Freedom of Contract in Labour Relations
| Author | Gaabriel Tavits |
| Position | Lecturer of Labour and Social Welfare Law |
| Pages | 179-188 |
Page 179
Different countries have different approaches towards labour law and its position in the legal system. In this respect, no common standpoint has been reached to date. Before 1940, the prevalent approach in the Republic of Estonia was that labour law was a part of public law (1, p. 143). However these days, opinions to the effect that labour law belongs neither to public nor private law but is somewhere on the line between the two are also rather widespread (9, p. 38). It has been claimed that labour law is a special part of private law while the third standpoint placing labour law under a branch of private law, civil law, is not rare either (2, pp. 30-32).
Speaking about the current legal system in Estonia, the previously mentioned three approaches on the position of labour law within the domains of private and public law are prevailing. These approaches are new for Estonian labour law as during the Soviet era the classification of law into private and public was actually something that was irrelevant. There was no such thing as classification of law into two major areas: private and public law. The legal system at that time comprised individual great branches such as civil law, labour law, constitutional law, penal law, etc. In treatment of labour law, the emphasis was primarily on its relationship with civil and administrative law.
Recognition of two major branches of law within the legal system was bound to lead to the question about what areas are included in public and what in private law. Traditionally, labour law has been an area which, by the content of its norms, is not directly classifiable under public or private law. The approaches commonplace in several countries can serve as examples to the effect that labour law belongs both to private and public law. There is no clear-cut answer to the question about which norms are more abundant in labour law. It is said that as a labour relationship involves private law elements (employment contract) while restrictions on it are prescribed by public law provisions, it is not possible to employ a uniform classification (9, p. 38).
According to the current approach in Estonia, labour law is considered to form a part of private law with certain reservations - it is called a special area of private law or a specialised private law (11). Such an approach is conditioned by the fact that a labour relationship is formed on the basis of a contract in private law - employment contract - and consequently the private law element is present one way or another. However, as different acts prescribe different minimum requirements for the parties to the labour relationship and as the parties cannot agree on conditions worse than those minimum requirements, labour law has been attributed a special status within private law.
In Estonia, employment contracts became important in the context of shaping labour relations after the adoption of the Employment Contracts Act back in 1992. Before that employees were hired on the basis of ordinances which, in essence, were administrative instruments. Such a method of hire was possible as the employers were state-owned companies and all the working conditions were virtually provided for by law. In a new economic situation it is however necessary for the parties to be able to negotiate the working conditions and freely enter into a contract. The State imposes just the minimum requirements. This demonstrates a principle of labour law according to which the State provides legal regulation of labour relations insofar as this is necessary to guarantee the co-operation of the subjects of the labour relationship based on social partnership and to protect the interests of employees who are, eco-Page 180nomically, the weaker party (8, p. 13).
Matters connected with freedom of contract in labour relations are important in the Estonian context because according to the plans for the reform of the Estonian private law, employment contracts will become a part of the contracts in the law of obligations. Consequently, the application of the general principles of contract law will become directly relevant for employment contracts. It is, however, disputable whether the principles of the freedom of contract and private autonomy should at all times be applicable to employment contracts. At the same time, it can be claimed that although different laws restrict freedom of contract in labour relations, it nevertheless exists.
The existence of employment contracts is necessary in order to determine the scope of labour laws. Notwithstanding our point of departure in defining the scope of labour laws: be it the characteristic features of employees or of the employment contract, the voluntariness of working and the existence of an employment contract in private law are the features important in defining labour relations. Therefore, it is important to pay attention to freedom of contract in labour relations. Voluntariness of working is expressed by the existence of an employment contract. An employment contract is a transaction that involves two parties. What is important in a transaction is the will of a person as it is expressed. An expression of will, however, must concur with the actual and freely developed will of the person over time. The previously mentioned principles, used in civil law, are applicable in labour law too. The existence or non-existence of an employment contract is reducible primarily to the problem of whether the person who performs the work is an employee or not. An employment contract, which is the expression of the voluntariness of work performance, has the features characteristic of a contract. One such characteristic feature is, e.g., the written form of employment contract prescribed by § 28 of the Employment Contracts Act.
Labour relationships built on private autonomy are the focal point of the entire labour law. At the same time, the individual right of self-determination is restricted in labour law while it is complemented by the autonomy of undertakings and collective agreements. The decisive starting point, however, is the employment contract in which the parties have agreed. The set of problems related to private autonomy in employment contract law is therefore the decisive issue for the entire labour law.
Private autonomy is understood as a possibility, granted to an individual via the legal system, to regulate his or her legal relations by concluding transactions under law (3, p. 532). Private autonomy means that an individual must be able to shape his or her legal relations by way of self- determination and self-responsibility. The legal order must grant him or her maximum freedom in this realm of private life (7, p. 91). In a legal order built on private autonomy, contracts are an important tool in achieving the satisfaction of the needs of a private individual. Consequently, private autonomy means first and foremost freedom of contract. A private individual must have the possibility to decide freely whether he or she concludes a contract and with who he or she does it (freedom to conclude a contract) and what the content of the contract shall be (freedom to determine the content of contract) (7, p. 91).
Private autonomy also plays an important role in labour relations, particularly in employment contract relations. Although in Estonia the employment contract is not connected with other contracts in the law of obligations, it does not mean that the parties do not have the freedom to conclude a contract or to determine its content.
Private autonomy and freedom of contract exist insofar as the parties to the contract are granted, under law, a corresponding possibility to regulate their relations. Insofar as provisions of law are mandatory by nature, agreements deviating from law cannot be effective. In addition to the norms established by the State, private autonomy in labour relations is also restricted by collective agreements. Such an option can be rightfully considered a peculiarity of labour law sources (3, p. 533). Irrespective of the previous statement, it is possible in labour relations to deviate, by employment contracts, from the provisions established by laws or collective agreements, but only in the case where such arrangements are more favourable than the conditions prescribed by law or collective agreement (17, § 14).
The principle of private autonomy and one of its most important expressions - freedom of contract is guaranteed in Estonia under the Constitution. Under § 19 of the Constitution, everyone is guaranteed the right to free self- realisation. The principle provided for in § 29 of the Constitution, under which every citizen of Estonia has the right to freely choose his or her sphere of activity, profession and place of work, is especially significant in terms of labour law. The conditions and procedure for the exercise of this right may be provided for by law. The freedom to choose profession means, inter alia, that the parties to an employment contract are free to decide with who and whether at all the employment contract will be concluded. They may also decide on the content and conditions of the contract. What must be taken into account, of course, is that under § 29 of the Constitution restrictions may be by law established on the parties to the labour relation in the realisation of their freedom of contract. The possibility of setting...
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