Estonia: Temporary agency work and collective bargaining in the EU

  • Observatory: EurWORK
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  • Published on: 18 December 2008



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The temporary agency work sector is not large in Estonia with about 50 enterprises and 2,800 temporary agency workers. However, the information on temporary agency work is scarce and moslty based on qualitative research. There are no regulations specifically for the temporary agency work sector. Also there is no collective bargaining or trade union membership in the sector.

Section 1. Definitions

1) In your country, is there a statutory definition of:

a) temporary agency work?b) agency worker?c) user enterprise?

If yes, please give definitions.

No, there are no such statutory definitions. The current Employment Contracts Act has been in force since 1992 and is regarded as outdated and in need of modernisation (see for example EE0309101N and EE0405103F). At the same time, temporary agency work is a relatively new form of employment in Estonia. The temporary work agencies entered the market only after 2000, in 2004 the sector expanded with several international firms (EE0506103T). Thus there has been no statutory definition included in the labour law until now.

In 2008 a new draft Employment Contracts Act is developed (see EE0802019I and EE0805029I), which also includes definition of temporary agency work. According to the draft act, temporary agency work is work done under the management and control of a third person (user enterprise). Agency worker is, thus, a worker in this form of employment relationship. User enterprise is defined as the body under whose control the job is done and who provides job orders. However, the draft act will not take effect before 2010. Also, the Riigikogu (Estonian Parliament) has not yet discussed the act and thus the dratf may be subject to additional changes and the implementation of the act may take some further time. Also, with regard to the regulations on TAW, still many problems remain unsolved with the draft act (see Commentary below).

2) Is there a collectively agreed definition of:

a) temporary agency work?b) agency worker?c) user enterprise?

If yes, please give details (e.g. how and where defined).

No. There are no collective agreements on TAW.

3) In your country, would you describe TAW as a sector in its own right?

As the TAW is a recently developed form of employment in Estonian labour market, the number of temporary work agencies is small and there are still no specific regulations, it is not recognised as a distinct sector in practice.

At the same time, the rhetorics referres to TAW as a distinct sector. For example the Estonian Staffing Agency Association has strongly emphasised the peculiarities of the sector and the need to develop specific regulations to support the expansion and progress of the sector. Also research has been conducted on the sector and the problems that the TAW is faced (see for example Klaster, University of Tartu 2007 and Plaks et al. 2007).

Section 2. Regulatory framework

1) Have there been any changes in the law concerning TAW since 2004?

a) Yes b) No

No. TAW is not yet regulated in Estonian legislation.

2) How is TAW regulated in your country?

a) Is there a legal framework specifically for TAW; and/or is it covered by general labour law (including case law/ jurisprudence)?

There is no legal framework specifically for TAW. As at 2008 TAW is governed by the general legislation, but at the same time there are no specific regulations applied which makes the implementation of TAW more difficult (see Commentary below).

b) What is the role, if any, of collective labour agreements and self-regulation?

There are no collective agreements regulating TAW, however self-regulation has gained some importance as there are no specific regulations on TAW in general labour law. For example, in order to support the development of TAW as a sector and increase its quality, some of the Estonian enterprises providing TAW services formed the sectoral employer association (EPREL), which has also defined a moral code for the sector. It is obligatory for the members of EPREL to follow the code. Currently EPREL has six members, employing about 500 TA workers. According to the estimations on the size of the sector (Klaster, University of Tartu, 2007) this forms about 18% of the total number of TA workers. However, this estimation should be regarded with reservations as both the number of persons working in EPREL member companies and the size of the sector is based on estimations rather than administrative data (see methodological issues of research in Section 5, point 4). Still, these figures provide us some broad idea on the proportions of membership.

3) What is regulated in these provisions? In particular, does it cover:

a) use of agency work (e.g. length of assignment, sectoral bans, permitted reasons of use, number of agency workers per company, other)

Use of agency work is not regulated.

b) the form of the contract (e.g.project, fixed-term, special contract, open ended, etc.)

The form of contract is not regulated specifically for TAW. Under the framework of the general legislation employment contracts should be concluded with the agency worker (Employment Contracts Act). Service contract is concluded between the TAW agency and the user company under the framework of the Law of Obligations Act.

c) social security and social benefits

There are no specific regulations for TAW. As TA worker is employed under employment contracts, the same social security and social benefits provisions apply as for regular employees.

