About the Regulation of Termination of Employment Contracts in Draft Employment Contracts Act
| Author | Inge-Maret Orgo |
| Pages | 135-144 |
Inge-Maret Orgo
About the Regulation of Termination of Employment Contracts in Draft Employment Contracts Act
The need for reorganisation of the Estonian legal system and preparation of the draft Law of Obligations Act has given rise to heated discussions in the Estonian society. It is not clear as to whether the regulation of employment contracts should be included in the Law of Obligations Act, or whether the relationships created on the basis of employment contracts should be regulated separately. 1 During the three previous years, several draft acts for regulating employment relationships have been prepared on the initiative of the Ministry of Social Affairs and Ministry of Justice, whereas some of them presume that employment contracts will be regulated by the Law of Obligations Act; however, in one instance, adoption of a separate Employment Contracts Act serves as a prerequisite. The adoption of an independent employment contracts act does not mean that the regulation of employment contracts should not be related to the general principles of the law of obligations. These principles can and, in the case of particular issues, have to be taken into account even if the relevant regulation is not included in the Law of Obligations Act. The main problem in preparing drafts has not been the association with law of obligations but, rather, the extent of the regulation, its clarity, and the proportion of restrictions in public law. As the author of this article has enjoyed the opportunity to participate in preparation of several draft acts, as well as the discussion of relevant problems, the author has experienced that the representatives of trade unions require detailed and thorough formalisation of employment contract relationships on the level of legislation. Therefore, the main reason is the very limited proportion of employees who are parties to collective agreements. Nonetheless, the representatives of employers are of the opinion that the new regulation of employment contracts should abolish several guarantees provided for employees by law, and leave more space for agreement between the parties. During the discussion of draft acts, people have suggested that the currently applicable and relatively detailed labour laws inhibit the conclusion of collective agreements, as there is no need for employees to fight for the conclusion of collective agreements. Without denying the necessity to increase the importance of collective agreements for determining the working conditions, the impact of which on employment relationships is constantly increasing in developed countries 2 , we can not, however, create presently a situation where the laws do not establish guarantees necessary for employees, where there are no collective agreements either. The guarantees established for Estonian employees by legislation allow for a wider application - they even set conditions for the conclusion of collective agreements and establishment of supplementary benefits - because when compared to the guarantees provided for in many other states, our employees are protected to a considerably lesser extent. Thus, for example, in several EU member states, employees receive much higher benefits upon redundancy than in Estonia. 3 The importance of collective agreements has to increase, above all, with regard to determining the wage conditions. The modest proportion of collective agreements has not been caused by the higher level of protection provided to employees but, rather, by the lower level of organisation among employees and, frequently, also by the fact that employers lack potential for the establishment of additional benefits.
As mentioned above, attempts have been made to regulate employment contracts in several manners. By the time the article is printed, the working group formed by the Ministry of Social Affairs and headed by the Minister will have completed the preparation of another draft Employment Contracts Act, to which amendments and adjustments will probably be made in the course of reading; however, the conditions should remain the same with regard to the most important issues concerning termination of employment contracts.
The purpose of this article is to discuss the procedure for termination of employment contracts according to the new draft act. Problems are not likely to arise associated with the termination of employment contracts by agreement between the parties, upon expiration of the term, and as a result of the deaths of either the employee or employer, which has been regulated in a similar manner in most states; therefore, the following discussion will focus on the termination of employment contracts in regular and extraordinary cases, and on the consequences of illegal termination of employment contracts.
The principle of equality of the parties to an employment contract presumes that an employee and employer are in an equal position upon termination of an employment contract. A reasonable period of time shall be ensured to an employee for finding a new job; however, an employer also needs sufficient amount of time for finding a new employee. In many states, the same terms have been established both for employees and employers for regular termination of employment contracts, i.e. in Germany a common term for both parties for giving notification of regular termination of an employment contract is four weeks. If an employee has worked in a company for two or more years, the term for giving notification of termination shall be extended for both parties, which, depending on the time employed by the same employer, can total up to seven months. 4 The terms may be amended by a collective agreement and by agreement of the parties, but no longer term of giving notification of termination may be applied to an employee, than as to an employer. 5 When agreeing upon the terms for giving notification of regular termination of an employment contract in Estonia, the determination was made to establish the same terms for both parties. One draft of the act provided the terms for giving notification of termination depending on the length of employment in one company from one to four months, whereas starting from the tenth year of employment, both an employee and employer would be responsible for giving notification of termination of an employment contract at four months in advance.
This draft act would have introduced critical changes to the current condition of employee's. Section 79 of the applicable Employment Contracts Act 6 (hereinafter: ECA) provides to an employee an opportunity to terminate an employment contract by giving the employer only one month's advance notice of termination thereof. Thus, the persons working for the benefit of an employer over a longer period of time would have been in a less advantageous position. In case of such a regulation, changing of jobs would have become very problematic for an employee whose length of employment was longer. There are few employers who are ready to wait four months until an employee is released from the previous job, particularly in the case of a shortage of work. If we examine the procedures applicable in other states, it is evident that in many of them, shorter terms for giving notice of regular termination of an employment contract have been assigned to employees, if compared to employers 7 , whereas the differentiation has been usually made proceeding from the length of employment.
Long terms of giving notice of termination have been eliminated in the last version of the draft act. An employee may give notice of the termination of an employment contract, concluded for an unspecified term, by notifying the employer thereof in writing. The terms for giving notice of the termination of an employment contract shall depend on the continuous length of employment of an employee with that employer: - less than one year - at least 14 calendar days;
- 1-5 years - at least 21 calendar days;
- 5-10 years - at least one month;
- over 10 years - at least two months.
In many states, employers are obliged to follow the long terms of giving notice of termination imposed on them, even if the reason for termination is the behaviour of an employee (offence) or the employees unsuitability for a position, because the term for giving notice does not depend on the cause of termination. Long terms for giving notice of termination by all means protects the employee's interests 8 , but a question arises whether more emphasis should not be laid on employers' interests. It can be argued that there is little benefit for the employer in keeping an employee on the job who is violating the duties of employment, in an employment relationship for five or six months, while knowing that the employment contract of the employee would terminate upon expiry of that term? It would be difficult to expect that in such a case any employment duties would be performed in an efficient manner. The same problem arises in case of unsuitability of an employee for the job or position to be filled.
In the draft ECA, the terms for giving notice of termination of an employment contract provided to employees have been differentiated according to the causes of termination. If an employment contract is terminated due to the redundancy of an employee, the term for giving notice will depend on the...
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