a national minimum wage agreement for cultural workers.

Wage bargaining coverage

Wages are usually determined in bipartite negotiations between the employer and the individual employee. According to collective agreements database analysis, collective agreements in Estonia are mostly used to determine wage conditions (93%) (Põldis and Proos, 2013).

Collective wage bargaining coverage of employees at different levels

Level

 

Source

Comments

All levels

9%

2013 – ECS

 

All levels

19%

2010 – SES

 

All levels

18.6%

2015 – Estonian Work Life Survey

Including companies with more than 5 employees. Employees self-reported coverage. However, a remarkable share of employees did not know whether they were covered with an agreement (27.6%).

Sources: Eurofound, European Company Survey 2013 (ECS), private sector companies with establishments >10 employees (NACE B-S) – multiple answers possible; Eurostat, Structure of Earnings survey, companies >10 employees (NACE B-S), single answer: more than 50% of employees covered by such an agreement. More information on methodology, see here.

According to the 2009 Work Life Survey, 32.7% of employees were covered by a collective agreement, while 5.4% said they did not know whether they were covered by a collective agreement or not. The survey also indicated that about 6% of companies had concluded a collective agreement. In 2015, the same survey showed that 18.6% of employees were covered by an agreement, while 27.6% did not know whether they were covered or not. In 2015, 3.9% of companies had concluded an agreement according to the Estonian Work Life Survey 2015. The difference in statistics (see table above) might be explained by the fact that during the economic crisis, many companies did not renew their collective agreements. Also, in 2012 an amendment in the collective agreement act allowed the unilateral ending of collective agreements. Looking at the collective agreement register data, the number of newly concluded collective agreements was 66 in 2008, decreasing to around 50 in 2010, around 40 in 2014 and 30 in 2015. However, the register does not include data on all collective agreements.

Collective bargaining coverage – national data

 

2012

2013

2014

2015

2016

Source

Sectoral level

42,500*

42,500*

42,500*

42,500*

42,500*

Põldis and Proos (2013), Database of collective agreements

National level

**560,500

**564,600

**567,900

**581,000

No data

National level minimum wage agreement, Statistics Estonia salaried employees.

* Sectoral collective agreements regulating passenger transport (covering 14,000 employees), freight transport (covering 3,500 employees), healthcare workers (covering 25,000 employees). Some of the agreements are formally expired, but according to the law, the employers and employees are required to comply with the conditions of the agreement until it is cancelled by one of the parties or until they reach a new agreement (hence a collective agreement with a specified term turns into an agreement with unspecified term).

** The statutory minimum wage applies to all employees with employment contract.

Bargaining levels

The dominant level of collective bargaining for setting pay, working time or any other issues in Estonia is the enterprise level. There are only a few sectoral and national level collective agreements.

Levels of collective bargaining 2016

 

National level (Intersectoral)

Sectoral level

Company level

 

Wages

Working time

Wages

Working time

Wages

Working time

Principal or dominant level

       

X

X

Important but not dominant level

           

Existing level

X

X

X

X

   

Articulation

National level collective agreements (minimum wage agreement) apply to all employees; sectoral level agreements (only two in Estonia) apply to all employees working in these sectors, company level agreements apply to employees of the company. Thus, the company might be covered by a sectoral level agreement, but it can still have its own collective agreement as well.

Timing of the bargaining rounds

There is no specific pattern in relation to bargaining at the sectoral and workplace level. The national minimum wage negotiations usually start in the spring in order to conclude the agreement for the following year or the following two years.

Coordination

There are no specific coordination mechanisms.

Extension mechanisms

Extended contracts may be the subject of pay, working time and holiday conditions, and concluded by the association or federation of employers’ and workers’ union or federation, or employers’ and workers’ confederation (i.e. multi-employer agreements). In practice, extended contracts are rare in Estonia. Currently there are two extended sectoral collective agreements (transport and healthcare), but only one is a private sector collective agreement. Several problems have emerged on the issues of extending collective agreements, including the lack of employers’ and employees’ associations, representativeness criteria and control mechanisms.

