New law on collective bargaining and dispute resolution

New industrial relations legislation has been under discussion by Estonia’s Ministry of Social Affairs and the social partners since the beginning of 2013. The aim is to create a legal framework for the negotiation of collective agreements and for dispute resolution which takes into account the current socio-economic circumstances. The reforms will also make Estonian industrial relations law clearer and consistent with existing domestic and international legislation.


During the Soviet era, collective representation and bargaining as it is understood today did not exist in Estonia, even though the majority of workers were union members.

Estonia’s modern industrial relations system had to be built from scratch including circumventing and enforcing legislation on collective bargaining and collective dispute resolution in 1993.

There have been few amendments to the legislation passed in 1993, even though much has changed in employment relations, in the labour market, in the economy, and in individual employment law.

Early in 2013 the government began to discuss new legislation on collective bargaining and collective dispute resolution with the social partners.

Major changes

The legislative reform will create a framework for the negotiation of collective agreements between employers and employees. Currently, the regulation also covers civil servants, but the recent 2013 civil service reforms and the current reforms propose amendments to civil servants’ terms of service and collective bargaining.

The most significant changes cover:

  • the extension of collective agreements;
  • rights disputes;
  • interest disputes;
  • peace obligations – agreements not to resort to industrial action, usually during a period when a valid collective agreement is in force.

Extension of collective agreements

The current legislation provides that conditions of pay, work and rest time can be extended to other employers in the economic sector.

The new amendment will make it possible to extend agreed leave entitlements to other employers. The principles of extension are set out in more detail because current legislation only states that agreements can be extended. In common with international practice, the new draft law proposes that the right to extend a contract will be based on the representativeness of the parties. If the parties are not representative, the parties representing the minority party may extend the agreement after the employers’ and employees’ confederation have approved it in advance. The new law will also specify in detail principles of informing and consulting third parties about extension that are not regulated currently.

Rights disputes

Under current law, a rights dispute about the application of an agreement must be referred to a labour dispute committee (an extra-judicial independent body that includes representatives of employees and employers), or to a court.

The new law will propose resolution of rights disputes by an arbitration court to speed up the process.

Interest disputes

The new law will clarify the regulation of interest dispute resolution by employers’ and employees’ associations, or through confederation and conciliation procedures with the National Conciliator.

The most crucial addition to the current law will be the resolution of disputes with employees who do not have the right to strike, such as rescue workers and defence personnel, by a special committee. This compulsory arbitration will compensate them for the restriction on their freedom to take industrial action. The special committee will be made up of two employers’ representatives, two union representatives and the National Conciliator, and its decisions will be made by a simple majority vote.

Peace obligation

The new draft legislation makes it clear that parties can agree to complete peace obligations, restricting rights to take industrial action, as well as the selective peace obligations allowed for by current legislation. Such peace obligations will prevent unions organising a strike or employers imposing a lockout in order to force the other side to concede on whatever working condition is in dispute.

The regulation regarding essential services will be specified, so that it would not depend on whether parties come to an agreement or not upon the minimum extent of the services that eliminate the risk to people’s health, the environment and the high risk of disproportionate interference with the public interest, as set by the current legislation.

A special tripartite essential services commission, made up of an employers’ representative, a union representative and a representative of the relevant government ministry will be set up. In cases where the commission does not have a quorum or does not reach an agreement based on a simple majority vote, the relevant government ministry will decide which are the essential services that must be kept running during any dispute.


The Ministry of Social Affairs (Sotsiaalministeerium) started negotiations with the social partners over industrial relation reform at the beginning of 2013.

So far, the social partners and the government have been in dialogue and the various parties have made their proposals and expressed their opinions.

During the coming months, the legislation will be debated in parliament. It remains to be seen what changes will be publicly debated by the interest groups, including the social partners.

The government anticipates that the new legislation will come into force on 1 January 2015.

Märt Masso, Praxis Center for Policy Studies

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