When making a staff member redundant, compensation has to be paid. The amount of the compensation is fixed by law at one month of the individual’s average wage, but a higher compensation can be due on the basis of the individual employment or service contract.
Employees also have the right to receive an additional redundancy benefit from Töötukassa.
For those employers faced with a collective redundancy, special obligations apply.
What is collective redundancy?
To know if the termination of the contract of more than one employee is to be seen as a collective redundancy, the average number of employees over the previous six months must be taken into account. The thresholds are:
- 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.
Notification and consultation
When a collective redundancy is imminent, the employees or their representatives have to be notified of this intent, and have to be consulted in order to try and prevent the collective redundancy, try to reduce the number of employees that has to leave, and/or try to agree on measures that help those who are fired.
This notification must include the reasons for the collective redundancy, the number and job titles of all employees who are affected and the criteria on the basis of which they are selected for redundancy, the period during which the redundancy will be implemented, and how additional compensation to these worker (on top of the benefits provided by law or collective agreement) is calculated.
The employees or their representatives then have 15 days to react to your news and proposals. You may of course decide to allow for a longer period of consultation and negotiations.
The details of this procedure are enacted in the Employment Contract Act (par. 101 to 103).
Notification of the collective redundancy to Töötukassa
At the same time as when you inform your employees or their representatives, the same information must be sent to Töötukassa.
You may send the information from our self-service, by digitally signed e-mail to koondamine [ä] tootukassa [dot] ee, or print and send the form by regular mail to the head office at Lasnamäe 2, Tallinn 11412. Please add the word “redundancy” on the envelope.
Note that you also must be able to show the employees proof of the fact that you have notified Töötukassa.
A collective redundancy can only take place when all requirements are met. Should you fail to consult or notify, or to follow the correct procedure, the dismissals will be faulty and non-existent. As with most obligations that are enacted in the Employment Contracts Act, failure to comply also means that you risk having to pay a fine.
The consultation and notification requirements are however also important to help the affected employees into new jobs as soon as possible. With your help, Töötukassa can intervene in time to give all persons concerned the best chances of success.