Law Firm ALTERNA’s partner and attorney-at-law Annika Vait wrote in the April’s post of the legal blog about the Supreme Court case, according to which it is not possible to demand from the employee late payment fee exceeding the statutory late payment fee.

This position was expressed by the Supreme Court on 28 March 2017 in case No 3-2-1-178-16. According to Annika in the specific case the employer and the employee had concluded an agreement, which contained the obligation of the employee to pay to the employer upon late payment of the loan a late payment fee of 0,2% per day for each day of delay. The highest court found that this is void, meaning that enforcing it against the employee is not possible.

The Supreme Court reached this position by interpreting Section 2 of the Employment Contracts Act. The specified provision provides that an agreement derogating to the detriment of the employee from the provisions of this Act and the Law of Obligations Act concerning the rights and obligations and liability of the contracting parties is void, unless the possibility of an agreement derogating to the detriment of the employee has been prescribed by the employment contracts act. This is a provision which prohibits the conclusion of agreements which are to the detriment of the employee (in comparison to what is stated in the Employment Contracts Act). The Employment Contracts Act does not specify an exemption or special regulation regarding the late payment fee. Thus, according to Section 2 of the Employment Contracts Act it is not allowed to conclude agreements on the late payment fee, which are more detrimental to the employee than the provision of the law.

Section 113(1) of the Law of Obligation Act provides the statutory late payment fee. At the present (this may change in the future) the statutory late payment fee is 8% per year, which is significantly lower than the late payment fee provided for in the agreement. Thus the court, found that despite an agreement to contrary, the employer can only demand statutory late payment fee from the employee.


You can read the post of the blog from here:


For questions relating to the post please contact Annika via contacts: or calling the phone number 680 6850.