What are the terms an employer must meet in order to apply for the subsidy?
An employer can apply for their employees to receive the subsidy, if they comply with at least two out of the following three terms:
- The employer must have suffered at least a 30% decline in turnover or revenue for the month they wish to be subsidized for, as compared to the same month last year.
- The employer is not able to provide at least 30 percent of their employees with the amount of work agreed upon in the employment contract.
- The employer has cut the wages of at least 30% of employees by at least 30% or down to the minimum wage.
The employer must meet the terms during the calendar month they wish to have subsidized. The employee must have an employment contract with the employer.
Do the terms I meet in order to apply for the subsidy have to be the same both months that I wish to apply?
In order to apply for the subsidy, an employer will fill an application online separately for each month and the two criteria out of three that they comply with may differ on different applications.
Can small enterprises apply for the subsidy?
The size of the enterprise is of no importance. Small enterprises with employees that are under employment contract, who meet at least two terms out of three (see Q1) may apply.
Can new enterprises apply for the subsidy?
Yes. Enterprises younger than a year cannot meet the turnover term but they can comply with the criteria of not having enough work and of cutting wages.
Can non-profit organisations and foundations also apply for the subsidy?
Yes. All employers, no matter what their legal form may be, can apply for the subsidy to help them pay wages for their contracted employees, given that they meet the terms.
In what way must an employer prove the drop in turnover as compared to last year?
The employer presents a document with the comparison, e.g. an official taxation data certificate from the Estonian Tax and Customs Board. More information on the certificate: https://www.emta.ee/eng/taxation-data-certificate
What do you mean by the criterion that says that the employer cannot provide at least 30% of employees with the agreed amount of work? In what way must an employer prove the lack of work?
An employer has the right to apply for the subsidy, if they cannot provide their employees with work and use § 35 or § 37 from the Employment Contracts Act. This means that both employers that cannot provide work and have thus cut wages, as well as employers that cannot provide work but have not cut wages (are paying average wages) are entitled to the subsidy.
In both cases employees should be notified of the lack of work in writing, so that it is later possible to provide the notification as proof to the Unemployment Insurance Fund.
When sending the application to the Unemployment Insurance Fund, does the employer have to have notified the employees of the reduction of wages or does the actual wage have to be reduced already?
At the hour of sending the application, the employer must already have cut the wages of at least 30% of employees by at least 30%
How long before reducing the workload does an employee need to be notified?
Parties may agree on changing the workload at any given time. This means that the employment contract is altered and the employee begins to work part time, for example.
§35 of the Employment Contracts Act speaks of failure to provide work. No specific amount of time has legally been set for the employer to give advance notice to the employee. We suggest you notify your employees as soon as possible.
How much in advance do the employees need to be notified about reduction of wages?
According to the Employment Contracts Act, §37 subsection (4), the employer shall provide the trustee/shop steward or, in his or her absence, the employees notice of the reduction of wages no less than 14 calendar days in advance. The Act does not state any exceptions to this rule, leaving no possibilities for an employer to reduce wages unilaterally. Read more on this subject: https://www.tooelu.ee/en/news/2583
In comparison to which period does the wage of the employees have to be cut by 30%?
The salary has to be cut by 30% as compared to the salary agreed upon in the employment contract.
Does the salary have to be cut by 30% for all employees’ salaries summed up or do you consider every employee’s wage separately?
The reduction by 30% is considered separately for each employee, comparing it to the salary set in their personal employment contract.
Can employers apply for the subsidy if they have been paying minimum wages to their employees? How? Considering that the minimum wage cannot be cut.
In case you are applying for the subsidy to be paid for an employee whose salary is the minimum wage, you as the employer will have to pay €150 to the employee and the Unemployment Insurance Fund will pay €434.
Can I apply for the subsidy if the employees’ salaries are only a little above the minimum wage and it is impossible to cut their wages by 30%? How?
An employer has the right to apply for the subsidy, also when they cut their employees’ wages down to the official minimum. For example, if the salary of 30% of the employees’ wage is set to €700 and the employer cuts their salaries to the minimum wage (€584 which makes about 20%), according to the Employment Contracts Act §37. In such case, the employer must pay the employees a salary of 150 euros and the Estonian Unemployment Insurance Fund will pay subsidy in the sum of €434.
Can I apply for the subsidy, if the employee is working part-time and their salary is below the official minimum wage? How?
If an employee’s salary is lower than the official minimum wage, their employer can apply for their wage to be subsidized, if the employer is experiencing a 30% drop in turnover and cannot provide at least 30% of their employees with work (the situation described in the Employment Contracts Act §35). Employer must pay a salary of at least €150 to all part-time employees as well. The Unemployment Insurance Fund will pay as subsidy the remaining sum up to their average monthly salary.