Derogation mechanisms

It is not possible to derogate from collective agreements. However, the Employment Contracts Act provides for derogation from some of the working time conditions set by the law on the basis of Working Time Directive 2003/88/EC.

Expiry of collective agreements

As of 1 May 2012, the Estonian Parliament passed amendments to the Collective Agreement Act, establishing the right of a party to a collective agreement to unilaterally terminate it once it had expired. Previously, the agreement would automatically remain in place until a new agreement was signed.

Other aspects of working life addressed in collective agreements

According to available information, 95% of the agreements in force at the end of the 2011 covered working conditions such as pay, annual leave, working time and skill development, and 84% covered occupational health and safety issues such as occupational health services in the company (Põldis and Proos 2013). Based on the social partners’ assessment, skill developments have been recently or are about to become the crucial topic covered in social dialogue and collective agreements. This was explained in the context of demand for skilled labour and demographic trends.

Industrial action and disputes

Industrial action and disputes

Legal aspects

Collective Labour Dispute Resolution Act (Kollektiivse töötüli lahendamise seadus) regulates industrial action types and therefore the rights of employees or associations or federations of employees to organise a strike and the right of employers or associations or federations of employers to lock out employees to resolve a labour dispute. The right to strike or lockout arises only if there is no prohibition against disruption of work in force, if conciliation procedures prescribed have been conducted but no conciliation has been achieved, if an agreement is not complied with, or if a court judgment is not executed. The organiser of a strike or a lock-out is required to notify the other party, the national conciliator and the local government of a planned strike or lock-out in writing at least two weeks in advance. In addition to strikes or lock outs, employees and their associations or federations have the right to organise warning strikes of up to one hour. Also, sympathy strikes are permitted in support of employees engaging in a strike. The duration of such strikes are decided by the parties, but may not last longer than three days. The representative, an association or a federation of employees is required to notify the employer, association or federation of employers and the local government of a planned warning strike in writing at least three days and of a planned sympathy strike in writing at least five days in advance.

Industrial action developments 2012–2016

 

2012

2013

2014

2015

2016

Source

Working days lost per 1000 employees

64

0

0

0

0

Author’s calculations

Number of strikes

2

0

0

0

0

Statistics Estonia, Strikes by economic activity (2012), authors estimation (2013–2016)

Note: Strikes are rare in Estonia. The two strikes in 2012 lasted for days and weeks. The table does not contain statistics on warning strikes (which can last up to one hour), there have been only a few such strikes during the time frame.

Dispute resolution mechanisms

Collective dispute resolution mechanisms

If the parties to a dispute cannot reach an agreement by negotiations, they can turn to the National Conciliator (Riiklik Lepitaja), who leads the conciliation process. Also, in the case of a collective labour dispute between an employer and an employee representative, they have the right to turn to a federation of employers and a federation of employees who then must establish a committee for the resolution of the dispute and notify the National Conciliator. The decision of the committee is binding on the parties of the dispute. In cases where there is a dispute arising from the performance of a collective agreement, the parties have the right of recourse to a labour dispute committee or the court for the resolution of the dispute.

If, despite these conciliation procedures, the parties still cannot conclude an agreement, strikes and lock-outs are permitted. Individual dispute resolution mechanisms

Individual labour disputes can be resolved by an agreement between the employee and the employer through the mediation of an employees’ trustee or a trade union. The parties have also the right to turn to local labour dispute committee (LDC) or to court.

LDCs are independent, extra-judicial individual labour dispute resolution bodies and their introduction was motivated by the slow handling of cases in courts. Labour dispute committees are established within the local branches of the Labour Inspectorate (Tööinspektsioon) and have three members – the chair of the labour dispute committee and representatives of employees and employers who are appointed by the Estonian Trade Union Confederation (Eesti Ametiühingute Keskliit, EAKL) and the Estonian Employers' Confederation (Eesti Tööandjate Keskliit, ETTK). Also, there is a three-tier court system in Estonia with county/city courts and administrative courts, circuit courts, and the Supreme Court.

