Leaving Board Members Without Support Unconstitutional

are board members of companies and do not receive remuneration for it, are not eligible for unemployment benefit. We highlighted the problem already in 2013, when the state planned to amend the Labour Market Services and Benefits Act.

In 2014, the Labour Market Services and Benefits Act was amended, taking from board members of companies who do not receive remuneration for their work, the right to register as unemployed and receive unemployment benefit. Back then, we did not agree with the claim set out in the explanatory memorandum to the draft act, which said that if a person is a board member, but does not receive a remuneration for that, the person is not unemployed, because he or she is running a company.

“This ruling is a good example of the fact that it is reasonable to talk and listen to the stakeholders before passing a law,” said Director General of the Chamber of Commerce Mait Palts. “If the Parliament has any will to solve the problem and promote the economic environment, it is very much expected that they should amend the respective provision. The In the light of the Supreme Court’s ruling, the Chamber sees no reason that would prevent the Parliament from doing so and hopes that this is a lesson for avoiding such mistakes in the future,” said Palts.

Statistics show that there are thousands of companies registered at the Commercial Register, which really have no economic activities. This means that there are currently and were back then thousands of companies that are not really operating. This in turn means that thousands of persons entered into the Commercial Register as board members are not employed.

Many people who are board members are actually working elsewhere and are paying the unemployment insurance premiums from the salary they receive. Paying the unemployment insurance premium is obligatory and it is presumed that if one loses his or her job, the person has the right to receive unemployment benefit. Unfortunately, the amendment back then created a situation where a person who lost his or her job could not register as an unemployed person, because he or she was in the Commercial Register with the status of board member and thus was deprived of the right to receive the benefit.

Now the Supreme Court found that the insured risk has been realised for the persons who are board members and do not receive a remuneration for it, due to which the fact that they were deprived of the unemployment benefit was in intense violation of their fundamental rights. As the court found that the need to prevent abuse of the unemployment insurance system, which was set out as the aim of the violation was not substantial enough, the court declared that the disputed provisions are unconstitutional and invalid.