Employees posted to Estonia must be registered

An amendment to Working Conditions of Employees Posted to Estonia Act (hereinafter ELTTS) entered into force on 17 December 2016, resulting in a number of changes from the perspective of employers in regard to employees posted to Estonia. The main purposes of the amendments are to ensure that employees posted to Estonia enjoy the applicable working conditions and to make enforcement of the conditions in the legislation more effective.

A Section 5¹ was added to the ELTTS, under which employers of persons posted to Estonia are obligated to provide the Labour Inspectorate with the following data regarding the posting:

1. the name, personal identification code or registry code, area of activity, place of residence or location and means of communications of the employer of the posted employee:
2. the name and means of communications of the contact person representing the employer of the posted employee:
3. the number of posted employees, their names and personal identification codes or dates of birth;
4. the expected duration of the posting and the scheduled start date and end date;
5. the name, personal identification code or registry code, area of activity, place of residence or location and means of communications of the contracting entity or contracting authority for whom the posted employee works in Estonia;
6. the name and means of communications of the contact person representing the contracting entity or contracting authority for whom the posted employee works in Estonia;
7. information regarding the area of activity in which the posted employee will start working in Estonia and the address of the place of performance of work of the posted employee.

These data must be submitted by the employer of the employee posted to Estonia to the Labour Inspectorate by email (posting@ti.ee) no later than the day on which the posted employee commences performance of work in Estonia.

In case of failure to comply with the notification obligation, the Labour Inspectorate has the right to impose on the posting employer a penalty payment, for which a collection claim can be submitted for cross-border enforcement.

It is also important to comply with the provisions of the directive

In the interests of clarity, it should be emphasized that the above provisions apply to a posted worker for the purposes of Directive 96/71/EC of the European Parliament and of the Council.

Pursuant to Article 2 (1) of the directive, a ‘posted worker’ means a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works.

According to Article 1 (3) of the directive, the directive is applied the following three cases:

1. An undertaking posts workers to the territory of a Member State on their account and under their direction, under a contract concluded between the undertaking making the posting and the party for whom the services are intended. Let us suppose that a company located in Sweden orders IT service from an Estonian company. The Estonian company posts an IT sector employee, whose place of work under his employment contract is Tartu, to the service recipient’s location in Sweden, for the duration of a project agreed between the employer and service recipient.
2. An undertaking posts workers to an establishment or to an undertaking owned by the group in the territory of a Member State. For example, an employee from a Latvian parent company is posted to a subsidiary operating in Estonia for four months to perform duties of employment.
3. A temporary employment undertaking or placement agency hires out a worker to a user undertaking established or operating in the territory of a Member State, provided there is an employment relationship between the temporary employment undertaking or placement agency and the worker during the period of posting (in other words, temporary agency work).

Similarly to the Employment Contracts Act in Estonia, a key consideration for the purposes of the directive is that the work performed by the employee in the other country is of a temporary nature and that the employee’s employment contract must be valid throughout the posting. It is important to highlight that the directive does not set forth any minimum or maximum duration of the employment in the other Member State. Thus it is important to distinguish between a business trip and a posted worker for the purposes of both the directive and the ELTTS.

What is the difference between posted worker and a business trip?

The main distinction (for the purposes of the Employment Contracts Act) in the case of a posted worker is that he must always have a recipient at the destination: be it a service recipient, a subsidiary in the same group, or, in the case of temporary agency work, a user company.

The main reason why we must distinguish between a worker on a business trip and a posted worker is the fact that:

• employees on a business trip are subject to Estonian law and the conditions of the employment contract concluded between the employee and the employer;
• employees posted on the basis of the directive are also subject to the requirements and rights of the destination state, above all the applicable minimum working conditions in the destination state (i.e. minimum salary, work and rest time etc.) which must also be guaranteed for a posted worker if they are more favourable than those of the country of the undertaking that assigns the worker.

To sum up, it is important to draw attention to the fact that if a company located in Estonia receives the worker posted to Estonia, it would be reasonable to notify the posting company of the obligation to register with the Labour Inspectorate. Among other things, keep in mind that if an Estonian company assigns an employee to temporary employment in another Member State for the purposes of the directive, the company must make sure whether the destination country imposes a similar obligation to register the employee’s data. Failure to comply with the notification obligation first results in a precept issued to the posting undertaking; failure to follow this precept is highly likely to lead to a fine.