Individual employment relations

Individual employment relations

Individual employment relations are the relationship between the individual worker and their employer. This relationship is shaped by legal regulation and by the outcomes of social partner negotiations over the terms and conditions governing the employment relationship. This section looks into the start and termination of the employment relationship and entitlements and obligations in Estonia.

Start and termination of the employment relationship

Requirements regarding an employment contract

The Employment Contracts act (Töölepinguseadus, Article 7) stipulates that as a rule an employer shall not enter into an employment contract with a minor under 15 years of age or a minor subject to the obligation to attend school, or allow such a minor to work. However, exceptionally, an employer may enter into an employment contract with a minor of 13–14 years of age or a minor of 15–16 years of age subject to the obligation to attend school and allow him or her to work if the duties are simple and do not require any major physical or mental effort (light work). Minors of 7–12 years of age are allowed to do light work in the field of culture, art, sports or advertising.

The employment contract act (Article 4) stipulates that an employment contract shall be entered into in writing. An employment contract shall also be deemed entered into if an employee commences work which, under the circumstances, can be expected to be done only for remuneration.

In 2014, changes to the Taxation Act were made, which established an employment register to address undeclared work and envelope wages, and to increase tax revenue. All forms of employment (paid or voluntary work) must be registered by the employer at the time the employee starts working. Recent developments also include debate and resolutions regarding the characteristics of an employment relationship. More specifically, it revolved around the Estonian Supreme Court decisions which supported Estonian Tax and Customs Board (EMTA) that in some cases service agreements could be considered as fraudulent schemes and should be defined as employment relationships regulated by employment contracts. The court decisions gave EMTA the right to requalify service agreements into employment contracts and to oblige the employer to declare and pay the labour taxes.

Dismissal and termination procedures

Dismissal and termination procedures are described in the Employment Contracts Act. According to the Act, parties to the contract may terminate an employment contract at any time by agreement. However, the employee must notify the employer at least 30 days in advance, while the employer must notify the employee at least 15–90 days in advance (depending on length of employment relationship).

Contracts can also be terminated extraordinarily under certain circumstances. An employee can extraordinarily terminate a contract if they are unable to perform their duties or if the employer has committed a fundamental breach of obligation to the employee. The employer can terminate the contract if there are good reasons arising from a worker’s long-term inability to perform duties or for economic reasons such as decrease in work volume, reorganisation of work or bankruptcy.

In case of collective dismissal, the employer must inform and consult with employee representative or with the employees, if they do not have a representative, and notify the EUIF.

Collective dismissal means cancellation, within 30 calendar days due to lay-off, of the employment contract of no less than:

1) 5 employees in an enterprise where the average number of employees is up to 19;

2) 10 employees in an enterprise where the average number of employees is 20–99;

3) 10% of the employees in an enterprise where the average number of employees is 100 to 299;

4) 30 employees in an enterprise where the average number of employees is at least 300.

See also further information on unemployment benefit provisions in Estonia.

Entitlements and obligations

Parental, maternity and paternity leave

This section looks into parental, maternity and paternity leave terms and conditions.

Statutory leave arrangements

Maternity leave

Maximum duration

A woman has the right to pregnancy and maternity leave of 140 calendar days. The pregnancy and maternity leave may be taken 30–70 days before the estimated date of birth (30th to 36th week of pregnancy), as determined by a doctor or midwife. If a woman starts pregnancy and maternity leave less than 30 days before the estimated date of birth, leave is shortened by the respective period.

Reimbursement

100% of average income per calendar day (maternity benefit).

Who pays?

The health insurance fund (Haigekassa, EHIF).

Legal basis

Employment Contract Act (2017), Article 59; Health Insurance Act (2017), Article 54.

Parental leave

Maximum duration

A mother or father has the right to child care leave until his or her child reaches the age of three years. Child care leave may be used by one person at a time. There is no mandatory period for fathers.

