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Employment relationships

Employees and employers must respect mutual rights and obligations in employment relationships, which are established by the contract of employment, the collective agreement, and the Employment Contracts Act.

Collective labour relations

Collective agreement

A collective agreement is a voluntary agreement between employees and the employer, which can be used to determine the majority of the working conditions of employees. The conclusion, validity, termination and content of a collective agreement are governed by the Collective Agreements Act.

The terms of remuneration and working and rest time contained in the Collective Agreements Act can also be extended to employers and employees who are not parties to the collective agreement. The extension of a condition of a collective agreement may be agreed by:

(1) a federation of trade unions or an industry trade union whose members account for 15 per cent of the employees in that industry or who have at least 500 members, and

2) an association or federation of employers whose members employ at least 40 per cent of the corresponding industry’s employees covered by the extended condition of the collective agreement.

Before the extension of the condition of a collective agreement, the negotiating parties have an obligation to publicly inform all of those employees and employers in regards to whom the extension is being sought. In the process of informing, the particular condition and to whom and from what time the extension is desired must be communicated. Those employees and employers must also be consulted prior to the expansion, or, if they wish, be involved in the negotiations. The proper conduct of information and consultation and compliance with the representative criterion shall be monitored by representatives from the Estonian Employers’ Confederation and the Estonian Trade Union Confederation together with the Minister. Once the extension agreement has been properly concluded, the condition of the extended contract shall be published in the electronic journal Official Announcements. The extended condition of a collective agreement takes effect after the passing of three months from its publication, unless the parties agree on a later date of entry into force Registration of collective agreements in the Estonian Collective Agreements Register: the representative of employees must, within 15 working days of the entry into, modification or termination of the collective agreement, digitally submit the collective agreement, its amendments or termination agreement to the Ministry of Social Affairs  for registration in the relevant register.

Framework agreement

A framework agreement is one type of agreement concluded between social partners at the European Union level. The legal bases for framework agreements are Articles 154 and 155 of the Treaty on the Functioning of the European Union (PDF). Information on the implementation in Estonia of framework agreements that have not been transposed into  Estonian law under the Directive can be obtained from the Estonian Trade Union Confederation and the Estonian Employers’ Confederation. 

More detailed information on collective agreements can be found in the Working Life Portal.

Collective labour dispute

A collective labour dispute is a dispute having arisen between the employer (their federation) and the employees (their association or federation, i.e. trade union or federation of trade unions) concerning the conclusion and implementation of a collective agreement and the establishment of new working conditions. A collective labour dispute can therefore arise either over interests (conclusion of a collective agreement and the establishment of new working conditions) or rights (implementing a collective agreement and interpreting its terms). More detailed information about collective labour disputes can be found in the Working Life Portal.

Estonian and international labour law recognises the need for employee representation in order to increase the quality of employment relationships. There are four types of employee representatives in Estonia: trustee of employees, trade union, working environment representatives, and representatives of employees at community-scale undertakings. More detailed information about collective labour disputes can be found in the Working Life Portal.

Individual employment relationships

The Employment Contracts Act  brings together the entire body of rules governing the individual employment relationship, which includes both the conclusion and termination of the contract of employment, working and rest time conditions, leave, and the regulation governing remuneration. The law favours employee and employer partnerships and directs the parties to enter into more mutual agreements.

A contract of employment is an agreement between the employee and the employer, according to which the employee undertakes to work for the employer, subject to its management and control, while the employer undertakes to pay the employee remuneration for work performed and to ensure the working conditions prescribed to the employee by an agreement between the parties, a collective agreement, the law, or an administrative act. The employer must comply with the requirements for working and rest time and ensure a safe working environment for the employee. Under the contract of employment, the employee has the right to annual leave.

The contract of employment is concluded in writing in duplicate, with one copy remaining with the employee and the other with the employer. If necessary, the contract of employment shall be concluded either indefinitely or for a fixed period. A fixed-term contract of employment is concluded, for example, to perform seasonal work or to replace someone.

As a general rule, the essential conditions to be agreed upon in a contract of employment are remuneration, working hours, tasks to be performed, place of work, etc. The law lays down the conditions which the employer must notify the employee of in writing prior to starting work. The employer must inform the employee about the conditions in the contract of employment or in the document accompanying it. The employer must provide the employee with at least the following information in writing:

  • name of the employer and the employee;

  • registry or personal identification code; residence or seat;

  • time of conclusion of the contract of employment and the date of commencement of work by the employee;

  • a description of the duties;

  • time of payment of remuneration (pay day);

  • working hours;

  • the place where the work is done;

  • duration of holiday;

  • deadlines for providing advance notice of the expiry of the contract of employment;

  • work organisation rules;

  • a valid collective agreement.

The employment contract may end:

  • by agreement of the parties to the contract of employment
  • after the expiry of the term
  • upon the death of an employee or an employer who is a natural person,
  •  upon cancellation.

The employee and the employer may at any time terminate the contract of employment by agreement between the parties. The contract of employment may be terminated unilaterally by means of a declaration of cancellation in a format that can be reproduced in writing (e.g. by e-mail or message). The employer may cancel an employment contract entered into for an unspecified term and an employment contract entered into for a specified term extraordinarily and only with good reason. An application for extraordinary cancellation of an employment contract must include a reason. The employer must always justify the cancellation, but the employee must only justify the extraordinary cancellation.

The employer must give an employee advance notice of extraordinary cancellation of the employment contract if the employee’s employment relationship with the employer has lasted:

  • less than one year of employment – no less than 15 calendar days
  • one to five years of employment – no less than 30 calendar days
  • five to ten years of employment – no less than 60 calendar days
  • ten and more years of employment – no less than 90 calendar days.

The employee can cancel the contract of employment ordinarily or extraordinarily. In addition, the employee has the opportunity at any time to make a proposal to the employer for termination of the contract of employment by agreement between the parties. An employee may cancel a contract of employment entered into for an unspecified term at any time, i.e. the employee is not required to have a basis for extraordinary cancellation. An employee may only cancel a contract of employment on an extraordinary basis if there is a good reason for doing so.

The employee must give advance notice of the cancellation of the employment contract as follows:

  • cancellation during the probationary period – 15 calendar days
  • willing cancellation after the probationary period – 30 calendar days
  • in case of extraordinary cancellation, the employee does not have to comply with notice periods if, taking into account all the circumstances and mutual interest, it is not possible to continue the contract.

More detailed information on the entry into and termination of contracts of employment, working and rest time, remuneration and other topics related to employment relations can be found in the Working Life Portal.

Last updated: 04.08.2023