Coronavirus And Payday: Lay-Offs

To formalise the lay-off, the employer must provide the employee with a declaration of cancellation of employment contract in writing, which includes the reasons for the termination of the contract. The employer must notify the employee about the lay-off in advance, according to the fixed deadlines by law:

In case of a lay-off, the employee has a right to receive compensation to the extent of one month’s average salary, regardless of the duration of the employment relationship. If the notification period is less than required by law, then the employer must compensate the difference.

In addition to the compensation paid by the employer, the employee may be entitled to lay-off benefit from the Estonian Unemployment Insurance Fund. The amount depends on the length of employment at the company: one month's average salary if the employment relationship has lasted five to ten years and two months’ average salary, if the employment relationship has lasted over ten years.

If the employer lays off a large number of employees in a short period of time, then it is called collective lay-off and additional rules apply. Lay-offs become collective if, within 30 calendar days the following limits are reached:

Before deciding on collective lay-offs, the employer has to consult the employees or their representative to try to reach an agreement to prevent the lay-offs. The employees must be provided with all the necessary information about the planned collective lay-offs.

After consultations, the information must be submitted to the Estonian Unemployment Insurance Fund by the company. Only after consulting and informing the Unemployment Insurance Fund can the employer terminate the employment contracts.

Collective lay-off enters into force after a fixed notification period, which can not be less than 30 calendar days after the time when the Unemployment Insurance Fund received the information about the consultations from the employer.