Reimbursement

The benefit shall be granted for the period of 435 days as of the date on which the right to receive the benefit arises. If the mother of the child does not have the right to receive maternity benefit, parental benefit shall be granted until the day the child attains 18 months of age. The amount of the benefit per calendar month shall be 100% of the average income per calendar month calculated on the basis of the social tax paid in the calendar year prior to the date on which the right to receive the benefit occurs.

Who pays?

State budget, social insurance tax.

Legal basis

Employment Contract Act (2017), Article 62; Family Benefits Act (2017), Division 4.

Paternity leave

Maximum duration

10 working days

Reimbursement

Paternity leave shall be remunerated on the basis of his average wages but no more than three times the average gross monthly salary in Estonia.

Who pays?

The remuneration is compensated to the employer from the state budget.

Legal basis

Employment Contract Act (2017), Article 60.

Sick leave

In case of sickness, the employee has the right to receive sickness benefit from the fourth day of illness. The first five days are paid by the employer (4th to 8th day of sickness); and from the ninth day by the EHIF. The amount of the benefit is 70% of the person’s average wage. The benefit is paid for a maximum of 182 consecutive calendar days. As of 2017, employers can compensate for (but are not obliged to) the second and the third day of sickness leave social tax free to the maximum amount of 100% of the person’s average wage.

The employment contract act (Article 88) states that an employer may extraordinarily cancel an employment contract if the employee has for a long time (four months) been unable to perform his or her duties due to his or her state of health. Before cancellation of an employment contract the employer shall offer other work to the employee, accommodate his or her work, and provide training where possible.

Retirement age

According to State Pension Insurance Act (Article 7), as a rule, the minimum formal retirement age is 65. At present, however, it is lower and varies for persons depending on when they were born up until 2026. By 2016, the retirement age for women was gradually increased from 60 to 63, hence as of 2016, the retirement age for both men and women was 63. It will continue to gradually increase to 65 by 2026 (read more about it here).

Pay

Pay

Pay: For workers, the reward for work and main source of income; for employers, a cost of production and focus of bargaining and legislation. This section looks into minimum wage setting in Estonia and guides the reader to further material on collective wage bargaining.

Minimum wages

Since 2002, the national minimum wage in Estonia is negotiated by the national social partners and then brought into effect by government decree (in 1992–2001 the minimum wage was agreed in a tripartite agreement). It is usually negotiated annually, but the last two times was negotiated biennially between EAKL and ETTK (see more here and here). According to the latest agreement, in 2016 the minimum wage was €430 and in 2017 it is €470 per month.

For more information regarding the level and development of minimum wages, please see Eurofound’s topical update on statutory minimum wage in the EU 2017 or visit Eurostat.

Collectively agreed pay outcomes

For more detailed information on the most recent outcomes in terms of collectively agreed pay, please consult Eurofound’s collectively wage bargaining portal.

Working time

Working time

Working time: ‘Any period during which the worker is working, at the employer’s disposal and carrying out his activities or duties, in accordance with national laws and/or practice’ (Directive 2003/88/EC). This section briefly summarises regulation and issues regarding working time, overtime, part-time work as well as working time flexibility in Estonia.

Working time regulation

The statutory working time regulation, including maximum working day and working week, are stipulated in the Employment Contracts Act. The statutory weekly working time in Estonia is 40 hours a week.

For more detailed information on working time (including annual leave, statutory and collectively agreed working time), please consult Eurofound’s report on Working time developments in the 21st century: Work duration and its regulation.

Overtime regulation

Overtime work is regulated by Employment Contracts act (Article 44). The regulation stipulates that an employer and employee may agree that the employee undertakes to do work over the agreed working time (overtime work). In general, overtime work shall be agreed between the parties in line with the principle of good faith. An employer may demand that an employee work overtime due to unforeseen circumstances pertaining to the enterprise or activity of the employer, in particular for prevention of damage. Also, the legislation excludes overtime work where it might be harmful for employee health.

An employer shall compensate for overtime work by time off equal to the overtime, unless it has been agreed that overtime is compensated for in money, in which case the employer should pay 1.5 times the normal hourly wage for each hour of overtime.