There is no reliable information whether TAW is a longer (more permanent) employment relationship or short-term employment with repetead periods of unemployment. In case of the latter, TA workers might not be eligible for the social benefits and the amounts of benefits may remain lower due to the lack of required length of employment.

d) conditions to open a TAW agency (e.g. license or authorisation schemes, supervision by public authorities, financial requirements, or others - please specify)

There are no conditions to open a TAW agency. Until 2006 a license was required to provide labour market services (including TAW) which was accompanied by supervision of the Ministry of Social Affairs (Sotsiaalministeerium) on service providers and was renewed every three years. This ensured that the register was up to date.

The license requirement and regulations on the supervision were lost with the adoption of the Labour Market Services and Benefits Act from 1 January 2006. Since then only registration as labour market services provider is required at the register of economic activities, however no control over the quality and legality of the service provider follows. The service provider itself will be responsible for the authenticity of the data provided in the register and the renewal of data.

e) business activities/services delivered by TW agencies (e.g. prohibition to provide other services than TAW)?

There are no such regulations on TW agencies. Most of the agencies (58%) provide other labour force mediation services as well (Klaster, University of Tartu 2007).

f) third-national companies or temporary agency workers (e.g. activities of foreign agencies)?

There are no specific regulations for TAW. The activities of third-national companies and TA workers are regulated under the same grounds as for all other foreign companies. Difference is made between EU and non-EU companies and workers- the activities of the latter are more limited (for example work permits for non-EU workers).

4) Do any regulations (by law and/or collective bargaining in the TAW sector) specify equal treatment rights for agency workers with permanent workers in the user enterprise concerning:

a) payb) trainingc) other terms or conditions of employment?

If yes, please give details.

There are no regulations that specify the equal treatment rights for agency workers. However, according to the Employment Contracts Act, it is prohibited to apply unfavourable conditions towards employees who have fixed-term contracts compared to those working under open-ended contracts, except when it is justified with objective reasons deriving from legislation or collective agreements. The definition of unfavourable conditions is not specified.

5) Do TAW workers have the right to information, consultation and representation?

If yes, please specify the nature/basis.

On the one hand, all persons working under employment contracts have the right to information, consultation and representation, including TA workers. However, this is only regulated in case of employer-employee relationship. Thus, TA workers have these rights only in relation to the TAW agency, but not to the user company.

6) Is there a control/enforcement mechanism regarding any TAW regulation?

If yes,

a) is there a special labour inspectorate or a bi-partite body governing TAW?b) are there any sanctions/penalties for not respecting the regulations (whether stemming from law and/or collective agreements)?

There is no specific control/enforcement mechanism regarding TAW; only that of general labour law apply. However, the relatively poor enforcement of labour law has been indicated by research results (see for example Eamets, Masso 2004 ) and the Estonian Trade Union Confederation (Eesti Ametiühingute Keskliit, EAKL).

The Estonian Staffing Agency Association may also be regarded as a control body regarding TAW to a certain extent as they have agreed on a moral code, which aims at keeping the quality of the TAW service and following the national regulations. The code is obligatory to its members and the penalty for not respecting the code is exclusion from the association.

7) Are there any procedures governing use of TAW and strike breaking?

In particular, can workers on strike be replaced by agency workers?

There are no such procedures defined in law or collective agreements.

Section 3. Social dialogue and collective bargaining

1) Is there any employers’ association(s) for TAW firms in your country?

If yes, please provide any data on membership (e.g. sectoral coverage of firms/workers)

Estonian Staffing Agency Association affiliates six TAW firms and about 500 TA workers. Based on the estimations of Klaster and University of Tartu (2007) on the size of the sector, the sectoral coverage of EPREL in terms of enterprises is about 12% and in terms of employees about 18% (see also Section 2, point 2b).

2) Is there any union(s) specifically for agency workers?

If no, have any unions or confederations targeted the recruitment of agency workers? launched any campaigns around agency workers’ rights?

There are no unions specifically for agency workers. Also, according to the Estonian Trade Union Confederation, they have not concentrated on the recruitment of agency workers in specific as their employment in a user company is temporary and thus they are not prone to joining trade unions of these companies.

