The regulation of fixed-term contracts should be made even more flexible
A draft on Amendments to the Employment Contracts Act has been submitted to the Parliament of Estonia, which gives employers the opportunity to enter into successive short-term employment contracts with a person registered as unemployed. The Chamber supports the planned change, but we made two additional proposals to the Parliament of Estonia to increase the flexibility of the regulation of fixed-term employment contracts.
The new flexible rule only applies to the unemployed
The draft stipulates that an employer may conclude with an unemployed person fixed-term employment contracts of up to 8 days for an unlimited period of six months. This means, for example, that an employer can conclude three two-day employment contracts with an unemployed person in one month, and these employment contracts do not become indefinite. The current Employment Contracts Act allows for the conclusion of a fixed-term employment contract no more than twice in a row or renewed once.
At the same time, it is worth remembering that the amendment to the Labour Market Services and Benefits Act, which entered into force on September, 1 2020, remains in force. The maximum duration of the contract is eight days, the number of working days allowed in one month is eight. The planned amendment to the Employment Contracts Act does not change these principles.
Although the planned change is positive, it will have a very marginal effect in making the regulation of fixed-term employment contracts more flexible. Currently, only about 3% of the registered unemployed do „work-bites”. Thus, only a very small proportion of employees will be able to use the greater flexibility when the draft enters into force.
2 proposals to increase flexibility
According to the Chamber, changes in the regulation of fixed-term employment contracts must be made to a significantly greater extent than provided for in the draft. Therefore, we made two additional proposals to the Legal Affairs Committee of the Parliament of Estonia to amend the regulation of fixed-term employment contracts.
Firstly, we proposed to amend the Employment Contracts Act so that the employer and the employee are allowed to enter into a fixed-term employment contract without good reason. At present, the law allows the parties to conclude a fixed-term employment contract only for good reasons, in particular a temporary increase in workload or seasonal work and the replacement of a temporarily absent employee.
In addition, we proposed to amend the law so that employers and employees would have more flexibility to agree on the extension of fixed-term employment contracts or the conclusion of contracts in succession without the employment contract becoming indefinite. The draft alleviates this problem, but only for the unemployed. In our opinion, more flexible rules could apply not only to people with unemployment status but also to other employees. For example, we have received a proposal from companies that the regulation of fixed-term employment contracts could be changed so that if the duration of fixed-term employment contracts between an employer and an employee is less than 60 days in one year, then it is permitted to conclude indefinite number of fixed-term contracts, without the contracts to become indefinite.
More information about the draft in the Parliament of Estonia can be found here.