Part-time work

The Employment Contracts Act (Article 43) concludes that employer and employee can also agree on a shorter working time or part-time work. The exact working time is determined by individual or collective agreement. According to Eurostat LFS, the share of part-time workers in Estonia has stayed at around 9%, around 10 percentage points lower than the EU28 average, over the last decade. While the share of women in Estonia working part time is twice the share of men, the gender gap is significantly smaller compared to the EU28. While the share of men working part time in 2016 was closer to the EU28 average (6.4% vs 8.2%, respectively), the share of women working part time was considerably smaller in Estonia compared to the EU28 (12.8% vs 31.4%, respectively).

Persons employed part-time in Estonia and EU28 (% of total employment)

 

2011

2012

2013

2014

2015

2016

Total – EU28

18.2

18.6

19.0

19.0

19.0

18.9

Total – EE

9.1

9.0

8.7

8.2

9.2

9.5

Women – EU28

31.0

31.4

31.8

31.7

31.5

31.4

Women – EE

13.5

13.1

12.2

10.9

12.9

12.8

Men – EU28

7.4

7.7

8.1

8.2

8.2

8.2

Men – EE

4.9

4.9

5.3

5.6

5.7

6.4

Source: Eurostat Labour Force Survey [lfsi_pt_a] – Persons employed part-time (20 to 64 years of age) – total and by sex.

Night work

According to the Employment Contracts Act (Article 45), night work is defined as working time between 22.00 and 6.00. Night work is paid 1.25 times the employee’s wage, unless it has been agreed that the wage include remuneration for working at night. The parties may also agree on compensation for work done at night by granting additional time off.

Shift work

Shift work is not defined in Estonian legislation.

Weekend work

Weekend work is not specifically defined in Estonian legislation. The Employment Contracts Act stipulates that it is presumed that an employee works 40 hours per week, 8 hours a day, and the weekly rest time is granted on Saturday and Sunday. However, employers and employees are allowed to agree on different working time arrangements, provided that it is in compliance with the law.

Rest and breaks

Daily rest time is defined in the Employment Contracts Act (Article 51). In general, an employee is entitled to 11 hours of consecutive rest time over a period of 24 hours. Exceptions may be made in the cases specified in Council Directive 2003/88/EC. For minors, the rest time is longer (between 17 and 21 hours) depending on their age. This provision shall not be applied to healthcare professionals and welfare workers, provided that such working does not harm their health and safety.

In the case where an employee works more than 13 hours over a period of 24 hours, the employer must give the employee additional time off, immediately after the end of the working day, equal to the number of hours by which the 13 working hours were exceeded, it cannot be compensated with money.

During the working day an employee must have a break no less than 30 minutes for work longer than 6 hours.

Weekly rest time is defined in the Employment Contracts Act (Articles 52). In general, employees must have at least 48 hours of consecutive rest time over a period of seven days. In the case of calculation of the summarised working time, the rest time must be 36 hours of consecutive time over a period of seven days.

Working time flexibility

In principle, an employer and employee may agree the working hours and work schedule that best suits their interest, and the legislation only limits working time and places some restrictions on night work. However, the legislation favours employers’ discretion by stipulating that the employer has the right to establish the rules of work organisation; and that an employer may unilaterally change the organisation of working time, provided the changes arise from the needs of the employer’s enterprise and are reasonable, considering mutual interests (Article 47).

The statistics indicate that 33% of employees have at least some discretion over their working time (EWCS 2010) and in 25% of establishments more than 80% of employees may adapt the start and end of their working day to their personal needs.

Do you have fixed start and finishing time in your work?

In the figure, we see a comparison between Estonia and European Union for the workers with 'Age : All' when asked 'Do you have fixed starting and finishing times in your work?'. For the 'No' answer, Estonia's score is lower than the European Union score. For the 'Yes' answer, Estonia's score is higher than the European Union score. Data is based on question 39d from the sixth "European Working Conditions Survey (2015) The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: European Working conditions survey 2015.

