Dismissal for reasons related to the employee

On what grounds may the employer terminate the contract?

The employer may terminate an employment contract extraordinarily for a good reason arising from the employee, due to which, taking into account the interests of both parties, continuing the employment relationship cannot be expected (TLS § 88 lg 1) [1]. The Act names in particular cases where the employee:

• has for a long time been unable to perform their duties due to their state of health, except when working on a sick note; this is presumed if their health does not allow them to perform their duties for four months (TLS § 88 lg 1 p 1) [1];
• has for a long time been unable to perform their duties due to insufficient skills, unsuitability for the job or failure to adapt (TLS § 88 lg 1 p 2) [1];
• despite a warning, has ignored the employer's reasonable instructions or breached their duties (TLS § 88 lg 1 p 3) [1];
• despite the employer's warning, has been at work while intoxicated (TLS § 88 lg 1 p 4) [1];
• has committed theft, fraud or another act causing the employer to lose trust in them (TLS § 88 lg 1 p 5) [1];
• has caused a third party to distrust the employer (TLS § 88 lg 1 p 6) [1];
• has culpably and significantly damaged the employer's property or created a risk of damage (TLS § 88 lg 1 p 7) [1];
• has breached a confidentiality obligation or a restraint of trade (TLS § 88 lg 1 p 8) [1].

Before terminating, especially for health or skill reasons, the employer must where possible offer the employee other work, including arranging training if needed, adapting the workplace or changing working conditions, if this does not cause disproportionately high costs and can reasonably be expected in the circumstances (TLS § 88 lg 2) [1]. According to the Supreme Court (Riigikohus), the work offered need not be equivalent to the previous work, but if the employer claims it was not obliged to offer other work, it must prove that there was no other suitable work or that offering it would have caused disproportionately high costs or would not have been reasonable in the circumstances (judgment 3-2-1-70-16) [5].

The employer may not terminate the contract, for example, because the employee is pregnant, performs important family obligations or is briefly unable to cope with their duties due to their state of health (TLS § 92 lg 1) [6]. The employer may not terminate the contract of a pregnant woman or a woman entitled to maternity leave due to reduced capacity for work (TLS § 93 lg 2) [7], provided the employee informed the employer of her pregnancy or right to maternity leave before receiving the notice of termination or within 14 calendar days after that (TLS § 93 lg 3) [7]. If she missed that deadline for reasons beyond her control, the termination is still void (TLS § 104 lg 2) [8].

Must the employer give a warning first?

As a rule, yes. The employer may terminate the contract for breach of duties or reduced capacity for work if the termination was preceded by a warning (TLS § 88 lg 3) [1]. No warning is needed if, due to the particular seriousness of the breach or for another reason, the employee cannot expect one from the employer in good faith (TLS § 88 lg 3) [1].

The Supreme Court has explained (judgment 3-2-1-187-15) [9]:

• even where trust has been lost, a right to terminate does not as a rule mean that the employee may be dismissed without a prior warning; the purpose of a warning is to give the employee a chance to improve their conduct;
• a warning must clearly express the employer's intention to terminate the contract if the employee does not improve their conduct;
• the Act sets no form for a warning, so it can be given orally, in a form that can be reproduced in writing, or in writing.

If the circumstances allow the contract to be terminated without notice, the employer may as a rule also be entitled to dismiss the employee without a prior warning (judgment 3-2-1-70-16) [5].

How much notice must the employer give?

The notice period depends on how long the employment with that employer has lasted (TLS § 97 lg 2) [2]:

1. less than one year of employment – at least 15 calendar days;
2. one to five years of employment – at least 30 calendar days;
3. five to ten years of employment – at least 60 calendar days;
4. ten or more years of employment – at least 90 calendar days.

A collective agreement may provide for different notice periods (TLS § 97 lg 4) [2]. For a reason arising from the employee, other than their state of health, the employer may terminate the contract without notice if, considering all the circumstances and the interests of both parties, continuing the contract until the end of the notice period cannot reasonably be required (TLS § 97 lg 3) [2]. When terminating due to the employee's state of health, the employer must as a rule observe the notice periods (judgment 3-2-1-172-14) [10].

If the employer gives less notice than the law requires, the employee is entitled to the average daily wage for each working day by which the notice fell short (TLS § 100 lg 5) [11]. Failing to observe the notice period does not make the termination void – its consequence is this compensation (judgment 3-2-1-70-16) [5].

How can a termination be challenged, and what compensation is available?

A termination without a legal basis or not meeting the requirements of the law is void (TLS § 104 lg 1) [8]. The notice of termination must be in a form that can be reproduced in writing; a notice made in breach of the form requirement or with conditions is void (TLS § 95 lg 1) [12]. The employer must give reasons; missing reasons do not affect validity, but the employer must compensate the resulting damage (TLS § 95 lg 2 and 3) [12]. The employer may terminate only within a reasonable time after learning, or after it should have learned, of the circumstance on which the termination is based (TLS § 88 lg 4) [1].

