Overview of the Chamber's Most Important Activities in the Second Quarter of 2024
The Estonian Chamber of Commerce and Industry issued written opinions on 41 draft laws or other policy-making documents in the second quarter of 2024.
In May, the Chamber’s regular general meeting took place, where the Climate Minister Kristen Michal and the Rector of the University of Tartu Toomas Asser gave presentations. The agenda included the approval of the 2023 financial report and the raising of membership fees. Both agenda items were approved. In addition, the Chamber’s board met with Jaak Aaviksoo to get an overview of the state of national education funding, and with the chairman of Elering Kalle Kilk to get a better overview of the electricity market. The Chamber’s representatives also communicated weekly with various ministries, state agencies, and the Riigikogu to advocate for business interests.
Various tax issues remained in focus in the second quarter. We were critical of the packaging tax, opposed the amendment to remove the land tax cap that limits the tax amount growth to 10 percent per year, and requested to halt the sweetened beverage tax legislation.
We also paid great attention to labor-related issues in the second quarter. For example, we again proposed to bring the weekly minimum rest period for employees in line with the EU average and to make the conditions for flexible working time agreements more adaptable than planned. Additionally, we opposed three planned changes related to foreign labor.
We also opposed bureaucracy and over-regulation. For example, we proposed to raise the thresholds for audits and reviews beyond the planned scope and to simplify and speed up various processes for obtaining permits and licenses. Additionally, we expressed that the state should not regulate the way invoices are transmitted between companies and that we do not see the need for additional EU regulation of internship contracts.
KEY ISSUES OF THE SECOND QUARTER OF 2024
The Chamber again proposed to bring the weekly minimum rest period for employees in line with the EU average
We approached the Ministry of Economic Affairs and Communications with a proposal to change the regulation of the weekly rest period in the Employment Contracts Act so that the daily consecutive rest period for shift workers, together with the weekly consecutive rest period, would be 36 hours instead of the current 47 hours.
The proposal is based on the March 2023 ruling of the European Court of Justice, which states that the daily rest period is not part of the weekly rest period but is added to it. This means that, according to the new interpretation, shift workers in Estonia must be given an uninterrupted rest period of 47 hours once a week instead of the previous 36 hours, and for other workers, at least 59 hours instead of the previous 48 hours.
The Ministry of Economic Affairs and Communications proposed amendments to the Employment Contracts Act at the end of May, which at least partially alleviate the current problem.
We submitted several proposals for the preparation of the economic policy action plan
We sent initial proposals to the Ministry of Economic Affairs and Communications on what activities should be included in the 2025 action plan to achieve the vision set out in the economic policy plan to double Estonia's economy by 2035.
For example, we proposed to significantly speed up the process of handling various permits for businesses. We also emphasized the need to make labor law more flexible and to find a solution for the rapidly filling immigration quota. Additionally, we proposed to exempt at least electro-intensive companies from the obligation to pay renewable energy fees and to reduce bureaucracy and over-regulation.
Proposals for making labor law more flexible
The Ministry of Economic Affairs and Communications introduced a draft law at the end of May to amend the Employment Contracts Act, which gives employers and employees the option to agree on flexible working hours in certain cases and allows employers to apply shorter weekly rest periods for shift workers in certain cases. The Chamber considers the planned changes a step in the right direction but believes they still do not provide sufficient flexibility for the parties to the employment relationship. Therefore, we made several proposals to increase flexibility. For example, we proposed to allow flexible working time agreements with all employees, not just a limited group, such as students and pensioners. Regarding the weekly rest period amendment, we again suggested that the weekly rest period for shift workers, together with the daily rest period, should be 36 hours and for other employees 48 hours, thus restoring the situation that has existed in Estonia for decades.
We remain critical of the packaging tax
The Ministry of Climate came out with a waste reform in March, which includes the idea of introducing a packaging tax and the obligation to collect packaging waste at the point of generation. The Chamber informed the ministry that it is against the introduction of the packaging tax and that the idea of collecting packaging waste at the point of generation needs further analysis.
A success can be noted that the Ministry of Climate has abandoned the previously planned recycling target for sales packaging, but in other respects, the Chamber's proposals have not been significantly taken into account. The draft waste reform is likely to be completed in August this year.
