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In Estonia, public limited (joint-stock) companies must have both a management and a supervisory board. Consequently, all public limited companies have a two-tier management structure. In private limited companies a supervisory board need be established only if the share capital exceeds EEK 400,000 (ca. EUR 25,000) and the management board has less than three members or if it is prescribed by the company statute.
Estonian law does not provide employees with a right to elect or appoint representatives to the management board and/or the supervisory board. Although theoretically possible, in practice no trade union or employer has agreed to deal with this question in a collective agreement. The national-level social partners hold different positions on this issue: whereas the employer organisation ETTK takes the view that that the presence of employees on supervisory boards would merely obstruct its smooth functioning, the Confederation of Estonian Trade Unions (EAKL) is in favour of employee participation at board level. Based on the assessment that the existing compulsory information and consultation procedures do not operate effectively in practice, EAKL argues that this right would help to ensure that employees are aware of decisions which affect their interests (such as collective redundancies, a transfer of an enterprise, and so on). Although the debate on board-level participation has halted for the time being it may arise once more in the planned reform of Estonian collective labour relations.
Estonia has a one-channel system of employee workplace representation, in other words, the trade unions. In practice, collective labour relations are most developed at enterprise level and the number of collective agreements at national or branch level is not significant. At enterprise level, employees participate in labour relations via shop stewards who are usually elected in companies with a trade union. The Estonian Trade Unions Act (2000) lays down provisions on information and consultation procedures on a number of issues. Thus, the obligation to inform and consult employees is only effective where there is a trade union organisation. However, as the reputation of the trade unions is still suffering from their close ties to the Communist Party during the Soviet period few employees are still trade union members. The right of information and consultation is therefore guaranteed for only a few employees. In addition, information and consultation of employees is a relatively new area in employment relations in Estonia and requires additional knowledge and skills on the part of both trade unions and employers. As a result, information and consultation has not yet developed into a well-functioning and common practice.
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Disputes concerning a new Employee representatives act in Estonia (by Dr. iur. Merle Muda, Department of Labour and Social Security Law Faculty of Law University of Tartu, 20 March 2006)
The draft new Estonian Employee representatives act by which the EU information and consultation Directive shall be transposed abolishes the present rules for electing shop stewards and foresees the election of shop stewards only by the general meeting of employees. Instead of the current one-channel system, the draft establishes a two-channel system of employee representation, that is, shop stewards represent all employees in questions connected with their job and representatives elected by a trade union represent members of the trade union in issues laid down in the Trade Unions Act. The Confederation of Estonian Trade Unions opposes the conception of the new act. Download SEEurope report (doc)
"Not in line with the EU information and consultation Directive"
In her legal assessment, ETUI-Researcher Wiebke Warneck argues that the current draft Estonian Employee representatives act presented by the Estonian government does not respect the scope of the EU Directive. The implementation of the EU legislation would be misused to deregulate and lower existing national standards. Download report (pdf)
Debates on the introduction of the European Company Statute (by Dr. iur. Merle Muda, Department of Labour and Social Security Law Faculty of Law University of Tartu, 1 September 2005)
The only issue that gave rise to discussion in the process of transposing Directive 2001/86/EC into Estonian law concerned who can elect employee representatives to the special negotiating body and the statutory representative body. The Confederation of Estonian Trade Unions did not approve the provision of the act which provided for the election of employee representatives by a general meeting of employees. The Confederation took the view that the trade unions must have the right to elect employee representatives to these bodies since the general meeting of employees is generally influenced by the employer.
The Estonian Employers’ Confederation disagreed and stated that the trade unions and the general meeting of employees must play an equal role. The employers’ organisation held that the special negotiating body and the statutory representative body should be elected by the members of the largest employee representative body at an enterprise. If the general meeting of employees represents more employees than the trade unions, then it should elect the relevant representative bodies.
In February 2005, after the adoption of the Act on Employee Involvement in the Activities of Community-Scale Undertakings, Community-Scale Groups of Undertakings and European Companies, the Confederation of Estonian Trade Unions appealed to the Chancellor of Justice of the Republic of Estonia on the grounds that the provision of the act relating to the election of employees’ representative bodies is not compatible with the principles of the Constitution and international labour law. The Confederation emphasised that, under international law, a trade union must have the right to act as employee representative in Estonia.
The Chancellor of Justice of Estonia disagreed with the trade unions, taking the view that the Act on Employee Involvement in the Activities of Community-Scale Undertakings, Community-Scale Groups of Undertakings and European Companies is in conformity with both the Constitution and international law.
For the opinion of the Estonian Employers’ Confederation see: http://www.ettk.ee/en/newseng/2005/01/16/item20926
Download SEEurope report (pdf)
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(3) Transposition process
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SEEurope report: Transposition of the takeover directive and the SCE legislation in Estonia (February 2005, by Dr. iur. Merle Muda)
With the aim of transposing Directive 2004/25/EC on takeover bids into Estonian law, the Estonian Ministry of Finance is currently drafting the Securities Market Act Amendment Act. The Ministry intends to submit the draft to the government in October 2006. The draft of the European Cooperative Society (SCE) Application Act was passed by the Estonian parliament on 14 December 2005 and will enter into force on 18 August 2006. With regard to the Directive on employee involvement within SCEthe ministry intends to submit a draft to the Estonian government in July/August 2006. Download report .
SEEurope report: Transposition of the SE Regulation and the SE Directive in Estonia (February 2005) by Dr. iur. Merle Muda
The SE directive was transposed into Estonian law by the third chapter of the Employee Involvement. The draft of the Employee Involvement Act passed three readings in the Riigikogu (the Estonian parliament) without extensive debate. The Estonian law on employee involvement in the European Company (SE) was adopted in January 2005 and entered into force on 11 February 2005.
According to the IEA, employees’ representatives are elected to the special negotiating body and the statutory representative body by a general meeting of employees. The Confederation of Estonian Trade Unions did not approve of this solution, stating that it should be the trade unions’ prerogative to elect employees’ representatives to these bodies. Download report (pdf, 41 KB).
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(5) Other relevant information (Info-Box)
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