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  • The employment contract indicates the agreed gross wages.
  • An employee may not be paid wages falling below the minimum wage established by the Government of the Republic.
  • The employer undertakes to pay the employee wages at least once a month on the agreed day.

Wages

One of the most important conditions of an employment contract is the wages. The amount of remuneration and the method of calculating it shall be indicated in the employment contract. The remuneration indicated in the employment contract is gross wages. Taxes have been deducted from the amount that is transferred to the employee’s bank account (net wages). In the employment contract, the employer must indicate which taxes are withheld from the wages (income tax, mandatory funded pension tax and unemployment insurance tax) and which taxes are paid by the employer on behalf of the employee (social tax).

The Employment Contracts Act does not prescribe mandatory components of the wages. This means that the parties can decide for themselves what the wage consists of and how it is calculated. For example, it is permissible to agree on the bases for calculating remuneration per unit of time (for example, hourly wages, monthly wages) or the number of jobs performed (piece work). The amount of wages must be indicated in the employment contract so that it is clear and unambiguous to the employee.

The amount of wages must take into account the amount of work and the time required to perform it, the complexity of the work, working conditions, qualifications, performance of duties in special conditions (e.g. night work), etc. The agreement on wages must not depend only on the employee’s gender.

If the employee starts working full-time, the wages cannot be lower than the minimum wage established by a regulation of the Government of the Republic.

In the absence of an agreement on wages, it will be based on wages normally paid for similar work under similar conditions. For example, if a cashier works without a written agreement and verbal promises cannot be proven, they are entitled to the average wages of colleagues doing similar work or the average wages of the same area of activity.

It is also in the interest of the employer to agree on the wages, because in the event of a dispute, the average wages in the field may be higher than what was agreed with the employee without a written agreement.

The employer undertakes to pay the employee wages at least once a month on the agreed day. The parties may also agree to pay wages for a shorter period, such as weekly, but not for a period longer than a month. The payday must be notified to the employee in writing and included in the employment contract.

The payday agreement must be clear and unambiguous, i.e. the payday must be stated on a date (e.g. the 5th day of each month) or in another way (e.g. the first working day of each month). It is not correct to agree on a payday as a period (e.g. the 1st to the 10th of each month).

Wages shall be paid in money as a net amount. The employer deducts taxes and payments from the agreed wages. The taxes referred to are, in particular, income tax and social tax, as well as unemployment insurance premium and compulsory funded pension payment. The law requires that the wages be paid into a bank account designated by the employee, but the parties may also agree to pay the remuneration in money. If the employee wishes to receive remuneration in money, it is also advisable to determine the place where they will receive the money.

If the payday falls on a public holiday or non-working day, the remuneration must be paid on the working day preceding that day. For example, if the payday falls on a Sunday, the wages must be paid on a Friday.

According to the Employment Contracts Act, the remuneration paid for work may not be less than the minimum wage established by the Government of the Republic. Although the parties are free to agree on the amount of remuneration suitable for them and the bases for its calculation, the employee may not be paid less than the amount corresponding to the established minimum wage.

As of 1 January 2024, the minimum hourly wage shall be 4,86 euros and the monthly minimum wage for full-time employment 820 euros (gross).

Example: An employee works full time and earns 4,86 euros gross per hour. In February 2024, the employee receives wages in the amount of 801,9 euros gross (165*4,86 =801,9). In contrast, April is a longer month and then the corresponding amount of wages is 855,36 euros gross (176*4,86 = 855,36).

If the employee works part time, the minimum is reduced accordingly.

Example: An employee works part time, four hours a day and 20 hours a week. The employee’s wages may be agreed as an hourly rate, i.e. in January 2022, for example, the amount is 427,68 euros gross (88*4,86= 427,68). The employee’s wages can be a monthly amount of 410 euros gross (820/2 = 410).

At the request of the employee, the employer is required to provide them with information on the monthly wages, additional remuneration, bonuses, calculation of the average wages, etc., calculated and paid to the employee, as well as other communications characterising the employee or employment relationship. The parties agree on the form in which the notification is to be submitted: either on paper or by e-mail.

If the employer does not submit the notification despite the oral request, it would be prudent for the employee to repeat the request in an e-mail, which could later be used as written evidence in the case of a possible dispute.

Special cases of payment of wages

According to the Employment Contracts Act, overtime work can be compensated in two ways:

  • by providing the employee free time, or
  • with money.