The thresholds for the audit and review of the financial statements will be raised
The Ministry of Finance has prepared a draft law that establishes sustainability reporting requirements for businesses and raises the thresholds for the mandatory audit and review of the annual financial statements. Although the Ministry of Finance has taken into account the Chamber's proposal from last year to raise the thresholds for audits and reviews, we again proposed to the ministry to raise the thresholds by 50 percent instead of 25 percent. The new thresholds will apply to the 2024 annual financial statements.
Success: the Chamber's proposal prevents the extension of the period during which an employee was unable to perform work duties due to health reasons
Initially, the Ministry of Social Affairs wanted to amend the Employment Contracts Act so that in the case of reduced work capacity due to health conditions, the employment contract could be terminated if the employee has not been able to perform work duties due to health reasons for six months. According to the current law, the employment contract can be terminated if the health condition does not allow the performance of work duties for four months. The Chamber proposed to abandon the amendment, as six months is a very long period for the employer, meaning that the employer must accept a longer period with an employee unable to perform their work duties. The ministry took the Chamber's proposal into account, and the planned amendment did not reach the law.
Overview of the main directions of the planned climate law
The Ministry of Climate published the main directions of the climate law, now called the Climate-Resilient Economy Act, in May, which proposes sectoral climate targets and the main decisions needed to achieve them, prioritizes the development of CO2-free energy, and sets principles and timelines for the gradual phase-out of fossil fuels. The draft Climate-Resilient Economy Act is likely to be completed in July this year.
Amendments to the Land Tax Act will allow for future increases in land tax up to 100% per year
In May, we sent an opinion to the Finance Committee of the Riigikogu on the amendments to the Land Tax Act. The Chamber did not support the removal of the annual land tax cap, which means that in the future, local governments could increase the land tax by up to 50% per year. The Chamber also opposed increasing the maximum land tax rate for commercial and industrial land from 1% to 2%.
In mid-June, the Riigikogu adopted the amendments to the Land Tax Act, allowing the land tax amount to increase by up to 50% next year and up to 100% starting in 2026. The Chamber's proposals were not taken into account.
The state should not regulate the method of invoice transmission between companies
The draft law amending the Accounting Act, which includes several changes related to e-invoices, reached the Economic Affairs Committee of the Riigikogu. We welcomed the promotion of e-invoice adoption but did not support all the planned changes. We are particularly opposed to the amendment that allows a private sector accounting entity registered in the commercial register as an e-invoice recipient to require an e-invoice from the seller when purchasing goods or services. This change creates confusion in businesses, lacks practical necessity, and is not essential for promoting e-invoice adoption. Therefore, we proposed to exclude this amendment from the draft law.
The bill will continue to be processed in the Riigikogu in the fall.
Changes to the unemployment insurance system should not increase costs and must motivate people to work
The Ministry of Economic Affairs and Communications prepared a draft law that creates a new type of benefit in the unemployment insurance system in addition to the unemployment insurance benefit – a basic rate unemployment insurance benefit, and the current unemployment benefit will be abolished. As a result of the change, either the current income-based unemployment insurance benefit or the basic rate unemployment insurance benefit will be paid in case of job loss. The Chamber believes that the changes should not increase the unemployment insurance premium rate and that the new system must motivate people to return to work.
Internship contracts do not need EU regulation
The European Commission has prepared a directive to improve the working conditions of interns and to combat the practice of presenting ordinary employment relationships as internships. The Chamber believes that the problems regulated by the internship contract are not relevant in Estonia and that over-regulating internship opportunities may reduce companies' willingness to offer internships to young people.
The Chamber opposed three planned restrictions related to foreign labor
The Ministry of the Interior has prepared a draft law amending the Aliens Act, which on the one hand reduces the administrative burden for both the foreigner and their employer but also introduces several new restrictions on hiring foreigners. The Chamber opposed the amendment that allows a foreigner to work short-term in Estonia only with a long-term visa. We also did not support the amendment that to hire a foreigner, the employer must generally have prior (at least 6 months) economic activity in Estonia, and that a foreigner can only be hired by an employer registered in the Estonian commercial register. The ministry took the first Chamber proposal into account and plans to ease the prior economic activity requirement.
