Can foreign nationals be employed for a reasonable pay?

Triniti

This current year brought about certain mitigations for employers that employ foreigners in Estonia as well as for employees that are foreign nationals. In addition to so called administration-practical mitigations, substantial rules have also changed. For example, additional grounds were added on January 1, 2016 for employment of foreigners in certain cases under more favorable remuneration conditions in fields, included in a list approved by the Government of the Republic of Estonia, in which the shortage of labor is especially acute.

Option to pay “normal” remuneration

The Aliens Act in force as from January 1, 2016 provides that, in a nutshell, if an employer wishes to recruit a foreigner to work in a field in which it is necessary to reduce the shortage of labor in Estonia and facilitate the development of the Estonian economy, science, education, or culture, the employer is required to pay remuneration to the foreigner the amount of which is at least equal to the annual average gross monthly salary in the given field in Estonia, last published by Statistics Estonia.

The main difference as compared to the former regulation is that the general minimum remuneration paid to a foreigner must be 1.24 times (in certain cases twice) the average minimum remuneration in the Republic of Estonia. As from January 1, 2016 employers in certain fields have the option of employing foreign nationals under more reasonable conditions, that is to say conditions that actually apply to the labor market. For example, in a filed in which the average remuneration is, say, 780 euros it was thus far possible (theoretically rather than practically) to recruit a foreigner but the foreigner was to be paid at least 1.24 times the average remuneration in the Republic of Estonia – currently approximately 1,246 euros. As a result of the relevant amendments, as from January 1, 2016 the employer can pay the foreign national remuneration equally to local work force.

An important nuance in relation to said list of fields is that the Government of the Republic has the right to enact such a list by its regulation for up to two years maximum. This means that even though the list currently includes certain fields, the same fields may not be represented next year.

A few other changes

In addition to the abovementioned changes, other amendments of higher and lower importance were introduced as from January 1, 2016 in relation to employment of foreign nationals in Estonia. Below are a few changes that this text’s author finds significant:

  • foreign nationals holding a residence permit for entrepreneurship may work for any employer in Estonia – this may prove a relevant palliative in a number of practical cases;
  • Upon applying for a residence permit, the information to be submitted somewhat differs from that required formerly; in certain cases it might be necessary to submit fewer documents.

Conclusion

The above changes are but a few of many more or less fundamental amendments to the Aliens Act that took effect as from January 1, 2016. Considering the limited nature of the Estonian labor force market and the relatively low level of unemployment, the described changes seem to this text’s author well reasonable and necessary. Regardless, there is much to be done yet to make the Estonian labor force market more open to employment of foreign nationals.

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