The law presupposes that overtime work is compensated by paid free time. When compensating with free time, the employee must be paid one-time wages for working overtime, as well as for the free time given to the employee for overtime work.

The reason why the first precondition for compensating for overtime is free time is to protect the health and safety of the worker. As sufficient rest time is necessary to maintain working capacity and regenerate the labour force, the Employment Contracts Act prescribes a precondition for compensating overtime work with free time. Therefore, free time must be provided as soon as possible after the end of the period when the overtime occurred. In the case of summarised working time, overtime becomes clear at the end of the calculation period and can be compensated with free time during the next period.

Due to the extraordinary nature of overtime work, performing overtime work must result in additional compensation for the employee for working different hours than usual. Overtime work must therefore be followed by adequate compensation in excess of the remuneration for work performed within the agreed working hours, i.e. overtime work must be more ‘expensive’ than normal working hours. Therefore, in the case of compensation for overtime work, that free time cannot fall within the employee’s normal rest period. Leisure time intended to compensate for overtime work is granted from the agreed working hours and is therefore remunerated as normal working hours. The respective regulation ensures adequate compensation for the employee for working overtime and protects the employee from a possible decrease in wages.

If the employer wishes to compensate for the overtime work in money, this must be agreed with the employee. Upon compensation for overtime work in money, an employer shall pay an employee at a rate of 1.5 times the wages.

OVERTIME WAGES (hourly / piece-rate) = wages for the calculation period / working hours for the calculation period × number of overtime hours × 0.5

OVERTIME WAGES (monthly) = wages for the calculation period / working time norm for the calculation period × number of overtime hours × 1.5

If an employee works overtime at night or on a public holiday, the employee must be paid for overtime, night work as well as work performed on a public holiday, but the basic wages agreed in the employment contract do not have to be taken into account twice. Considering additional remuneration, a situation must not arise where, in addition to the bonus for night work and work performed on a public holiday, the employee also receives double the basic wages agreed in the employment contract. For example, in a situation where an employee works overtime on a public holiday, the employee's (basic) wages must first be multiplied by 2 and then by 0.5 (the overtime bonus is deducted from the basic wages component).

 

We present an illustrative example:

Let us assume that an employee working on the basis of ordinary working time, whose salary is 1000 euros per month, works 8 hours on a public holiday, December 26, 2022, which is also overtime work. An employee's salary for December can be found as follows:

1000 (salary per month) / 165 (number of standard hours) = ~6.1 euros (salary per hour)

Salary for December: 1000 (for standard hours) + 6.1 x 8 x 2 (salary on a public holiday) + 6.1 x 8 x 0.5 (overtime pay) = 1122 euros

If the law presupposes that overtime work is compensated by providing free time, then night work and work performed on public holidays are presumably performed for additional remuneration.

Public holidays and non-working days are provided in the Public Holidays and Days of National Importance Act.

Night work and work performed on public holidays may be compensated in free time in agreement with the employee. For working at night (10pm to 6am), the employer must pay the employee at a rate of 1.25 times the wages. Payment of additional remuneration is not necessary if the parties have agreed that the wages include remuneration for night work.

In a situation where the employee receives the minimum wage, the wage does not include additional remuneration for working at night. In this case, the employee receives only the statutory minimum, which does not include the additional remuneration component. The employer must therefore pay at least at a rate of 1.25 times the wage to compensate for night work.

If the working time falls on a public holiday, the employer shall pay two times the wage for the work. Working hours that fall on a national or public holiday must receive double remuneration. For example, in a situation where the employee’s work shift begins on a normal working day and ends on a public holiday, the hours worked on a public holiday must be additionally reimbursed, the remaining working hours being paid in the normal way. If an employee works overtime on a public holiday, in addition to double the wages, the employee must also be compensated for the overtime.

The employee must be paid for the same hours as both overtime and hours worked on a public holiday. Here, however, it must be borne in mind that if the employee is to be paid double the wages for working on a public holiday and at a rate of 1.5 times for overtime, then overtime work is not paid at a rate of 3.5 times in total on public holidays, but roughly 2.5 times. In other words, the principle applies that the so-called basic wage does not have to be taken into account twice. The basic wage is calculated once through the respective coefficients and added together.

