Riigikogu supports paying unemployment benefits to plc managers

(AFP/Scanpix)
Dario Cavegn
2/9/2016 2:49 PM
Category: Economy

In a session on Tuesday the Riigikogu supported a proposal of the Chancellor of Justice that calls for an extension of the current unemployment insurance scheme to include management board members.

Chancellor of Justice Ülle Madise pointed out that while every person who contributes to the unemployment insurance fund got support in case they lost their job, this wasn’t the case for members of management boards.

This is a problem for some. Private limited companies are very common in Estonia, as they can be set up in a matter of minutes and don't require founders to immediately contribute capital.

As taxes on salaries payable by employers are high, starting a so-called osaühing (private limited company) is a popular way to optimize tax expenses for anyone able to turn their job or hobby into a business. The osaühing is so easy to establish that professions ranging from freelance photographers to building contractors use it.

A large part of Estonia’s impressive number of new businesses per year are founded for these reasons.

Unfortunately, current law states that no one who is a member of an osaühing’s management board, no matter whether paid a salary or not, is entitled to unemployment insurance in case they lose their job.

For example, somebody working for a bank and paid a salary who also owns a small private limited company couldn’t hope to be able to file for unemployment benefits.

Madise called this situation “unfair without reasonable or appropriate justification” in the sense of the Estonian constitution. The Riigikogu supported her proposal with 69 votes in favor.


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