Trade unions contest law making annual reports publically available

In July 2008, an amended Non-Profit Associations Act came into effect, requiring trade unions and other non-profit organisations to present their annual report to a special register from 2010. This will make the trade unions’ financial situation publicly available to all persons interested, including the employer. However, the Confederation of Estonian Trade Unions claims that this will harm trade union rights and its collective bargaining position.

Changes in Non-Profit Associations Act

From 10 July 2008, a new Non-Profit Associations Act came into effect. Under the newly revised act, starting from 2010, non-profit organisations (NPOs) will have to present their annual reports to the non-profit associations and foundations register. This does not constitute a new provision for NPOs, as they already had to present their annual reports for registering. The new aspects of the act concern the fact that the annual reports will be made public, along with the provision to establish sanctions to penalise organisations that fail to register their annual report.

According to the amended act, the reports will have to be presented within six months after the end of a financial year. If the NPO fails to present the report without good reason, the process of removing the NPO from the registry of non-profit associations and foundations may be started and eventually the NPO may be liquidated.

Up until 2010, when the new provisions will come into effect, the annual reports are to be presented to the Estonian Tax and Customs Board (Maksu- ja Tolliamet, MTA), which collects and archives the reports. However, MTA does not check whether all of the NPOs follow their obligation to present reports or the actual content of the reports. In addition, the reports will not be available to the public before 2010. From this date, the reports will be collected by the registry department of court, which will also monitor the presenting and compiling of such reports. At the same time, it will be possible to make the reports public and to process them in the same way as reports of commercial undertakings and foundations.

Plans are underway to make the system of reporting available only electronically, which is why the relatively long deadline of 2010 has been set for implementing the new reporting system. Until then, it will be possible to present reports either electronically or on paper.

Trade unions strongly opposed

The trade unions are strongly opposed to the changes to the Non-Profit Associations Act, arguing that the decision to make annual reports publicly available will weaken the trade unions’ position. According to the Chair of the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL), Harri Taliga, the changes amount to a violation of freedom of association, and will weaken the trade unions’ position in representing employees.

Their main argument is that publicly available information on their financial situation, especially on the amount of money in the trade union strike fund, will enable employers to put pressure on trade unions during the collective bargaining process and weaken their position. In their opinion, the trade unions should be treated differently to other NPOs as they have different aims. The trade unions contend that the state should only be allowed to impose the current situation, whereby annual reports are presented to MTA, which is not permitted to publicise the information.

Government rejects opposition

Despite strong opposition from the trade unions, the Estonian parliament approved the changes to the act. Subsequently, the trade unions sent a letter to the country’s President, Toomas Hendrik Ilves, asking him to refuse to proclaim the act’s changes. Notwithstanding these efforts, the act finally took effect on 10 July 2008.

The Minister of Justice, Rein Lang, disagreed with the trade unions’ arguments and did not see how the amended act would jeopardise freedom of association. Minister Lang also pointed to the fact that trade union members have a right to see what their membership fees are being used for.

Commentary

Although NPOs in Estonia are obliged to present their annual reports, only 59% of the country’s 25,000 NPOs do so, according to data from MTA. Some commentators also speculate that a large number of NPOs have commercial activities, which is not permitted in the case of such organisations. However, no factual evidence of this can be obtained until the annual reports are made publicly available.

Marre Karu, PRAXIS Centre for Policy Studies