There are shortcomings in the Amendment of the Aliens Act
The Estonian Chamber of Commerce and Industry and the Estonian Employers’ Confederation have contacted the Constitutional Committee of the Riigikogu in relation to the draft amendment act of the Aliens Act, which aims at preventing abuse of the rules for employment of aliens in Estonia. Business organisations support the aim of the draft act and recognise ministries for taking the proposals made so far into account. However, from the point of view of entrepreneurs, there are a number of problems in the draft act, which we highlighted in our address.
The draft act imposes additional obligations on Estonian entrepreneurs in a situation where an Estonian company commissions a service (e.g. demolition of a building) from another EU company (e.g. a Latvian company) and the other company sends third country citizens (e.g. Ukrainian citizens) who have the right to live and work in the respective EU country, to Estonia to provide the service. We do not support the amendment due to several reasons.
Administrative burden on Estonian companies will increase
In the given example, the Estonian company has to ask from the Latvian company the names of the third country citizens who are coming to do the demolition work in Estonia, so that the Estonian entrepreneur could check if the third country citizens have the legal basis for staying and working in Estonia. Even if the Latvian company informs that they are not using third country citizens for demolition work in Estonia, the Estonian company is required to ascertain whether or not it is true. However, such activity places a disproportionally large administrative burden on the Estonian company.
It is unclear who are subject to the new obligations
It is unclear if the new obligations are applicable only on the first Estonian company who has contact with the aliens in the chain of providing a service or it is applicable for everyone. For example, if one Estonian company (the client) commissions demolition of a building from another Estonian company (the contractor) and the contractor in turn commissions the demolition work from a Latvian company (the sub-contractor) who then uses Ukrainian citizens staying in Latvia on the basis of a residence permit to do the demolition work, is the user company only the contractor or the client, too. The grammatical interpretation of the provision leads to a result that both the client and contractor are user companies.
Unequal treatment
If an Estonian company commissions demolition of a building from a Latvian company who uses third country citizens to provide the service, the Estonian company has to fulfil obligations arising from the Aliens Act. If the Estonian company commissions demolition of a building from an Estonian company who uses aliens staying in Estonia on the basis of the residence permit, the client is not considered the user company and they do not have to fulfil obligations arising from the Aliens Act.
Estonian company not subject to new obligations if an alien has no right to stay or work in another member state
If an Estonian company commissions demolition of a building from a Latvian company and the Latvian company sends Ukrainian citizens with no visa, residence permit or right to work in Latvia to Estonia, the Estonian company is not considered a user company. Thus, if an alien has no legal basis to live and work in Latvia, the obligations of the user company are not applicable for the Estonian company and that would give malicious companies the opportunity to disregard the new provision.
Purpose of the provision is unclear
If a Latvian company set out in the example above, sends Ukrainian citizens staying in Latvia on the basis of a residence permit to do demolition work in Estonia, then based on the Aliens Act, the Latvian company is obliged to register the working of the Ukrainian citizens as short-term employment at the Police and Border Guard Board. Based on the Aliens Act, the Latvian company is not required to pay to the Ukrainian citizens average Estonian salary for the demolition work, thereby excluding the possibility that the Latvian company would be violating the Estonian salary requirement.
If an alien who has come to provide a service at an Estonian company does not have a visa or residence permit or right to work in another member state, the Estonian company is not considered a user company and the provision is of no use.
The provision serves its purpose only in situations where a company of another member state has, either due to forgetting or lack of knowledge, failed to register the short-term employment of an alien at the Police and Border Guard Board and the user company can remind it to the service provider. For such reminder function, Estonian companies should not be obliged to pay penalty and fine.
Business organisations have made a proposal to the Constitutional Committee of the Riigikogu to leave out from the Aliens Act the provision that places additional obligations on Estonian companies that commission services from another EU company.