Does Estonian labour law apply to aliens working in Estonia?
Several international corporations have established branches in Estonia and the number of such branches is expected to grow in the future. Therefore it is apparent that the matters of applying the Estonian labour law to alien employees need to be explained in a short format.
Namely, the Supreme Court recently adjudicated a complaint by an alien employee on grounds of a refusal of the Police and Border Guard Administration (PBGA) to extend the alien’s residence permit. Among other justifications for the refusal, the PBGA referred to the fact that the employer did not pay the alien the remuneration for the time spent on holiday without pay, although it is required by the law. The PBGA expressed the view that as the Aliens Act (AA) is a specific law compared to the Employment Contracts Act (ECA), the provisions of the ECA do not apply to an alien’s employment.
Still, the Supreme Court and the courts of lower instances did not share the PBGA’s view. The courts unanimously declared that the Estonian labour law regulations apply also to alien employees. True, the AA does prescribe some special provisions, but the applying of those provisions does not in any way prejudice the applying of the ECA. The Supreme Court also stressed that although the PBGA may prescribe the conditions for an alien’s employment in Estonia with its decision of granting residence permit, the PBGA does not have unlimited options in doing so.
Estonian law applies to employment relations of an alien employee
As a very short summary: the Private International Law Act in force in Estonia (PILA) states that Estonian law incl. the ECA applies to employment relations of an alien working in Estonia. Even if some specific law – in this case the AA – prescribes certain compulsory requirements (incl. e.g. minimum pay), the ECA still applies to the alien in the rest, just like it does for employees being Estonian citizens.
Namely, the AA does not regulate an alien’s employment in Estonia, but instead prescribes certain specific prerequisites for allowing an alien to be employed and also prescribes some requirements intended primarily as the Estonian state’s protection for aliens. Working in Estonia is still regulated by the Estonian domestic law, incl. the ECA. Therefore, the Estonian law also applies to alien employees’ employment in Estonia.
The Police and Border Guard Administration has limited authorisation to intervene in employment relations
The second matter, although discussed only briefly by the Supreme Court, pertains to the PBGA’s authorisation to prescribe employment conditions in residence permits it grants. Namely, the AA obliges the PBGA to prescribe certain requirements for the alien’s employment in Estonia with its decision to grant a residence permit for work. The law states the minimum requirements that the PBGA must prescribe – those are the employer, the place of employment and the job (i.e. the position). At the same time, the law allows the PBGA to prescribe other requirements as well.
Still, the PBGA’s competence in this is not unlimited, as the Supreme Court has stated. Upon prescribing other requirements, the PBGA must take into account that it intervenes into the right of the employment relationship’s parties to agree employment conditions between them. Here, the PBGA is obliged to make sure that its intervention as a representative of public authority remains proportional to its intended goal and that such intervention does not excessively limit the right of the employer and the alien employee to shape their employment relations themselves.
If an employer is planning to employ an alien, then both parties should consider that a) Estonian labour law applies to alien’s employment in Estonia, and b) the PBGA may intervene in relations between the employer and employee in order to prescribe requirements for the alien’s employment in Estonia, but only in limited extent. If the PBGA’s decision to grant residence permit prescribes additional requirements not expressly stated by the law as compulsory, then it would probably be reasonable to analyse whether the PBGA is intervening too much in the employer-employee relations with such requirements.