The principle of good faith also applies to employment relationships

Based on recent Supreme Court decision, ALTERNA’s attorney-at-law and partner Annika Vait explained the principle of good faith in labour relations, pointing out that good faith principle might be a helpful legal instrument for reaching a fair solution.

The principle of good faith is one of the general principles of the civil law that arises from the General Part of the Civil Code Act and from the Law of Obligation Act. The General Part of the Civil Code Act requires persons to exercise their rights and obligations in good faith. The rights shall not be exercised in an unlawful manner, or with the intent to cause damage to another person. According to the Law of Obligation Act, the creditor and the debtor should, in relation to each other, act in accordance with the principle of good faith. If it is unacceptable to the principle of good faith, the law, custom or contract will not be applicable to the obligation.

In addition, the law provides that in the performance of obligation the person shall act in accordance with the principle of good faith and with the principle of reasonableness. In a recent judgment (in civil dispute no 3-2-1-28-15) the Supreme Court confirmed that the counterparties of employment contract must also execute their rights and obligation in accordance to the principle of good faith. This is pursuant to the Law of Obligation Act section 1 subsection 1 and to the Employment Contracts Act section 15 subsection 1 and section 28 subsection 1.

The Supreme Court has previously explained, that the main function of the principle of good faith is to limit the misuse of rights arising from the contract or from law. Limiting one´s right to exercise their civil rights, means, that if one acts in a bad faith the law or the contract shall not be applied by the court. Therefore, in these so called exceptional cases of bad faith, the court may exclude the law and the contract from application. The court has such a right regardless of the legal arguments of the disputing parties. In other words, the court is entitled to apply the principle of good faith even if the disputing parties have not requested it. The relevant court entitlement arises from the Code of Civil Procedure section 436 subsection 7, section 652 subsection 8 and section 688 subsection 2.

Therefore, the principle of good faith, might be in the legally correct cases the helpful legal instrument for reaching for a fair solution.

The legal blog article is available: http://addenda.ee/vandeasvokaat-annika-vait-hea-usu-pohimote-kehtib-ka-toosuhetes

For further information please contact Annika by e-mail annika@alternalaw.ee or by phone +372 680 6850.

Law Firm ALTERNA