Late or unpaid wages in Estonia: what you can do

When must wages be paid?

The employer must pay wages for work on the agreed terms and at the agreed time (TLS § 28 lg 2 p 2) [1]. Wages are paid once a month, unless a shorter interval has been agreed (TLS § 33 lg 1) [2]. If payday falls on a public holiday or a day off, payday is deemed to be the preceding working day (TLS § 33 lg 2) [2]. Wages are transferred to the bank account designated by the employee, unless agreed otherwise (TLS § 33 lg 4) [2].

At the employee's request, the employer must provide details of the wages calculated, paid or payable (TLS § 28 lg 2 p 12) [1].

What can the employee claim when wages are late?

• The wages themselves. The deadline for filing a wage claim is three years from the date the wages fell due (TLS § 29 lg 9) [6].
• Late-payment interest. The general part of the Law of Obligations Act also applies to employment contracts (VÕS § 1 lg 1) [3]. If a money obligation is paid late, the creditor may claim late-payment interest from the due date until proper performance; the rate is the interest rate under VÕS § 94 plus eight percent per year (VÕS § 113 lg 1) [4].
• Compensation on termination. If the employee terminates the contract extraordinarily because the employer materially breached it, the employer pays compensation equal to three months' average wage; a court or the labour dispute committee (töövaidluskomisjon) may change the amount (TLS § 100 lg 4) [7].

Can I end the contract straight away?

The employee may terminate the employment contract extraordinarily because of a material breach of the employer's obligations, in particular if the employer has materially delayed paying wages (TLS § 91 lg 2 p 2) [5]. This must be done within a reasonable time after the employee learned or should have learned of the circumstance on which the termination is based (TLS § 91 lg 4) [5]. According to the Supreme Court (Riigikohus), even a short delay can be a material breach if the employee has drawn the employer's attention to it but the employer continues; if wages are paid late month after month, the employee can rely on this to terminate only within a reasonable time after the latest breach. The employer may not delay paying wages because the employee has allegedly caused it damage and it wants the employee's consent to set the claims off (RK 2-19-2497/71) [8].

The employee need not give notice of extraordinary termination if, taking into account all circumstances and the interests of both parties, continuing the contract until the agreed term or the end of the notice period cannot reasonably be required (TLS § 98 lg 2) [9]. The notice of termination must be in a form that can be reproduced in writing, and the employee must give reasons for extraordinary termination (TLS § 95 lg 1 and 2) [10].

What if the employer is insolvent?

The employer is considered insolvent in particular if a court has declared its bankruptcy or terminated the bankruptcy proceedings by abatement, or in the other cases listed in the Unemployment Insurance Act (töötuskindlustuse seadus, TKindlS) (TKindlS § 19) [11]. The employee is then compensated for, among other things, wages and holiday pay not received before the insolvency, and compensation under the Employment Contracts Act not received on termination (TKindlS § 20 lg 1) [12]. Unpaid wages are compensated up to the employee's gross wages for the last three months worked, but in total no more than three average Estonian gross monthly wages (TKindlS § 20 lg 3) [12]. The application to the Unemployment Insurance Fund (Eesti Töötukassa) is filed by the bankruptcy trustee (pankrotihaldur) or interim trustee and, in the case named in the Act, by the employee whose bankruptcy petition led to the employer being declared insolvent (TKindlS § 21 lg 1) [13]. Once the employer's bankruptcy has been declared, creditors, including employees, must notify the trustee of all their claims that arose before the bankruptcy within two months of the bankruptcy notice being published in the official gazette Ametlikud Teadaanded (Bankruptcy Act, pankrotiseadus, PankrS § 93 lg 1) [14]. The claim is filed in writing, stating its content, basis and amount, with supporting evidence (PankrS § 94 lg 1) [15].

What the law says

• „Tööandja maksab töötajale töötasu üks kord kuus, kui tasu maksmiseks ei ole kokku lepitud lühemat tähtaega.“ [2] (translation: the employer pays wages to the employee once a month, unless a shorter interval has been agreed; TLS § 33 lg 1).
• „Töötasu nõude esitamise tähtaeg on kolm aastat arvates töötasu sissenõutavaks muutumisest.“ [6] (translation: the deadline for filing a wage claim is three years from the date the wages fell due; TLS § 29 lg 9).
• The employee may terminate extraordinarily if the employer „on oluliselt viivitanud töötasu maksmisega“ [5] (translation: has materially delayed paying wages; TLS § 91 lg 2 p 2).

What to do

1. Check the payday agreed in your employment contract; if no shorter interval was agreed, wages are paid once a month (TLS § 33 lg 1) [2].
2. Ask your employer for details of the wages calculated and paid (TLS § 28 lg 2 p 12) [1] and send a written demand to pay the arrears and late-payment interest (VÕS § 113 lg 1) [4].
3. If the employer does not pay, you can apply to the labour dispute committee – an out-of-court body for resolving labour disputes attached to the Labour Inspectorate (Tööinspektsioon) under the Labour Dispute Resolution Act (töövaidluse lahendamise seadus, TvLS) (TvLS § 4 lg 1) [16] – or to a court. Applying to the committee is free of state fees (TvLS § 15) [17]; you may apply to the committee of your place of residence or work, or of the employer's seat or residence (TvLS § 25 lg 1) [18].
4. The Labour Inspectorate also supervises compliance with the requirement to pay wages once a month (TLS § 115 lg 1) [19].
5. If you decide to terminate the contract extraordinarily, do so within a reasonable time, in a form that can be reproduced in writing and with reasons (TLS § 91 lg 4; TLS § 95 lg 1 and 2) [5] [10].

Frequently asked questions

How long can I claim unpaid wages?

The deadline for filing a wage claim is three years from the date the wages fell due (TLS § 29 lg 9) [6].

Can I claim interest on late wages?

Yes. The general part of the Law of Obligations Act also applies to employment contracts, and late-payment interest can be claimed on an overdue money obligation from the due date until proper performance (VÕS § 1 lg 1; VÕS § 113 lg 1) [3] [4].

Do I have to give notice before leaving?

No notice is required for extraordinary termination if, taking into account all circumstances, continuing the contract until the end of the notice period cannot reasonably be required (TLS § 98 lg 2) [9].

What compensation do I get if I leave because wages are late?

If the employee terminates the contract extraordinarily because the employer materially breached it, the employer pays compensation of three months' average wage; a court or the labour dispute committee may change the amount (TLS § 100 lg 4) [7].

What if my employer goes bankrupt?

An insolvent employer's employee is compensated for unpaid wages up to their gross wages for the last three months worked, but in total no more than three average Estonian gross monthly wages (TKindlS § 20 lg 1 and 3) [12]. Notify the trustee of your claim within two months of the bankruptcy notice being published in Ametlikud Teadaanded (PankrS § 93 lg 1) [14].