Compensations upon cancellation of an employment contract due to lay-off

Law Firm ALTERNA’s attorney-at-law and partner Annika Vait gave an overview of the compensations employees are entitled to in case of lay-off

Annika explains that employees are entitled to receive compensation from employers in case of lay-off and, in certain circumstances, also from the state.

Upon cancellation of an employment contract due to lay-off, an employer shall pay an employee compensation to the extent of one month’s average wages of the employee (Employment Contracts Act Section 100) irrespective of the length of employment relationship of employee. As a derogation from the abovementioned is the situation where the employment contract is entered into for a specified term. No compensation shall be paid if the employment contract is cancelled due to force majeure (Employment Contracts Act Section 100(3)).

In addition to the compensation paid by employer, the employee is also entitled to insurance benefit upon lay-offs paid by the state. According to Sections 14¹ and 14² of Unemployment Insurance Act, an insurance benefit shall be paid to an employee whose employment relationship with an employer or to an official whose employment in the service has lasted for:

– five to ten years – in the amount of one month’s average salary or wages;

– over ten years – in the amount of two months’ average salary or wages.

To apply for compensation under Unemployment Insurance Act, the employer shall submit an application to the unemployment insurance fund within 5 calendar days from the termination of employment relationship. If the employer does not submit the application, then the employee and an official may also submit it.

Read the full blog post here: https://www.addenda.ee/vandeadvokaat-annika-vait-koondamisel-maksmisele-kuuluvad-nn-koondamise-huvitised

Questions related to this post can be discussed with Annika by e-mail on annika@alternalaw.ee or by calling +372 680 6850.

Law Firm ALTERNA
www.alternalaw.ee