Labor Inspectorate: Employers can temporarily cut salaries during crisis ({{contentCtrl.commentsTotal}})

Kaire Saarep of the Labor Inspectorate (Tööinspektsioo) in the ETV studios Thursday morning.
Kaire Saarep of the Labor Inspectorate (Tööinspektsioo) in the ETV studios Thursday morning. Source: ERR

Employers can unilaterally cut salaries for a temporary period if all legal conditions are met, in the wake of the coronavirus pandemic and its economic fallout, a spokesperson for the Labor Inspectorate (Tööinspektsioon) says.

"Salary reductions are possible up to the minimum wage when very exceptional circumstances occur," Kaire Saarep, head of the preventive department at the Labor Inspectorate said on ETV morning chat show "Terevisioon" Thursday morning.

"Right now, this [exceptional circumstance] is the coronavirus outbreak," she went on.

Saarep noted that payroll considerations must also be putting strong pressure on companies for cuts to occur.

"Another condition that must be met is that the payment of wages must be unreasonably onerous for the company."

"In this situation [of exceptional pay cuts], pay can be reduced for up to three months, over a period of up to 12 months," Saarep explained.

This can be done unilaterally by the employer with 14 days' notice. If an employee does not consent, redundancy will follow, with statutory conditions, she said.

Three-month pay reduction would be followed by redundancy

After the three months are over, a redundancy scenario is on the table, Saarep went on.

"If three months have passed and the economy has not recovered, then this is a redundancy situation," Saarep said.

Saarep noted that there are currently already many companies in Estonia that are closed as a result of the coronavirus pandemic and the government's emergency situation measures.

Many companies have moved their staff over to working remotely, which was still work and the responsibility of the employer to initiate and maintain.

"Working from home is not a holiday; you have to do your job. The employer has to provide the tools," Saarep said.

Labor Inspectorate busy

The inspectorate was also busy with processing queries on the matter, she went on.

"The labor market is currently experiencing problems related to the inspectorate's field in each sector," noted Saarep. 

While the inspectorate's hotlines are experiencing a high volume of calls, but answers to questions on employment contracts can also be obtained online here, she said.

Law: Temporary lay-offs not possible

The Employment Contracts Act does not allow for temporary lay-offs, Saarep noted, though it provides for limited opportunities to reduce pay.

"By agreement, you can be on unpaid leave," Saarep said. 

"If you are made redundant and your employer promises to take you back later, then that is literally hinges on their word (rather than on any legal provision-ed.)," she added.

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Editor: Andrew Whyte

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