3) Collective bargaining levels

Is TAW governed by collective bargaining at:

a) intersectoral/ national level?b) the sectoral level for TAW?c) company (ie. temporary agency firm) level?

If yes, please provide details of the parties concerned.

There is no collective bargaining in TAW sector. Also, there is no information available on the European Works Councils in the sector.

4) Collective bargaining outcomes

Please provide examples and details of any recent/ significant collective agreements governing TAW at the levels referred to in question 3.

There are no collective agreements concluded.

5) Are there any examples of sector- or company-level collective agreements in other sectors that restrict, permit or otherwise regulate the use of TAW within their domain?

There is no information on such agreements in Estonia.

6) Please provide any data concerning:

a) trade union density for agency workers

According to the estimations of the Estonian Trade Union Confederation there are no trade union members among agency workers in Estonia.

b) the coverage of collective bargaining within the sector.

There are no collective agreements in the sector.

Section 4. Employment and working conditions of TA workers

1) Please provide the most recent data (averages) on TAW employment

a) longevity of TAW employment, i.e. how long workers remain employed

- in the sector?

- with a particular agency?

There is no data on longevity of TAW employment.

b) duration of TAW placements, i.e. the length of assignment in a user company.

There is no reliable data on the duration of TAW placements.

According to Klaster and Univesity of Tartu (2007), in about half of the cases (55%), the duration of TAW placement is between two and six months. In 18% of cases the placement is from two weeks to two months and other 18% from six months up to a year. Only 9% of the contracts are concluded for longer than a year. The data is based on a web-based survey of the TAW agencies. 31 of the total of 65 companies answered (48%). However, the survey has some methodological issues (see Section 5, point 4).

2) Please provide any evidence from official, academic and social partner sources concerning:

a) the reasons for user companies’ usage of TAW, including any differences by sector, occupation, firm size etc.

The interviews with user companies revealed that the TAW is used in cases of labour shortage and need of additional staff. It is also seen as a mean of recruiting new workers as many of the temporary agency workers end up as permanent employees in the user companies. However, there is no quantitative information as to what extent this practice is prevalent among user companies. Also, due to the lack of quantitative data, it is not possible to point out any differences by sector, occupation etc. (Klaster, University of Tartu, 2007).

The information is based on the qualitative part of the survey which includes interviews with both TAW agencies and user companies. Among both groups 20 semi-structured interviews were conducted.

b) reasons for workers participation in the sector and levels of satisfaction, including any differences by age, sex, education etc.

Based on the qualitative research the authors have developed three types of temporary agency workers who have different motivations to participate in the sector:

  • Workers who want to be in a temporary employment relationship rather than being employed with an open-ended contract
  • Workers who are employed as TA workers in foreign countries for higher income. They do not have a purpose to be employed as TA workers as such, but this option has proved to be most beneficial.
  • Workers who are employed as TA workers but who want to be employed by the user company based on an employment contract. For those persons TAW is a channel of job search. This is also estimated as the largest group in the sector.

However, it should be kept in mind that the above mentioned typology is developed based on the information received from interviews with TAW agencies and user companies and the issue has not been analysed from the perspective of TA workers. Also, the Estonian Labour Force Survey does not allow the analysis of temporary agency workers due to small sample.

Source: Klaster, University of Tartu (2007). The information indicated above is based on the qualitative part of the survey (for methodology see Section 4 point 2a).

3) In practice, which rules and procedures may apply to temporary-agency workers in contrast to other workers in the user company?

Based on the interviews with the representatives of the TAW agencies (Klaster, University of Tartu 2007) some cases of differential treatment have emerged. For example, there has been exclusion of TA workers from training as their employment was only temporary. Also, there have been cases where TA workers were paid higher wage level. Still, it was pointed out based on the TAW agencies’ questionnaires that in most cases (60% of the TAW agencies) the wage level of TA workers is the same as for other workers in the company. About third of the agencies pay higher wages than is the general wage level in the user company.

Section 5. The extent and composition of TAW.

1) For 2004 and 2007, please state

a) the number of agency workers

It is estimated that in 2007 the number of agency workers is about 2,880 (Klaster, University of Tartu 2007). However, this is only estimation rather than reliable data, thus the actual number may differ to some extent. There is no data available for 2004.

b) total revenues of the TAW sector

There is no data available.