Health and well-being

Health and well-being

Maintaining health and well-being should be a high priority for workers and employers alike. Health is an asset closely associated with a person’s quality of life and longevity, as well as their ability to work. A healthy economy depends on a healthy workforce: organisations can experience loss of productivity through the ill-health of their workers. This section looks into psychosocial risks and health and safety in Estonia.

Health and safety at work

The framework of the Estonian health and safety system is provided by the Occupational Health And Safety Act (for more information about the topic, see the OSHWiki page).

The number of accidents at work decreased during the economic recession at the end of the last decade, and has increased during the economic recovery. Compared to EU28/EU27, the number of working days lost per 1,000 employees is somewhat lower in Estonia. However, it has been argued that workplace accidents are underreported in Estonia and also that the administrative system encourages the rule of staying-at-work or a quick return to work, after a work accident occurred.

Accidents at work, with four days’ absence or more – working days lost

 

2008

2009

2010

2011

2012

2013

2014

All accidents

6,567

4,255

4,756

5,145

4,993

5,363

5,393

Percentage change on previous year

 

-35.2

11.8

8.2

-3.0

7.4

0.6

Per 1,000 employees

10.9

7.8

9.1

9.3

8.9

9.5

9.5

Source: Eurostat, [hsw_mi01] and [lfsa_eegaed]

Psychosocial risks

The basis of occupational health and safety policy is the Occupational Health And Safety Act that entered into force in 1999. The act stipulates that, among other things, the purpose of the act is to guarantee the psychological and social well-being of an employee. The act defines psychological hazards (Article 9) as monotonous work or work not corresponding to the abilities of an employee, poor work organisation, working alone for an extended period of time, and other similar factors that may gradually cause changes in the mental state of an employee. In order to prevent mental stress, the employer shall adapt the work to suit the employee as much as possible (for instance, allow for breaks within the working time).

It has been argued that the safety legislation covers the areas of risk factors and measures in a general way, and does not address social and subjective factors, nor the dimension of communication in the organisation (European Commission 2011, p. 7)

Compared to the EU27 average, in Estonia the share of employees working to tight deadlines, working long hours, and having been subjected to discrimination is rather comparable (taking into account the margin of error of the sample). The share of employees working more than 10 hours a day once or more in a month has decreased, although this might be due to the economic turbulence during the second half of the last decade.

Work intensity: Do you have enough time to get the job done?

In the figure, we see a comparison between Estonia and European Union for the workers with 'Age : All' when asked 'Do you have enough time to get the job done?'. For the 'Always or most of the time' answer, Estonia's score is higher than the European Union score. For the 'Rarely or never' answer, Estonia's score is lower than the European Union score. For the 'Sometimes' answer, Estonia's score is lower than the European Union score. Data is based on question 61g from the sixth European Working Conditions Survey (2015). The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: Eurofound’s European Working Conditions Survey 2015.

More detailed figures are available from Eurofound’s European Working conditions survey.

Skills, learning and employability

Skills, learning and employability

Skills are the passport to employment; the better skilled an individual, the more employable they are. Good skills also tend to secure better-quality jobs and better earnings. This section briefly summarises the Estonian system for ensuring skills and employability and looks into the extent of training.

National system for ensuring skills and employability

The institution that involves the social partners in skills and employability measures is the Estonian Qualifications Authority (Kutsekoda). The authority is developing a support structure for an occupational qualifications system to increase the competitiveness of Estonian employees and to promote the development, assessment, recognition and comparison of their occupational competence. The authority was established by the Estonian Chamber of Commerce and Industry, ETTK, the Ministry of Social Affairs, TALO, EAKL. In addition to the founders of the Authority, the Supervisory Board of the Authority includes a representative of the Ministry of Education and Research.