Delay in payment of wages

Delay in the payment of wages is a situation where the employer has not paid the wages to the employee by the agreed payday. As the Employment Contracts Act does not prescribe a rule for delaying the payment of wages, the payment of penalty for late payment is based on the provisions of the Law of Obligations Act concerning penalty for late payment.

The employee has the right to demand penalty for late payment for the delay in the payment of the wages in accordance with the provisions of sections 94 and 113 of the Law of Obligations Act.

The interest rate shall be the rate applied by the European Central Bank to its main refinancing operations (Euribor), plus 8% per annum. As of 1 January 2024, the applicable default interest rate is 12,5% (i.e. 0.0342% per day).

The parties may also agree on a higher penalty for late payment, but only if the employer delays the fulfilment of the financial obligation.

The website www.viivisekalkulaator.ee is useful in calculating penalty for late payment.

The term for filing a claim for wages is three years as of the time the wages fell due.

Liability of person who has commissioned subcontracting

The person who has commissioned subcontracting is liable for the subcontractor’s obligation to pay wages as a surety under the provisions of the Law of Obligations Act governing suretyship. This provision is applicable if an employee of the subcontractor performs construction work related to the construction, repair, upkeep, alteration or demolition of buildings and the employer (subcontractor) does not pay the employee wages. This means that the person who has commissioned subcontracting undertakes to be liable for the performance of the employer’s (subcontractor’s) obligation to pay wages to the employee. 

A person who has commissioned subcontracting means a person who, for the performance of their obligations related to construction work, orders work specified above from another person. This provision is not applicable to the contracting entity or contracting authority of the site as the contracting entity or contracting authority does not have the obligation to perform construction work, they are just looking to order the completion of something.

The obligation to pay wages must be fulfilled by the person who has commissioned subcontracting if it is not possible for the employee to collect the wages from the employer (subcontractor) within four months after the commencement of enforcement proceedings. In order to initiate enforcement proceedings, the employee needs an enforceable title that has entered into effect and must also present an application to the enforcement agent.

The limit of liability of the person who has commissioned subcontracting is the minimum wage per calendar month. In 2023, the minimum wage was 725 euros per month, and as of 1 January 2024, the minimum wage is 820 euros per month.

Example:  If the employer was obliged to pay the employee 1,500 euros per month under the employment contract but has not paid wages for four months, the employee is entitled to receive wages in the total amount of 6,000 euros (4 × €1,500). As the liability of the person who has commissioned subcontracting is limited to minimum wage, the employee has the right to demand from the person who has commissioned subcontracting the payment of four months’ minimum wages, ie 4 × 820 euros = 3280 euros in 2024.

When the person who has commissioned subcontracting has paid to the employee the minimum wages, the person who has commissioned subcontracting may reclaim the performed obligation to the same extent from the subcontractor (employer of employee). At the same time, the employee’s claim against their employer is reduced by the amount paid by the person who has commissioned subcontracting.

The person who has commissioned subcontracting does not have the obligation to pay wages if they have exercised due diligence. The exercise of due diligence may mean the performance of a background check of the contracting party or contractor by the person who has commissioned subcontracting, eg they request documents reflecting the contractor’s financial status or a taxation data certificate, make inquiries in public registers, verify the absence of tax arrears as well as the payment of social tax of employees to ensure that there are no signs of tax evasion, concealed transactions or the like with regard to the subcontractor, all of which build confidence that wages will in all probability be paid to the employees.

The final assessment of the performance of the obligation of due diligence will be given by the labour dispute committee or court.

Reduction of wages

In a situation where the workload has decreased due to unforeseeable reasons beyond the control of the employer, i.e. it is no longer possible to provide employees with the agreed amount of work and the employer is unable to pay the agreed wages due to insufficient funds, the employer may unilaterally reduce the employee’s wages. For example, the spread of the coronavirus is one of the unforeseen circumstances in which an employer may unilaterally reduce an employee’s workload and wages for three months over a 12-month period (not a calendar year) under subsection 37 (1) of the Employment Contracts Act. Wages may be reduced up to the minimum wage established by the Government of the Republic (820 euros per month).

However, a reduction of wages pursuant to subsection 37 (1) of the Employment Contracts Act is permitted only under certain conditions, i.e. both conditions must be met simultaneously:

  • Due to unforeseen economic circumstances beyond its control, the employer cannot provide the employee with work to the agreed extent (not including seasonal changes in the workload).
  • Paying the agreed wages is unreasonably burdensome for the employer.

