The Supreme Court of Estonia declared unconstitutional and invalid restrictions which leave without unemployment insurance benefits those individuals who, at the time of their loss of income, are board members of businesses but do not get paid for it.
Unemployment insurance is a system created for controlling unemployment as a social risk and is based on the principle of mandatory insurance, the Supreme Court said. The insured are working people who are obligated to pay an unemployment insurance premium from the payments made to them for their work. In the event of the realizatin of the insured risk — i.e. loss of income — the insured person has the right to receive unemployment insurance benefits.
Provisions of the Labour Market Services and Benefits Act left an insured person who had lost their income without the right to receive unemployment benefits solely for the reason that they were a board member of a business, including a procurator, shareholder accredited to represent a general partnership or limited partnership, manager of a branch of a foreign busines or the head of some other place of business of a non-resident.
The Supreme Court explained that the legislator has broad opportunities to choose which measures to use in containing social risks, however deciding on a system based on mandatory insurance has narrowed the legislator's choices considerably. The right to insurnace indemnity is a financially appraisable right which is protected by right of ownership. As any infringement of fundamental rights must be constitutional, the creation of arbitrary terms to limit the payment of benefits is not allowed.
The Supreme Court found that in the case of insured people who do not receive a payout due to being a board member of a business, the insured risk has been realized, which is why the deprivation of benefits has intensely infringed upon the fundamental rights of those people. As the top court did not deem the need to avoid the abuse of the unemployment insurance system, listed as the aim of the infringement, compelling enough, it declared the disputed provisions partly unconstitutional and invalid.
Editor: Aili Vahtla