Change in the System of Parental Benefits Beneficial for Employers and Employees

The Chamber supports the changes planned for the system of parental benefits, which make using of the parental benefits more flexible, giving fathers more possibilities to take care of their small children. However, in our opinion sent to the Ministry of Social Affairs, we made proposals for updating the draft, but also for changing the regulation for compensating from the state budget the holiday pay of employees with partial or absent capacity for work.

The draft aims to establish an amendment giving the parents an opportunity to suspend and continue the use of the parental benefit until the child is three years old. We hope that this amendment will facilitate fusing better the work and family life and thereby improve the position of mothers at the labour market.

Furthermore, we consider it important that the terms for advance notice of going to and coming from the leave are extended. At the moment an employee is required to notify the employer of going on the parental leave or cancelling the parental leave only 14 calendar days in advance. In our opinion, it is an unreasonably short term during which it is difficult for the employer to find a substitute. Furthermore, it is unfair toward those who are substitutes for the employees on parental leave. In our opinion, the term for notifying of the holiday could depend on the duration of the leave. The maximum term for notifying could be, for example, 2-3 months. It is very important for the employers that the employee would inform of the length of the parental leave already when going on the leave, giving the employer an opportunity to rearrange the work processes in a better manner.

We also consider positive the amendment, which does not decrease the parental benefit when a parent is simultaneously earning revenue taxable with social tax, which is less than 1,5 times the average salary of Estonia. However, we proposed the Ministry to make the regulation more flexible and abolish the principle that in case of revenue that is higher than the set limit, the parental benefit will be decreased. This will allow increasing the income for families and tax revenue for the state as well as decreasing the administrative burden for the beneficiary and the state.

We support the amendment planned with the draft, giving fathers the right to go on parental leave for 30 days instead of the current 10 working days. We also consider reasonable the principle that the father’s leave can be used from 30 days before the expected birth date determined by the doctor or midwife until the child is 3 years old. Furthermore, we support the amendment with which the period of father’s leave is compensated for the father with the additional parental benefit instead of the currently applicable father’s leave benefit. In the Chamber’s opinion, it is reasonable that a certain part of the parental benefit is meant only for fathers. We hope that these changes will help to increase the father’s role in raising children.

In our opinion, another positive change is the regulation according to which all fathers will have the right for the additional parental benefit to the extent of 30 days, irrespective of if and under which agreement he is working.

The proposal for amending the regulation for compensating from the state budget the holiday pay of employees with partial or absent capacity for work.

Due to the fact that the amendment of the system of parental benefits means amendments to the Employment Contracts Act, we proposed the Ministry of Social Affairs amending the regulation for compensating from the state budget the holiday pay of employees with partial or absent capacity for work.

According to the current regulation, it is presumed that the annual holiday of an employee with partial or absent capacity for work established on the basis of the Incapacity for Work Act is at least 35 calendar days. The employer pays for the 28 days of base holiday, for the exceeding part, a compensation can be applied for from the state. According to the current regulation, if an employee leaves work, the employer is required to pay to the employee for the base holiday as well as the part exceeding it and has no possibility to apply for compensation from the state.

It is unclear for us, why the employer cannot request compensation of the said pay from the state budget in advance. If the state has decided to compensate to the employer from the state budget for the seven calendar days of base holiday pay payable to the employee with partial or absent capacity for work, the state should compensate this pay to the employer even if the employment contract expires and the employee has not used this holiday.

Therefore we proposed the Ministry to amend the wording of the Act in a way that the employer would be paid a compensation from the state budget for the part that exceeds 28 calendar days also if the employment contract of an employee with partial or absent capacity for work expires and the employee has unused base holiday for the part that exceeds 28 days. In our opinion, it would increase the employers’ motivation to employ employees with partial capacity for work, because the expiry of the employment contract would not mean for the employer higher costs than compared to other employees. It should be taken into account that employing an employee with partial capacity for work is, as a rule, anyway more complicated for the employer.

You can read the Chamber’s official opinion here.