In 2012, a Task Force was established at the Government Office of Estonia to address and better manage the situation concerning skill needs and labour market imbalances. It was composed of officials from the Ministry of Education and Research, the Ministry of Economic Affairs and Communications, the Ministry of Social Affairs, the Ministry of Finance, the Ministry of the Interior and the Foundation Innove, The Estonian Qualifications Authority, Enterprise Estonia, the Estonian Unemployment Insurance Fund, the Association of Municipalities of Estonia, and the Association of Estonian Cities.

The OECD recommended the establishment of this type of task force in its 2011 governance report. The Task Force concluded its activities in the summer of 2014. Under the leadership of the Task Force, the coordination system of the surveillance and forecasting of the labour market and the development of skills (the OSKA system) was created.

The OSKA system creates a regular cooperation platform in order to plan the structure, volume, and the content of educational services between employers and parties offering educational services. It also combines and analyses information on the trends of the labour market and economy and forecasts labour needs. It ensures relevant regular outreach activities and supports the education system in planning the training places to take into account the professional and occupational needs in a better way. In addition, the changes taking place in the labour market will in the near future be documented through an annually updated database.

The Minister of Education and Research is responsible for implementing the system and the activity is organised by the Estonian Qualifications Authority.

At the end of 2016, the Estonian Unemployment Insurance Fund published an occupational barometer, which is a qualitative method of forecasting short-term (12 months) labour demand by occupation, and thus helps to forecast the short-term skills demand.

Training

The mission of the Ministry of Education and Research (Haridus-ja teadusministeerium) is to coordinate the education policy developments and create the conditions and prerequisites in order to ensure the lifelong learning possibilities for every Estonian citizen in an innovative and growth-oriented society.

EUIF is a quasi-governmental organisation, and a legal person in public law. The legal basis of the activities of EUIF is found in two acts: the Unemployment Insurance Act which describes the unemployment insurance system and the organisation of EUIF, and the Labour Market Services and Benefits Act, which contains the provisions concerning job mediation and related services, including labour market training, vocational training.

Training: Have you had any on the job training in the past year?

In the figure, we see a comparison between Estonia and European Union for the workers with 'Age : All' when asked 'Have you had on-the-job training in the last 12 months?'. For the 'No' answer, Estonia's score is lower than the European Union score. For the 'Yes' answer, Estonia's score is higher than the European Union score. Data is based on question 65c from the sixth "European Working Conditions Survey (2015). The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: Eurofound’s European Working Conditions Survey 2015.

More detailed figures are available from Eurofound’s European Working conditions survey.

Work organisation

Work organisation

Work organisation underpins economic and business development and has important consequences for productivity, innovation and working conditions. Eurofound research finds that some types of work organisation are associated with a better quality of work and employment. Therefore, developing or introducing different forms of work organisation are of particular interest because of the expected effects on productivity, efficiency and competitiveness of companies, as well as on workers’ working conditions. Ongoing research by Eurofound, based on EurWORK, the European Working Conditions Survey and the European Company Survey, monitors developments in work organisation.

For Estonia, the European Company Survey 2013 shows that between 2010 and 2013, 44.2% of establishments with 10 or more employees reported changes in the use of technology, 39.9% introduced changes in ways to coordinate and allocate the work to workers and 23.6% saw changes in their working time arrangements.

Work organisation: Are you able to choose or change your methods of work?

In the figure, we see a comparison between Estonia and European Union for the workers with 'Age : All' when asked 'Are you able to choose or change your methods of work?'. For the 'No' answer, Estonia's score is lower than the European Union score. For the 'Yes' answer, Estonia's score is higher than the European Union score. Data is based on question 54b from the sixth "European Working Conditions Survey (2015).The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: Eurofound’s European Working Conditions Survey 2015.

More detailed figures are available from Eurofound’s European Working Conditions Survey.

