When you are faced with the need to make an employee or civil servant redundant, you are required to pay compensation to that person. The amount of the compensation is set by the Employment Contracts Act at one month of the average wage, but the individual employment or service contract may provide for a higher compensation.
In addition, the employee or civil servant may have the right to receive a redundancy benefit from the Estonian Unemployment Insurance Fund. In order for him or her to receive the benefit, you as the previous employer must apply for it.
A redundancy benefit is paid to employees or civil servants who are made redundant. The benefit is also paid when someone leaves on their own accord because you as an employer can not provide sufficient work or pay.
The benefit is paid only to those who have been employed by you or have been in service with you for at least five years.
Amount of the redundancy benefit
The amount of the redundancy benefit depends on the number of years of employment or service, and on the previous wages for which contributions are paid (assessed by the data available in the unemployment insurance database).
If the person concerned has worked with you for more than five, but less than ten years, the redundancy benefit amounts to one average monthly wage. If that period is longer than ten years, the benefit is two average monthly wages.
If the work or service relation has lasted for less than five years, no redundancy benefit is awarded from the Estonian Unemployment Insurance Fund.
Application and procedure
The redundancy benefit must be applied for within five calendar days after the end of the employment or service relation. Applications beyond that period are also accepted, if a reason for the delay is stated.
You can apply for compensation in any of the following ways:
- by submitting an application to the e-töötukassa (e-portal of the Unemployment Insurance Fund) if you are an employer;
- by filling out the application, signing it digitally and sending it via e-mail to firstname.lastname@example.org;
- by filling out the application, printing it out and taking it to the nearest office of the Unemployment Insurance Fund or by mailing it to: Lasnamäe 2, Tallinn 11412, Eesti Töötukassa.
After your application is received, the Estonian Unemployment Insurance Fund will make a decision within 14 days (unless more information needs to be gathered), and will send the decision both to you and to the affected employee or civil servant. Payments are made within five days after the decision has been reached.
Read more about Redundancy benefit.