Under the favourable opportunities opened up in the context of the continuous development of the single market of the European Union (EU), enterprises have more possibilities to post their employees in other Member States. According to the data available for 2014, more than 1.9 million business trips were made in the EU. Promotion of transnational service provision requires fair competition and due regard for employees’ rights. Provision of global services have taken employees that have entered into an employment contract with an Estonian employer to work in another EU Member State, European Economic Area Member State or the Swiss Confederation. Likewise, employees of foreign employers are sent to work in Estonia. In such a situation, the posting employer and the employees themselves may have trouble comprehending which legal order they should proceed from while working in another country. The key issue is whether or not to be guided by Estonian law and whether Estonian law really provides for solutions to all issues when the place of work is, for instance, in Finland or Germany. It becomes even more complicated when we refer to posting and posted workers.
The term used in Estonian law – töölähetuses viibiv töötaja or a worker on a business trip – is linguistically close to the term ‘posted worker’ derived from the EU law.
The term ‘posted worker’ is regulated by the European Parliament and Council directive 96/71/EC concerning the posting of workers in the framework of the provision of services.
For the purposes of the directive, a posted worker is someone whom the employer sends to work temporarily in another EU Member State, whether to provide a service within the framework of the company’s business operations or as a temporary agency worker by an employment undertaking.
Under the current Estonian Employment Contracts Act (ECA), an employee is on a business trip when the employer sends the worker outside the workplace prescribed by the employment contract in order to perform duties domestically or abroad. A business trip does not necessarily involve the provision of services. A business trip may be participation in a work-related even (e.g., conference, trainings, fair, etc.).
Thus, in distinguishing between a worker on a business trip and a posted worker, it is very important to know where is the place of work as agreed upon in the employment contract. For instance, where an Estonian employer has agreed with an employee that the place of work is Sweden, travelling from Estonia to Sweden does not constitute a business trip for the purposes of the Employment Contracts Act.
Who is a posted worker?
A posted worker is a natural person who usually works in a foreign country on the basis of an employment contract, and whom the employer has posted to work in Estonia for a certain period, in the framework of the provision of services.
Important notification: please pay attention to the redaction date of the translated versions of the legal acts.
Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services determines the law applicable to the employment relationship in case of posting.
The Directive was implemented in Estonia by the Working conditions of workers posted in Estonia Act (Eestisse lähetatud töötajate töötingimuste seadus).
If the provisions of the laws of a foreign country that apply to employment contracts are more favourable to posted workers than Estonian provisions as concerns the working conditions prescribed in § 5 of Working conditions of workers posted in Estonia Act (Eestisse lähetatud töötajate töötingimuste seadus), the provision that is more favourable to the worker shall be applied.
A worker on a business trip
Under the current Estonian Employment Contracts Act (ECA), a worker on a business trip means an employee sent by the employer outside the place of performance of work prescribed by the employment contract in order to perform duties, either domestically or abroad, but not for longer than 30 consecutive calendar days, unless the employer and the employee have agreed on a longer term. (Section 21 of the Employment Contracts Act (ECA).)
A posted worker
Pursuant to § 3 (1) of the Working Conditions of Employees Posted to Estonia Act (WCEPEA), a posted worker means a natural person who usually works in a EU Member State, European Economic Area Member State or the Swiss Confederation on the basis of an employment contract, and whom the employer posts to work in Estonia for a specified period of time for the provision of a service.
Since in Estonian the two terms used in this context – töölähetuses viibiv töötaja (‘worker on a business trip’) and lähetatud töötaja (‘posted worker’, defined in the European Parliament and Council directive 96/71/EC of 16 December 1996) concerning the posting of workers in the framework of the provision of services – are very similar it is critical to distinguish when we speak about a posted worker and when about a worker on a business trip.
A posted worker is distinct from a worker on a business trip primarily by the fact that a posted worker always has a concrete host or recipient of the service, a parent or subsidiary company that belongs to group or, for temporary agency work, a user undertaking. Thus, a posted worker has an undertaking in the host country that organises his or her work or working environment. When an employee goes on a business trip within the meaning of Estonian law, the employee has nobody in the country of destination to receive him or her.
We can also speak about posting workers in connection with the provision of services if:
1) The undertaking posts workers to the territory of a Member State on its own account and under its direction based on a contract entered into between the posting undertaking and the recipient of the service. Based on this provision, for instance, skilled workers, craftsmen and other specialists are often posted.
An Estonian company commissions construction works from a Polish company to be performed in the Republic of Estonia. In order to provide the service, the Polish company sends its workers to Estonia to perform the order. The Polish employer is responsible for the performance of the order and instruction of its staff while the local company, as the contracting entity, is responsible for compliance with working environment requirements.
2) An undertaking posts its workers to an organisation or company on the territory of a Member State where that organisation or company is a part of a group.
Based on this provision, for instance, line managers, specialists and skilled workers are often posted.
An Estonian employee is sent from his or her Estonian-based parent company to perform duties in a Finnish subsidiary. The work of the Estonian employee is organised by the local Finnish company. Furthermore, the Finnish company is responsible for compliance with working environment requirements while the Estonian employee performs work in Finland.
3) A temporary employment undertaking places an employee to work for a company based on operating in a Member State.
This represents temporary agency work that involves a tripartite employment relation between the employment undertaking, temporary agency worker and the user undertaking. This type of posting is common in the construction, agricultural, services or catering sectors.
A Lithuanian employee is sent via a placement agency operating in Latvia to work in Norway, for a local user undertaking. The Latvian company and its Norwegian counterpart have a service contract regarding the intermediation of workforce. The employment contract is entered into between the Lithuanian employee and the Latvian placement agency subject to Norwegian law; work orders are issued and their performance is supervised the Norwegian company that is also responsible for the Lithuanian’s working environment and safety at work. In such a case, the wages may be paid both by the Latvian and the Norwegian company. However, if payment of the wages is delayed, the employee needs to approach his or her employer in Latvia since, as far as a wages claim is concerned, the obliged entity is the actual employer and not a third party (the Norwegian company) for whom the employee works.
In all three cases, as at the time of posting an employment contract must have been entered into by the posting undertaking (employer) and the employee and the employment relationship needs to be retained throughout the posting period. If, during the employee’s stay in the host country his or her employment contract with the local employer expires and he or she enters into an employment contract with the undertaking of the country of the employment contract, he or she will no longer be a posted worker.
Keep in mind that an employee is a posted worker if:
- The place of performance of work is the territory of a Member State other than the State in which he or she normally works.
- The employment is temporary by nature, i.e., the employee does not mover to another State to permanently reside and work there.
- The employee has a concrete host in the other State or recipient of the service, a parent or subsidiary company that belongs to group or, for temporary agency work, a user undertaking.
Employers shall ensure that the following working conditions established in Estonia are applicable to posted employees:
- working time;
- rest time;
- minimum wage and compensation for overtime work;
- duration of annual holiday;
- equal treatment and equal opportunities;
- conditions of temporary agency work.
Health, safety and hygiene at work
The Occupational Health and Safety Act (Töötervishoiu ja tööohutuse seadus), applies to workes posted to Estonia, even when these are less favourable for posted workers than the provisions of foreign legislation.