Wages cannot be reduced, for example, if the employer is not able to provide work to the agreed extent, but at the same time has sufficient financial resources to pay the wages and there is no real need to change the employee’s wages.

In order to reduce wages, the employer must first consider whether they can offer the employee another job. As the Employment Contracts Act does not restrict the offer of another job with qualification requirements or specialties, the employee must be offered a job that they are able to do due to their abilities and skills, including lower-skilled and different jobs than originally agreed. Reduction of wages is unlawful if the employer does not offer the employee another job if there is a possibility to do so. At the same time, the employee is not obliged to accept another job and the refusal of the offered job cannot lead to the cancellation of the employment contract.

If there is no other job to offer or if the employee does not accept the offer of another job, the employer must notify the employees’ representative or, in the absence of a representative, the employees directly at least 14 calendar days in advance, i.e. the employer must follow the principle of informing and consulting employees. Employees must therefore be given the opportunity to express their will. Employees must submit their opinion within seven calendar days of receiving the notification.

In the event of a reduction in wages, the employee has the right to refuse work in proportion to the amount of wages reduced by the employer. For example: in the case of a 40% reduction of wages, the working time of the employee must be reduced by the same amount.

According to subsection 37 (1) of the Employment Contract Act, an employer may not reduce an employee's wages below the minimum wage. The minimum wage for full-time work is 820 euros per month or 4,86 euros per hour upon agreement. The minimum wage depends on the workload agreed with the employee in the employment contract, not on the workload set out in the notice of a reduction in wages.

1. The employee has agreed to full-time work in the employment contract (i.e. eight hours per day and 40 hours over a seven-day period).

  • The minimum monthly wage is 820 euros.
  • The minimum hourly wage depends on the standard working hours per month.

Standard working hours are calculated as follows: number of calendar working days (Mon–Fri, excluding public holidays) × estimated number of hours per day (eight hours for full-time work) – three hours if the employee’s working day falls on a New Year's Day, the anniversary of the Republic of Estonia, Victory Day or Christmas Eve. For example, in March 2024, there are 160 standard working hours for full-time work (20 working days × eight hours per day) and 176 hours in April (22 working days × eight hours per day), and so on. Thus, the minimum wage in March will be 777,6 euros (160 hours × 4.86 euros), 855,36 euros in April (176 hours × 4.86 euros), and so on.

2. The employee works part time (for example, four hours a day and 20 hours per seven-day period for 0.5 workload) as agreed in the employment contract.

The minimum monthly wage is 410 euros (820 euros × 0.5 workload)

The minimum hourly wage depends on the standard working hours per month. For the calculation of standard working hours see the explanation above. For the 0.5 workload, the worker is estimated to work four hours per day and 20 hours per seven-day period. Thus, in March 2024, the minimum wage would have been 388,8 €, as there were 80 working hours (20 working days × four hours per day) and in April the minimum wage would have been 427,68 €, as there were 88 hours (20 working days × four hours per day).

Remuneration can be reduced for up to three months during a 12-month period (not a calendar year).

Example 1: an employer reduced wages in the period 15/04–15/07/2021. Thus, the 12-month period began on 15 April 2021, and the employer can reduce wages again from 16 April 2022.

Example 2: An employer reduced employees' wages for one month from 15 April 2020. The 12-month period began on 15 April 2020 and ended on 15 April 2021. The employer can reduce the wages for another two months during the same period, because the wages do not have to be reduced for three consecutive months. Thus, the employer reduced the wages once again for one month from 1 March 2021. The new 12-month period under section 37 of the Employment Contracts Act begins on 16 April 2021, when the employer can, if necessary, reduce the wages again for up to three months. In such a case, a situation may arise where the employee’s wages have been reduced for a total of four months in 2021, but this is not a contradiction within the meaning of section 37 of the Employment Contracts Act based on the logic of implementing the 12-month period.

The reduction in wages may be spread over a period of 12 months, but it is not justified to reduce remuneration every few weeks for a few days at a time. Reductions in pay at short intervals indicate that this is a continuing situation that needs to be addressed through other measures, such as changes in working hours or organisation of work. Continuous reduction of wages in small periods also testifies to the fact that one of the preconditions for reduction of wages – unforeseen circumstances – is not met.

