Estonia: Government to strengthen role of labour dispute committees

Estonia is in the process of renewing several labour regulations. The Ministry of Social Affairs announced its intention in July 2014 to develop a new Individual Dispute Resolution Act. The aim is to remove the limitations present in the existing act by improving the quality and efficiency of labour dispute committees by increasing their role and capacity.

Background

In 2014, labour dispute committees (LDCs) received 349 claims from employers and 2,616 from employees. Those from employers were mainly related to cancelled employment contracts (125 claims), compensation for damage (95 claims) and compensation claims for invalid advance notice of cancellation by employees (93 claims). Most employees’ claims were related to wage payments (1,113), with half of the claims about delays in the final settlement of wages.

Need for change

The main reason why reform of the legislation on collective agreements and collective dispute resolution is necessary is because research has shown up significant loopholes which are hampering its implementation. The Ministry of Social Affairs has tried to address these problems in a new Individual Dispute Resolution Act. In July 2014, it wrote to the other ministries to inform them of its intention to use this new act to improve the quality and efficiency of labour dispute committees by increasing their role and capacity.

Main problems

Labour dispute committees use different procedural rules to resolve disputes. At present, civil court provisions which cover stipulations in the Individual Dispute Resolution Act should be applied to dispute resolution. But where there are no specific stipulations in the act on how to deal with a particular issue, LDCs have applied rules from other courts. However, Estonia’s Supreme Court has sometimes taken a different view and the Ministry of Social Affairs hopes that the new act will develop a common understanding of the procedural rules that should be used to resolve a dispute. 

Another issue that needs attention, according to Ministry of Social Affairs, is the definition of an individual labour dispute and its scope. According to current legislation, an individual labour dispute is a private dispute between an employer and an employee over the terms of an employment contract. While some obligations of employers and employees are regulated via other laws (for example, the Occupational Health and Safety Act), LDCs can only accept and process disputes covered by the employment contracts act, or those which occur during the preparation phase of an employment contract. According to the ministry, the new act should specify the scope of labour disputes and cover other issues such as:

  • occupational accidents and illness-related compensation claims;
  • claims related to missing unemployment insurance and redundancy benefits;
  • labour disputes where the employee is working abroad;
  • disputes regarding claims related to remote working.

One major obstacle which the ministry hopes to overcome is the fact that LDCs do not have the right to demand documentary evidence related to a claim if an employee or employer refuses to disclose it. 

The new act would also clearly define the maximum amount of a financial claim. While the current law states that LDCs cannot resolve disputes involving financial claims exceeding €10,000, the ministry wants them to regulate situations where it becomes necessary to merge different claims that, in total, exceed this amount.

It is also proposed to extend the time for hearing an application from 30 to 45 days. LDC members say neither they nor the parties involved currently have enough time to prepare for the hearing, with the added pressures on a committee to organise the hearing and make its decision within the specified timeframe. 

The new act would also address such issues as agreeing a compromise and how an employee working abroad should apply to an LDC. The current legislation does not regulate the use of compromise as a possible dispute resolution measure. Despite that, LDCs have ended disputes by negotiating a compromise if this has been requested by both parties. But as such action is not regulated by law, it can potentially cause additional disputes. The Ministry of Social Affairs argues that, as the aim of the LDCs is to ensure a fast and efficient resolution, it is necessary to include provisions for compromise in the new act. The issue of employees who work for an Estonian employer but work abroad has arisen only recently and is not therefore regulated in the current act.

The new act also seeks to make LDC procedures clearer including those regarding:

  • the refusal of applications;
  • the termination of proceedings and the withdrawal of applications;
  • delivery of proceedings documents;
  • filing of counter-claims and merging claims;
  • a formula for recognising dissenting opinion among LDC members;
  • announcement and delivery of the LDC's decision.

Commentary

The general debate over the new Individual Labour Dispute Act is yet to begin. The Ministry of Finance and the Ministry of Justice have responded to the letter of intention from the Ministry of Social Affairs, agreeing that new regulation is necessary. The social partners have not yet commented.

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