Estonia, EU – Baltic States, Financial Services, Labour Unions, Legislation, Markets and Companies

The Supreme Court said in a decision made public on Monday that the law does not allow for extending to an employer without their consent a collective agreement concluded by a union or a confederation of which they are not a member. Specifically, the top court dismissed the claim of an employee who wanted to be paid a higher wage under a collective agreement than the parties had agreed in the employment contract.

The chairman of EAKL, Peep Peterson, said that Estonia on Monday became almost the only country in the European Union which doesn't permit the extension of internationally recognized collective agreements to all market participants. 

"Ignoring the international system of labor law and good practice of interpretation, the Supreme Court deemed void the provision of the Collective Agreements Act under which the wages of thousands of workers have been agreed upon across the market and fair competition terms ensured for hundreds of employers," Peterson said in a press release.

 Kaia Vask, head of the council of EAKL and secretary general of the Estonian Seamen's Independent Trade Union, said that work to amend the Collective Agreements Act must start immediately, along with the preparation of a system whereby sectoral collective agreements are enforced by a regulation of the government just like the national minimum wage. 

The chairman of the Transport Union, Ullar Kallas, said that social partnership, which has been recognized also by the state, has been functioning very well in the Estonian transport sector for decades.

"The fresh judgment by the Supreme Court has put it under threat, and the solution must come fast," he said.

Esther Lynch, deputy general secretary of the European Trade Union Confederation, said that when passing decisions the Supreme Court of Estonia should not overlook important principles of human rights and if that happens, the employees and the unions that take a blow should definitely consult with the Council of Europe, international labor organizations, or the European Court of Human rights.

At present there are extended sectoral collective agreements in force in Estonia in the sectors of haulage, public transport and healthcare.

In the civil matter that reached the top court of Estonia, the employer paid to a bus driver a wage agreed between them in the employment contract. The employee meanwhile found that they are entitled to a wage as per the collective agreement concluded between the Union of Estonian Automobile Enterprises and the transport and road workers' trade union, which stipulated a higher wage.

In the dispute, the employer argued that the employee cannot demand a higher remuneration because the employer has not joined the collective agreement. The county court and a second tier court satisfied the employee's claim for higher pay. 

The Supreme Court however found that the two lower courts were mistaken in their interpretation of the Employment Agreements Act and that the law does not enable to make binding on an employer a collective agreement concluded by a union or a confederation that the employer is not a member of. Extending the terms of a collective agreement and imposing obligations on an employer is possible only if the employer has consented to it, the top court found.