The Koidula border checkpoint must remain open 24/7
The Ministry of Finance proposed a draft law in June, according to which the Koidula border checkpoint will only be open during the daytime. The Chamber believes that the planned change will have a significant negative impact, as it will result in even longer waiting times at the border checkpoint.
The draft law amending the Competition Act is not ready for adoption
Together with 11 business organizations, we informed the Economic Affairs Committee of the Riigikogu and the Ministry of Justice in a joint statement that we remain critical of the draft law amending the Competition Act, which creates a new type of procedure for handling competition violations – the competition supervisory procedure – and gives the administrative court the right to impose fines on companies.
The business organizations that joined the joint statement believe that the draft law is not suitable for adoption in the Riigikogu, as the chosen procedure has been incorrect, many important issues remain unresolved, there is a risk that fundamental rights will not be protected, and the legal-technical quality of the draft law is questionable. The Supreme Court, the Chancellor of Justice, and the Bar Association have also seen problems in the draft law.
The draft law will continue to be processed in the Riigikogu in the fall.
Fines do not make people more law-abiding
The amendments to the Penal Code plan to change the size of the fine unit and double it from four euros to eight euros. The Chamber believes that increasing the size of the fine unit will not prevent violations and misdemeanors. Instead, penalty policies should be analyzed more closely to find a solution that genuinely makes people more law-abiding. The size of the fine unit will increase on January 1, 2025.
Stopping a vehicle on the sidewalk for loading should remain allowed
The Riigikogu is processing a draft law amending the Traffic Act and the Police and Border Guard Act, which includes a change that will eliminate the possibility of stopping a vehicle on the sidewalk for loading from the beginning of 2025. The Chamber believes that while sidewalk movement should be safe, businesses should also be given reasonable opportunities for loading. During the legislative process, the Chamber's proposal to leave at least initially the possibility to stop a vehicle on the sidewalk for loading in the Traffic Act was not taken into account. However, the wish to give both businesses and local governments more time to find solutions and implement them in such a way that vehicles can be stopped for loading in places other than the sidewalk was considered. The point allowing stopping on the sidewalk will be removed from the law on July 1, 2025.
We proposed to the Riigikogu to halt the processing of the sweetened beverage tax law
The draft law on the sweetened beverage tax has reached the Riigikogu, and the Chamber highlighted in its opinion submitted to the Finance Committee of the Riigikogu that the processing of the sweetened beverage tax should be halted due to significant deficiencies in the draft.
The draft law on the sweetened beverage tax contains several ambiguities and questions that need to be resolved. For example, it is not clear enough which drinks will be subject to the tax and which will not. The impact analysis has not correctly assessed the extent of tax revenue to the state and the costs associated with administering the tax.
Initially, the Riigikogu wanted to adopt the sweetened beverage tax law quickly before Midsummer Day, but this plan has now been abandoned. The legislative process will continue in the fall in the Riigikogu. The new tax is expected to take effect on January 1, 2026.
Bureaucratic burden in the field of statistics
In the first quarter, the Chamber collected opinions from businesses on reducing bureaucracy, with the most suggestions received regarding statistics. We then submitted 17 questions and suggestions related to statistics to the Statistics Estonia. In the second quarter, we received a response from Statistics Estonia, explaining how they plan to reduce bureaucracy for businesses in the near future and why it is not possible to do so in some areas.
We submitted proposals to amend the planned circular economy support measure
The Ministry of Climate prepared the initial version of the support measure for circular economy production and consumption models, which allows companies to apply for support for implementing industrial symbiosis solutions, circular economy business models, and voluntary environmental measures. We sent three proposals to the ministry: the list of supported activities should be more flexible, only companies should be eligible to apply for support, and the proportion of support for companies and local governments should be equal if support is also given to local governments.
Problems in the draft law on gender equality and equal opportunities
The Ministry of Economic Affairs and Communications has prepared a draft law that aims to create a Gender Equality and Equal Opportunities Act, which obliges employers to actively, systematically, and purposefully promote gender equality and equal opportunities. The Chamber believes that the draft law is problematic because it does not justify the extension of the scope of the law, and the content of the new protected characteristics is unclear. Review the overview.