Estonia sees rise in labour disputes, unpaid wages most common complaint

Estonia's Labour Dispute Committee received 2,463 applications last year — 50 more than the previous year, according to the Labour Inspectorate's annual report. Most applications were filed by employees, with total claims amounting to 13.5 million euros. About 600 disputes ended in a compromise settlement.

The Labour Inspectorate notes that the rising number of applications does not necessarily indicate worsening relations between employees and employers. It may instead reflect that people are better informed about their rights and more willing to defend them. At the same time, citizens of third countries, who are less familiar with Estonian labour law, may be in a more vulnerable position.

Contracts misclassified

One common problem remains employment relationships formalised through contracts for services or contracts for work instead of proper employment contracts — a pattern seen particularly in construction, industry, catering and hospitality. Vladimir Logachev, a leading legal consultant at the Labour Inspectorate, explained that when work follows a set schedule under an employer's direction and control, it may in substance constitute an employment relationship regardless of what the contract is called. Workers in such arrangements can lose legally guaranteed protections, including paid leave.

The annual report cites an example of a worker hired through a temporary employment agency who performed the same duties as staff of the client company, but was given a contract for services instead of an employment contract. The issue surfaced when the worker tried to take leave and discovered he had no right to paid vacation or other labour guarantees.

Disputes over layoffs

A significant group of disputes concerns layoffs, with total claims in such cases reaching about 1.3 million euros last year. Employees often dispute cases where a layoff, in their view, was used to disguise another reason for dismissal — including situations where a new person is hired for the same position shortly after a layoff. Disputes also arise when employers fail to offer suitable alternative work before a layoff or do not pay legally required compensation.

Another frequent cause of disputes is full or partial non-payment of wages, with employees seeking unpaid salary, vacation pay, late fees and severance. The Labour Inspectorate says many problems in labour relations remain unchanged year after year and advises both parties to carefully review contract terms and comply with legal requirements when ending employment.