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TERMINATING AN EMPLOYMENT CONTRACT

More information is available online at www.sm.ee

A working relationship can be terminated with the agreement of both parties, upon the expiry of its term, if the employee makes such a request or on the initiative of the employer. Sometimes employment can be terminated because of a conflict between the parties, but in such cases the parties must act reasonably, fairly and in good faith so as to maintain good relations and remain within the law. Both employees and employers will find it easier to terminate a contract if they are aware of and fulfil their rights and obligations.

TERMINATING AN EMPLOYMENT CONTRACT

· Employees and employers can terminate an employment contract at any time with the agreement of both parties. In order to avoid claims and counterclaims at a later stage, the termination of the employment contract should be drawn up in writing. · An employment contract can be cancelled by either the employee or the employer. · An employment contract can come to an end upon the expiry of its term. In this case there is no need for advance notice. WHAT SHOULD BE TAKEN INTO ACCOUNT WHEN TERMINATING AN EMPLOYMENT CONTRACT ENTERED INTO FOR A SPECIFIED TERM? · If there is no justification for the specified term of an employment contract, it is considered to be an employment contract entered into for an unspecified term. (Justification in such a case would be the temporary nature of the work.)

· If an employee continues to work after the end date of a contract, it is considered to be an employment contract entered into for an unspecified term.

CANCELLING AN EMPLOYMENT CONTRACT

HOW CAN AN EMPLOYMENT CONTRACT BE CANCELLED DURING THE TRIAL PERIOD? · Both employees and employers have the right to cancel an employment contract during the 4-month probationary period by informing the other party of their intention to do so 15 calendar days in advance. · The employer must justify the cancellation of the contract during the probationary period, i.e. give reasons as to why the employee is not suited to the work in question. In providing this justification the employer must explain why the employee does not meet the requirements of the work in terms of health, knowledge, skills, abilities or personal qualities. · The employee is not obliged to justify their cancellation of the employment contract during the probationary period.

ORDINARY AND EXTRAORDINARY CANCELLATION

Employment contracts may be cancelled ordinarily or extraordinarily. · Ordinary cancellations do not need to be justified. · Extraordinary cancellations must always be justified.

An employment contract can only be ordinarily cancelled by the employee. The employer does not have the right to cancel an employment contract ordinarily. The employer may cancel the employment contract extraordinarily if they are justified in doing so.

CANCELLATION OF AN EMPLOYMENT CONTRACT BY THE EMPLOYEE

ORDINARY CANCELLATION BY THE EMPLOYEE · Ordinary cancellations do not need to be justified. · Employees may ordinarily cancel employment contracts entered into for an unspecified term. · Employees may only ordinarily cancel employment contracts entered into for a specified period in the case of contracts for the replacement of another employee. · Employees may ordinarily cancel employment contracts: · by submitting an application to do so in writing (signed by their own hand or digitally) or in a form that is able to be reproduced (e.g. e-mail or fax); and · with at least 30 calendar days' notice. · If an employee gives fewer than 30 calendar days' notice of cancellation,

the employer is entitled to demand that the employee compensate them for the number of days' difference. The amount of compensation is the average wages of the employee per day. EXTRAORDINARY CANCELLATION BY THE EMPLOYEE · An employee may extraordinarily cancel an employment contract entered into for a specified or unspecified period: · if they are justified in doing so; and · within a reasonable time of becoming aware of the circumstances forming the basis for the cancellation of the contract. · In the case of extraordinary cancellation the employee is not required to provide 30 calendar days' notice. What is considered to be sufficient justification for extraordinary cancellation? · Sufficient justification for the cancellation of an employment contract includes situations in which: · the employer has treated the employee in a demeaning manner; · there has been a significant delay in payment of wages by the employer; · continuing to work would be hazardous to the employee's health; · the employee's ability to work is hindered by the state of their health; and

· the employee is unable to continuing working due to family obligations, such as raising a child or taking care of their parents. · These examples do not exclude the cancellation of an employment contract for other reasons. · If an employee cancels their employment contract because their employer has fundamentally breached the contract, the employer must pay the employee compensation equivalent to three months' average wages. A court or labour dispute committee may amend the amount of compensation payable.

CANCELLATION OF AN EMPLOYMENT CONTRACT BY THE EMPLOYER

· An employer may extraordinarily cancel an employment contract entered into for a specified or unspecified period: ·if the justification they have for doing so arises directly from the employee or from the prevailing financial situation; and · by submitting notification of doing so in writing (signed by their own hand or digitally) or in a form that is able to be reproduced (e.g. e-mail or fax). The notification must set out the justification for cancelling the contract.

