Collective redundancy
According to § 89 of the Employment Contracts Act, an employer may extraordinarily cancel an employment contract due to redundancy if the continuance of the employment relationship on the agreed conditions becomes impossible due to a decrease in the work volume or reorganisation of work or other cessation of work.
Redundancy is also considered to be the extraordinary cancellation of an employment contract:
- upon cessation of the activities of employer (liquidation, compulsory dissolution);
- upon declaration of bankruptcy of employer;
- upon termination of bankruptcy proceedings, without declaring bankruptcy, by abatement.
The law specifically regulates the redundancy of a large number of employees at once, i.e., the collective cancellation of employment contracts (§ 90 of the Employment Contracts Act). In the case of collective cancellation of employment contracts, the employer must comply with the exceptions set out in §§ 101–103 of the Employment Contracts Act by involving the employees’ trustee / shop steward or, in their absence, the employees, in the cancellation process and by informing the Estonian Unemployment Insurance Fund of the planned cancellation.
If an employer makes a large number of workers redundant in a short period of time, the redundancies are treated as collective redundancy. In the event of collective redundancy, the employment contracts of employees end within 30 calendar days.
The employer is obligated to notify the Estonian Unemployment Insurance Fund of the collective cancellation of employment contracts.
Collective redundancies occur in the case of:
- a redundancy of 5 or more employees, when the average number is up to 19;
- a redundancy of 10 or more employees, when the average number is between 20 and 99;
- a redundancy of 10% or more of workers, when the average number is between 100 and 299;
- a redundancy of 30 or more employees, when the average number is at least 300.
The period of collective cancellation of employment contracts is calculated as at the date of expiry of the employment contracts. Cancellation is collective if employment contracts expire within 30 calendar days.
More information about the actions of the employer in collective redundancies
National supervision of the notification of collective redundancies is carried out by the Labour Inspectorate.
The Unemployment Insurance Fund provides help and counselling in the case of redundancies