To have the termination declared void, an action must be filed with a court or an application with the labour dispute committee within 30 calendar days of receiving the notice of termination (TLS § 105 lg 1) [3]. If this is not done and the deadline is not restored, the termination is valid from the outset (TLS § 105 lg 2) [3]. Applying to the labour dispute committee is free of state fees (riigilõivuvaba) under the Labour Dispute Resolution Act (töövaidluse lahendamise seadus, TvLS) (TvLS § 15) [13].

If the court or committee finds the termination void, the contract is deemed not to have ended by the termination (TLS § 107 lg 1) [14]. At the request of the employer or the employee, the court or committee terminates the contract as of the time it would have ended had the termination been valid (TLS § 107 lg 2) [14]. In that case the employer pays compensation equal to the employee's average wage for three months, and the court or committee may change the amount (TLS § 109 lg 1) [4]. For an employee who is pregnant, entitled to maternity leave or elected as an employee representative, the compensation equals the average wage for 12 months, which the court or committee may also change (TLS § 109 lg 2) [4]. Such an employee's contract is not terminated at the employer's request unless, taking into account the interests of both parties, continuing it is not reasonably possible (TLS § 107 lg 3) [14]. Once compensation has been awarded, the employee cannot claim the wages they would have received had the employment continued until the decision takes effect (TLS § 109 lg 3) [4].

What the law says

• „Tööandja võib töölepingu erakorraliselt üles öelda töötajast tuleneval mõjuval põhjusel, mille tõttu ei saa mõlemapoolseid huve järgides eeldada töösuhte jätkamist“ [1] (translation: the employer may terminate an employment contract extraordinarily for a good reason arising from the employee, due to which, considering the interests of both parties, continuing the employment relationship cannot be expected; TLS § 88 lg 1) – the reason must be serious enough that continuing cannot be expected.
• „Tööandja võib töölepingu töötaja kohustuse rikkumise või tema töövõime vähenemise tõttu üles öelda, kui ülesütlemisele on eelnenud tööandja hoiatus.“ [1] (translation: the employer may terminate the contract for the employee's breach of duties or reduced capacity for work if the termination was preceded by the employer's warning; TLS § 88 lg 3) – a warning is, as a rule, a precondition.
• „Seadusest tuleneva aluseta või seaduse nõuetele mittevastav töölepingu ülesütlemine on tühine.“ [8] (translation: a termination of an employment contract without a legal basis or not meeting the requirements of the law is void; TLS § 104 lg 1).
• „Kohtule peab hagi või töövaidluskomisjonile avalduse ülesütlemise tühisuse tuvastamiseks esitama 30 kalendripäeva jooksul arvates ülesütlemisavalduse saamisest.“ [3] (translation: an action with a court or an application with the labour dispute committee to establish that a termination is void must be filed within 30 calendar days of receiving the notice of termination; TLS § 105 lg 1) – this is the key deadline for a challenge.

What to do

1. Note the date you received the notice of termination: the 30-day deadline runs from it (TLS § 105 lg 1) [3].
2. Check the notice: is it in a form that can be reproduced in writing, without conditions and with reasons (TLS § 95 lg 1 and 2) [12], and which ground does the employer rely on (TLS § 88 lg 1) [1]?
3. Check whether you were warned beforehand (TLS § 88 lg 3) [1] and whether other work was offered to you where possible (TLS § 88 lg 2) [1].
4. Work out the notice period from the length of your employment (TLS § 97 lg 2) [2]; if you were given less notice, claim compensation (TLS § 100 lg 5) [11].
5. If you believe there was no basis or the requirements were breached, file an application with the labour dispute committee or an action with a court within the deadline (TLS § 105 lg 1) [3]; applying to the committee is free of state fees (TvLS § 15) [13]. You may also ask for the contract to be terminated and for compensation (TLS § 107 lg 2; TLS § 109 lg 1) [14] [4].
6. As an employer, warn the employee clearly, keep proof of the warning and of delivery of the notice of termination, and terminate within a reasonable time (TLS § 88 lg 3 and 4) [1].

Frequently asked questions

Does a warning have to be in writing?

The Act sets no form for a warning, so it may also be given orally; but it must clearly show that the contract will be terminated if the employee does not improve their conduct (judgment 3-2-1-187-15) [9]. The notice of termination itself must be in a form that can be reproduced in writing (TLS § 95 lg 1) [12].

Can my employer dismiss me while I am ill?

Not because you are briefly unable to cope with your duties due to your state of health (TLS § 92 lg 1) [6]. Termination is possible where the employee has for a long time been unable to perform their duties due to a state of health that does not allow the employment to continue, except when working on a sick note (TLS § 88 lg 1 p 1) [1]. On this ground the employer may not dispense with the notice period (TLS § 97 lg 3) [2].

What happens if I miss the 30-day deadline?

If the action or application is not filed in time and the deadline is not restored, the termination is valid from the outset and the contract ended on the date stated in the notice of termination (TLS § 105 lg 2) [3].

How much compensation is due if the termination was void?

If the court or committee terminates the contract, the compensation equals the employee's average wage for three months and may be changed in view of the circumstances (TLS § 109 lg 1) [4]; for an employee who is pregnant, entitled to maternity leave or elected as an employee representative, the average wage for 12 months (TLS § 109 lg 2) [4].