2) What proportion of the TAW workforce is currently

a) male/ female?b) full/part time?c) young (<c. 25) or older (>c. 50) workers?

There is no quantitative data available on the TAW workforce.

3) Has there been any changes to the TAW sector in terms of

a) concentration, i.e. proportion of employees or turnover accounted for by the largest firms?b) internationalisation, i.e. number/significance of multinational TAW firms?

According to the Estonian Staffing Agency Association, no such changes could be pointed out. This may be partly because the sector has emerged only recently and there has been no time for any remarkable changes. Still, the largest companies in the sector are international (based on foreign capital).

4) What is your evaluation of the availability and quality of statistical data concerning TAW in your country?

The availability and quality of statistical data on TAW is very poor in Estonia. On the one hand, Estonian Labour Force Surveys do not enable the analysis of TA workers as the number of such persons in the sample is too small to conduct reliable data analysis.

On the other hand, research by Klaster and University of Tartu (2007) has been the first attempt to collect information on the sector. However, there are some methodological issues and thus the results referred to above should be treated with caution and no fundamental conclusions should be drawn. The research concentrates on the TAW agencies and user companies. It is partly built upon quantitative data based on the web questionnaire of TAW agencies (see Section 4, point 1b) and partly on qualitative data based on interviews (see Section 4, point 2a). According to the comments of the authors, the responses to some parts of the questionnaire were of poor quality (for example incomplete answers). Methodolocial issues in case of the qualitative part of the survey have been pointed out by the Ministry of Social Affairs - not all of the interviews were conducted properly and examples are often derived from selected interviews (EE0711019I). It is also pointed out by the Estonian Staffing Agency Association that some of the interviews were conducted with companies that do not have the TAW as the main field of activity and thus they do not have strong connection to the practical part of the sector. As a result, some of the conclusions and comments are not completely relevant in terms of the TAW sector.

Commentary by the NC

The TAW sector has recently emerged and is still developing in Estonia. Even though EU-level policy documents aim at regulating the tripartite employment relationship as an increasing form of employment, the development of the sector in Estonia is still hindered by the lack of national level regulations which would encourage the supply of the TAW and use of TA workers by the user companies. At present the users and providers of TAW have encountered several problems with the implementation of such form of work as the current labour law does not consider the peculiarities of the tripartite employment relationship. For example Plaks et al (2007) have pointed out that in case a fixed-term employment contract is concluded to perform the same job for more than two times in a row, the contract is accounted for as an open-ended contract. In TAW practice a question has emerged what to regard as “same job” (whether same job tasks with one user company or the same tasks in general). The requirement of advance notice period is also controversial: according to the current law, the employer has to give a five-day notice before the end of the contract. At the same time, in TAW the contract may last for less than 5 days.

On the one hand, some provisions on TAW are included in the new draft Employment Contracts Act (definition of such form of work, obligation to inform the employee of the involvement in a tripartite employment relationship, validity and conditions of the job orders provided by the user enterprise). At the same time, most of the problems with the implementation of TAW referred above still remain unsolved. In addtition it is pointed out by the Estonian Staffing Agency Association that the quality of the sector is reduced by the fact that there are no requirements to the TAW agencies (such as a license requirement).

References:

Eamets, R., Masso, J., Labour Market Flexibility and Employment Protection Regulation in the Baltic States (in English, 216 Kb PDF), IZA Discussion Paper No 1147, May 2004.

Klaster Research Center, University of Tartu, Renditöö uuring [Temporary agency work survey (in Estonian, summary in English, 550 Kb PDF)], Estonian Ministry of Social Affairs, Tartu, 2007.

Plaks, C., Kõressaar, K., Haljasmäe, R., Koha, K. and Huberg, M., ‘Paindlikkus töösuhetes õiguslikust vaatepunktist’ [Flexibility in employment relations from the legislative point of view], in Vaher, B. and Seeder, K. (eds.), Töö ja pere: paindlik töökorraldus ja lastevanemate tööhõive, Tallinn, Estonian Employers’ Confederation, EQUAL, 2007.

Kirsti Nurmela, PRAXIS Center for Policy Studies

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