Firing The Employee in Estonia
Restricting Future Activities
A written agreement between an employee and an employer regarding the restriction of the occupational activities of the employee after termination of employment is possible. Such agreement is permitted if the employer pays the employee adequate monthly compensation for observing the restriction.The restriction must be for a reasonable period of time.
Upon terminating an employment contract due to a lay-off, an employer shall pay an employee compensation of one month’s average wages. An employee also has the right to receive an insurance benefit under the Unemployment Insurance Act.
Upon terminating a fixed-term employment contract for economic reasons, an employer shall pay employees compensation equal to the salary due for the remainder of the contract. No compensation is paid if the employment contract is terminated due to force majeure.
If an employee terminates the employment contract extraordinarily because the employer has committed a fundamental breach of the contract, the employer shall pay the employee compensation of three months’ average wages. A court or a labour dispute committee may change the amount of the compensation, taking into account the reasons for the termination andthe interests of the parties.
If an employer or an employee gives advance notice of termination later than provided for by law or a collective agreement, the employee or the employer has the right to receive compensation to the extent to which they would have had the right to obtain upon the term of advance notice.
Special Tax Provisions And Severance Payments
Severance payments are subjected to personal income tax in Estonia.
Allowances Payable To Employees After Termination
Employers are not required to contribute to any allowances payable to employees after termination.
Time Limits For Claims Following Termination
The general time period for submitting a petition to a Labour Inspectorate is four months. Employees have 30 calendar days to submit a claim for unfair dismissal. If the employee is making a claim relating to salary, the claim must be submitted within three years of the contract being terminated.