Hiring the employee in Estonia. Part two
Location Of Work/Mobility
The employee’s normal place of work must be specified by the employer in writing. Mobility clauses can be included in the contract ofemployment, but they cannot be operated unreasonably. Where the job requires travel to other temporary locations, it is normal for the employer to reimburse all reasonable trave lexpenses.
There are 2 types of funded pensions –mandatory and supplementary funded pensions. A mandatory funded pension is a periodic benefit which is guaranteed pursuant to law. This type of pension fund is regulated according to the Funded Pensions Act and the Social Tax Act. Compulsory contributionsare made.
A supplementary funded pension is a benefit for the receipt of which units of a voluntary pension fund are acquired or an insurance contract for a supplementary funded pension is entered. The rate of mandatory monthly contribution is 2 % of the employee’s remuneration. The supplementary funded pension is based on each person voluntary deciding to start saving either by contributions to a voluntary pension fund or by entering into a respective supplementary pension insurance contract with a life insurance company. The supplementary funded pension contracts can be made with life insurers as pension insurance, or by acquiring pension fund units with a fund manager. An employer may make contributions for a person to acquire units of voluntary pension fund and pay insurance premiums to a supplementary funded pension insurance contract. It is possible to choose between three different pension products:
- pension insurance with guaranteed interest;
- pension insurance with investment risk, or
- pension fund.
The estimates are that the state pension and the funded pension will together account for about half of a person’s pre-pension income. According to the research, however, a person’s pension should be 65-70%of his or her previous income in order to maintain the established life standard.
Childbirth allowance is a single benefit whichis paid on the birth of a child. The amount of support in 2015 is 320 EUR. In addition, 80%of Estonian local governments pay additional childbirth allowances.
More information about these allowances can be received from the town or rural municipality government of the place of residence.
Parental leave and child care allowance: The mother, father or some other family member has a right to 140 days leave. Maternity leave must be taken no later than 70 calendar days before the estimated birth date given by a doctor. If a person starts her maternity leave within 30 days of the estimated birth date, the maternity leave is shortened by the respective period. Employees can receive benefits whilst on maternity leave in accordance with the Health Insurance Act. Grandfather, grandmother, sister or brother,if he or she is the actual guardian of the child and if the mother or father of the child does not use the parental leave, may also be entitled to parental leave. In cases where the leave is used by some other family member, the employee must get the employer’s agreement. Parental leave may be used either at once or in parts and the person on parental leave may change.
During the time of parental leave the employment contract is stopped, this means that the job is retained. The leave cannot be used if the child is partially or wholly on state maintenance. Childcare allowance is paid during parental leave. Childcare allowance is paid either to the parent or the actual guardian of the child. The amount of childcare allowance is dependent on the age of the children and the number of children in the family. The childcare allowance is ordinarilyreceived during parental leave, but being on parental leave is not a prerequisite to receiving childcare allowance. A parent may terminate or stop parental leave (by resuming work) and keep getting child care allowance if somebodyis not already using it. Parental leave is mostly used after maternity leave, but students who receive no benefit for pregnancy and maternity leave, may use the right for childcare allowance immediately after childbirth. Childcare allowance shall not be paid in relation to the birth or adoption of whom maternity or adoption benefit is paid accordingto the Health Insurance Act or parental benefit according to the Parental Benefit Act.
In every employment contract, the parties must agree on the essential conditions ofthe contract:
- the names of the parties;
- the date when employment begins and when continuous employment began;
- the scales and intervals of pay;
- the hours of work;
- holiday entitlement;
- provisions relating to sickness or injury;
- provisions relating to pension and pension schemes;
- place of work;
- length of notice or anticipated fixed term;
- job title/job description;
- any collective agreements which apply; and
- certain information regarding grievance and disciplinary procedures.
For employees posted abroad for more than one month, additional information is required (the currency in which remuneration is to be paid, any additional remuneration or benefits to be provided and the terms andconditions relating to return to Estonia).
The employer and the employee are free to agree any other terms in addition to the compulsory provisions. It is worth mentioning that parties to the employment relationship may agree to more favourable employment terms than those established by Estonian laws. However, it is highly advisable to include the agreed provisions in the employment contract.