Prohibition on the cancellation of an employment contract · An employer may not cancel an employment contract because the employee is: · pregnant or is entitled to pregnancy and maternity leave; · fulfilling family obligations (e.g. raising a child or caring for their parents); · sick or injured; · representing other employees; or · completing military or alternative service. Further restriction upon the cancellation of an employment contract · The Employment Contract Act states that the cancellation of the employment contract of an employee who is pregnant, raising a child younger than 3 years of age or representing other employees is against the law. The employer must prove that there was a legal basis for the cancellation of the contract (e.g. a breach of duties on the part of the employee). Advance notice required in the event of cancellation by employer · The employer must provide the employee with the following notice, depending on the length of time the employee has been working for them: · less than 1 year of employment ­ at least 15 calendar days;

· 1-5 years of employment ­ at least 30 calendar days; · 5-10 years of employment ­ at least 60 calendar days; · 10 or more years of employment ­ at least 90 calendar days. · Theemployerisnotrequiredtoadhere to these periods of advance notice if the employee in question has breached their duties to such an extent that they cannot reasonably demand that the employer persist with the employment contract. · During the period of advance notice the employer must provide the employee with free time to look for a new job. · If the period of advance notice which the employer gives the employee of the cancellation of the employment contract is shorter than that required, the employer must compensate the employee for the number of days' difference. The amount of compensation is the average wages of the employee per day. Cancellation of an employment contract for reasons related to the employee · An employer may cancel an employment contract for reasons related to the employee if the employee: · cannot continue working due to the state of their health; · cannot cope with their duties due to insufficient knowledge or skills;

· ignores the instructions issued by the employer; · comes to work in a state of inebriation; · steals from or otherwise defrauds the employer or other employees; or · causes damage to the employer's property. · These examples do not exclude the cancellation of an employment contract for other reasons. · The employer must offer an employee other work, including (if required) organising in-service training, amending working conditions and adapting the work place, if they cancel the employment contract for the reason that the employee: · cannot continue working due to the state of their health; or · cannot cope with their duties due to insufficient knowledge or skills. · The employer may cancel an employment contract: · within a reasonable time of becoming aware of the circumstances forming the basis for the cancellation of the contract, such as a breach of duty; and ·provided that the employee has been issued with a warning. A warning does not have to be issued if an employee significantly breaches their duties.

Cancellation of an employment contract for economic reasons, a.k.a. redundancy · An employer may cancel an employment contract extraordinarily if an employee is being made redundant. · Redundancy is when an employer is no longer able to provide an employee with work under the originally agreed terms and conditions. Such work can come to an end because of a reduction in demand, the reorganisation of the work or the employer being declared bankrupt. · Prior to making an employee redundant the employer must: · offer the employee other work (except in the case of bankruptcy); and · enable the employee to undertake inservice training, if required, or amend their working conditions. · In making employees redundant, those who should be made redundant last are the representative of the employees and any employees who are raising children younger than 3 years of age. · Employers may not make the following employees redundant: · pregnant employees; · employees who are entitled to pregnancy and maternity leave; and · employees who are on parental leave or adoptive parents leave.

· In the case of a contract entered into for an unspecified period, an employer must pay an employee who is being made redundant compensation equivalent to one month's average wages. · In the case of a contract entered into for a specified period, an employer must pay an employee who is being made redundant compensation equivalent to the remaining wages that would otherwise have been paid up to the end date of the contract. · In addition to the redundancy payment made by the employer, the employee is also entitled to an unemployment insurance benefit as part of the redundancy procedure. The amount of the benefit, which is paid by the Unemployment Insurance Fund, depends on the length of time the employee worked for the employer: · 5-10 years of employment ­ 1 month's average wages; or · 10 or more years of employment ­ 2 month's average wages. · The employer applies for the insurance benefit from the Unemployment Insurance Fund as part of the redundancy procedure.

LEGAL ACTS RELEVANT TO THE TERMINATION OF EMPLOYMENT CONTRACTS www.riigiteataja.ee:

· Employment Contracts Act

Gonsiori 29, 15027 Tallinn E-mail: [email protected] / Telephone: +372 626 9301

Further information: Ministry of Social Affairs www.sm.ee

Gonsiori 29, 15027 Tallinn E-mail: [email protected] / Telephone: +372 626 9400 Legal information hotline: +372 640 6000 (Mon­Fri 10:00 am­3:00 pm)

Labour Inspectorate

www.ti.ee

European Union European Social Fund

For the future of Estonia

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