Equality and non-discrimination at work

Equality and non-discrimination at work

The Estonian constitution stipulates that everyone is equal before the law and no one shall be discriminated against on the basis of nationality, race, colour, sex, language, origin, religion, political or other opinion, property or social status, or on other grounds. On 11 December 2008, the parliament approved the Equal Treatment Act that took effect from 1 January 2009 and that ensures the protection of persons against discrimination on grounds of nationality (ethnic origin), race, colour, religion or other beliefs, age, disability or sexual orientation. The Act regulates the principles of equal treatment; the duties upon implementation and promotion of the principle of equal treatment; and resolution of discrimination disputes. According to the law, the Gender Equality and Equal Treatment Commissioner position was created, an independent and impartial expert who acts independently, monitors compliance with the requirements of this Act and the Gender Equality Act and performs other functions imposed by law. The Commissioner deals specifically with discrimination issues stipulated in the aforementioned Acts, but at the same time the Labour Inspectorate monitors compliance with the requirements of legislation regulating labour relations more generally (ensuring equal treatment for all in employment relations). Moreover, the government plans to give the Labour Inspectorate the authority to monitor the remuneration and benefits paid by employers to men and women for equal work.

Equal pay and gender pay gap

The Equal Treatment Act ensures the protection of persons against discrimination on grounds of nationality (ethnic origin), race, colour, religion or other beliefs, age, disability or sexual orientation. There is no other specific law ensuring equal pay for equal work. Information on gender pay gap has been available since 2006. The unadjusted gender pay gap has remained around 27–30% over the period 2006–2014. According to Statistics Estonia, which started to measure the gender pay gap from 2011, it was 22.9% in 2011, 24.6% in 2012, 24.8% in 2013, 23.5% in 2014 and 22.2% in 2015. The difference between Eurostat and national statistics is likely caused by different data (Estonian Enterprise Register data) and by the fact that Statistics Estonia includes small enterprises (below 10 people) and all fields of activities excluded by Eurostat such as public administration, agriculture, forestry and fishing.

The first comprehensive study on the gender pay gap was conducted in 2009–2010. It analysed the unadjusted and adjusted gender pay gap in Estonia and gave policy recommendations to reduce it. In 2014, another study on the gender wage gap was conducted.

There are no legislative support measures for addressing the gender pay gap. However, in 2012-2015, an action plan to reduce gender pay gap was in place, and measures were foreseen in five areas:

  • improving the implementation of the existing gender equality act, for instance, through improvement of the collection of statistics and awareness raising;
  • improving family, work and private life reconciliation by working with employers;
  • gender mainstreaming, especially in the fields of education and employment policies;
  • reducing gender segregation in the labour market and education;
  • analysing organisational practices and pay systems, and improving the situation where necessary.

In 2016, the national Welfare Development Plan 2016-2023 (Heaolu arengukava) was approved, which gives an overview of the main challenges, objectives and activities of labour policies, social security policies, and policies of gender equality and equal treatment in Estonia for 2016–2023. Serving as a unified strategic basis for these policies, the Plan simultaneously takes into account the needs of people, society and the economy, and the challenges arising from demographic and socioeconomic trends, international obligations and opportunities of the state. One of the objectives of the Plan is to reduce social inequality and there are several measures foreseen to tackle the gender pay gap (for example, increase the transparency of wages, analyse the pay gap, collect gender-based pay data and develop guidelines).

There are no reoccurring social partner initiatives regarding the gender pay gap, but social partners have participated in some projects (for example, a project which aimed at finding new solutions to tackle the pay gap.)

Quota regulations

There are no provisions for quotas in Estonia.

Bibliography

Bibliography

European Commission (2011), Report on the implementation of the European social partners’ framework agreement on work-related stress, Commission staff working paper, COM(2011) 241 final, Brussels.

Põldis, E. and Proos, M. (2013), Kollektiivlepingud Eestis, Teemaleht Sotsiaalministeeriumi Toimetised 1/2013, Sotsiaalministeerium, Tallinn.

Sotsiaalministeerium (2010), Eesti tööelu-uuring 2009 [Estonian Work Life Survey 2009], Sotsiaalministeeriumi toimetused nr 3/2011, Tallinn.

Useful? Interesting? Tell us what you think. Hide comments

Add new comment

Click to share this page to Facebook securely

Click to share this page to Twitter securely

Click to share this page to Google+ securely

Click to share this page to LinkedIn securely