Social partners agree on content and implementation of new labour law
The social partners finally reached a tripartite agreement in April 2008 on the new Employment Contracts Act and its implementation. The draft act will now be presented to the parliament and thus may be subject to further changes. An additional agreement on the implementation of the new labour law ensures the provision of information to employers and employees on the legal changes, restructures labour market institutions and promotes lifelong learning initiatives.
In January 2008, the Ministry of Social Affairs (Sotsiaalministeerium) presented the new draft Employment Contracts Act, which was developed in order to introduce more flexibility in the Estonian labour market and thus implement the flexicurity approach. However, the draft was extensively criticised (EE0802019I).
Since then, the social partners have held negotiations in order to reach agreement on a new version of the draft act which would be acceptable to all labour market parties. Discussions were held on two levels: bipartite negotiations between the employers and trade unions, and tripartite negotiations involving the participation of the state representatives. The new version of the draft act was agreed as a result of the bipartite discussions, while an additional social partner agreement was concluded on the basis of the tripartite talks.
Consensus on draft act
In April 2008, after three months of negotiations and long disputes, the social partners finally reached an agreement on the draft Employment Contracts Act. The changes introduced in the draft act relate to, for example, redundancy benefits and advance notice periods, which have been reduced in order to implement greater flexibility in the labour market.
Furthermore, a written material liability agreement has been introduced, which defines the limits of employees’ material liability. In terms of working time, the evening is no longer categorised as unsocial hours. Compensation in case of unlawful termination of the employment contract is set, with special provisions for pregnant women and employee representatives. The social security of employees in periods of unemployment is also strengthened by increasing the unemployment benefit and widening the scope of persons eligible for this benefit. To promote lifelong learning, the duration of paid study leave is increased and the additional tax on expenses incurred by the employer on the formal education of employees is abolished.
The draft act has not yet been discussed in parliament. As the planned changes in labour law are rather broad and a large group of the electorate is set to be affected, it is expected that the discussions in parliament will be long and heated. Further to the parliamentary readings, the draft act and above provisions may be subject to some final changes.
Content of tripartite agreement
In addition to the agreement on the content of the draft Employment Contracts Act, the social partners signed another tripartite agreement on 23 April 2008 concerning the further progress and implementation of the act. The signatories included the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL), the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK), the Estonian Employees’ Unions’ Confederation (Teenistujate Ametiliitude Keskorganisatsioon, TALO), the Estonian Chamber of Commerce and Industry (Eesti Kaubandus-Tööstuskoda, EKT), the Ministry of Social Affairs and the Ministry of Justice (Justiitsministeerium).
It was agreed that the social partners will be involved in the further development of the draft Employment Contracts Act in the parliament and that the government will proceed on the basis of the social partner agreement in processing the act. Moreover, during the next stages of the act, the social partners will have to reach consensus on additional provisions for night work, that is, in cases where exceptions in night work regulations may be allowed with a collective agreement. Furthermore, the agreement sets out the future process of maintaining the employment record book, as the draft act abolishes the obligation to keep this document, which holds a person’s employment history.
With regard to the implementation of the act, the agreement stipulates that the social partners at national level will inform both employers and employees of the changes in the labour law at least six months before the new act’s implementation, and that instructive materials will be published. For that purpose, the government will allocate EEK 2 million (€127,796 as at 29 May 2008) from the European Social Fund.
Consolidation, evaluation and lifelong learning
According to the tripartite agreement, the labour market institutions will be rearranged: more specifically, the Estonian Labour Market Board (Tööturuamet) and the Estonian Unemployment Insurance Fund (Eesti Töötukassa) will be merged into one public organisation led by the state and social partners. Thus, labour market services and unemployment insurance would be provided by a single body instead of two. Due to this restructuring, unemployment insurance contributions will not increase over the level of 1.5% of wages; currently, the level stands at 0.9% – representing 0.3% for employers and 0.6% for employees.
As noted, more persons will become eligible for unemployment insurance as a result of the draft Employment Contracts Act; therefore, the agreement provides for an assessment of the new conditions in this regard three years after the implementation of the changes.
Finally, in order to support the development of lifelong learning initiatives, the social partners will develop new financing schemes in order to ensure access for individuals to adult vocational training.
Kirsti Nurmela and Marre Karu, PRAXIS Centre for Policy Studies