If the employer wishes to reduce the employee’s wages, they must inform the employees’ representative or, in their absence, the employees directly and consult them on the reduction plan. The obligation to provide information has been implemented in a timely manner if the employee has not yet been affected in any way by the pay-reduction plan. The employer must therefore inform employees of the possible intention to reduce wages, not of the decision to reduce wages. If the employer makes a decision in advance of the notification obligation, then the employees do not have a substantive and effective opportunity to influence the process, as the decision has already been made. For the sake of clarity and in order to avoid possible future disputes, it is appropriate to give priority to the written form of information.

After or at the same time as providing the information, the employer starts consultations with the employees in order to exchange views and have a dialogue. The employer must notify the employees or their representative of the intention to reduce wages at least 14 calendar days in advance. During this time, a consultation takes place between the employer and the employees or their representative, during which the proposals and wishes received from the employees or their representative are discussed and a solution is sought that would satisfy all parties to the consultation. The employees or their representative have the right to give their opinion within seven calendar days as of the receipt of the employer's notice. The employer may, if necessary, extend the terms provided by law in order to give the employees more time to get acquainted with the proposed plan and to present their views.

During the consultations the suggestions and wishes received from the employees or their representative shall be discussed and a solution is sought that would satisfy all parties to the consultation. The employer is not obliged to take into account the opinion of the employees or their representative, but the reasons for not taking it into account must be given justification during the consultations. If the employer does not take the proposals into consideration, the reasons for this shall be given at the earliest opportunity in writing or in a format which can be reproduced in writing.

As a result of the consultations, the employer may change the wage-reduction plan; for example, it is decided to cancel the reduction of wages or to do it under different conditions than originally planned. If, after consultation, it is still decided to reduce the wages, the employer must inform the employees of the decision. Only after consultation, i.e. after negotiations and after obtaining the opinion of the employees, can the employer communicate to the employees a binding decision on the reduction of wages.

Therefore, at least an e-mail should be sent to the employees or their representative stating:

  1. Why has this reduction of wages taken place – for example, a description of how an unforeseen economic circumstance has affected the company’s turnover, orders, number of customers, etc., and how exactly has this led to the need to reduce the workload and wages of the employees?
  2. During what period of time does the employer apply a reduction in wages pursuant to section 37 of the Employment Contracts Act?
  3. What is the extent of the reduction in workload and wages? If the employer reduces working hours and workload equally for everyone, for example by 40%, this should also be pointed out. However, if an employer reduces working time and workload in relation to the actual contribution of each employee, individual notifications must be sent to each employee stating the extent of the reduction so that they can consider whether it is acceptable to them or not.
  4. The employer explains that the employee has the right to refuse to perform work in proportion to the reduction of the wages.
  5. The notice provides the opportunity for employees to have a say in the situation and to find possible alternative solutions. The employees or their representative shall give their opinion within seven calendar days as of the receipt of the employer’s notice.
  6. The notice clearly informs the employee that if they do not agree to the reduction of wages, then they have the right to cancel the employment contract on the basis of subsection 37 (5) of the Employment Contracts Act.
  7. The employer may also specify in the notice the specific period by which employees must notify their decision whether or not to accept a reduction in wages and to whom (at what address).

If the employees do not agree to the reduction in wages, they have the right to cancel the employment contract by referring to subsection 37 (5) of the Employment Contracts Act, notifying the employer of their decision five working days before the reduction of working hours and wages established by the employer takes effect. The employee is paid at the end of the employment contract, in addition to the so-called final settlement, i.e. earned wages and unexpired and unused annual leave, compensation in the amount of one month’s average salary on the basis of subsection 100 (1) of the Employment Contracts Act. In addition, the right to receive additional redundancy benefits from the Unemployment Insurance Fund here applies if the employee’s last employment relationship has lasted at least five years. If an employee cancels the employment contract because they do not agree to the reduction in wages, then they have the right to apply for unemployment insurance benefits from the Unemployment Insurance Fund if they become unemployed and are registered as unemployed.

TLS § 37 rakendades tuleb töötasu vähendamisel lähtuda töötaja ja tööandja kokkulepitud töötasust.  Kui pooled on kokku leppinud, et töötajal on õigus saada töötasu alammäära ning teatud tingimuste täitmisel tulemustasu (näiteks 10% läbimüügist), peab töötaja arvestama, et kindlalt on tagatud talle töötasu alammäär. Kui tulemustasu täitmise eelduseks olevad tingimused ei täitu, ei teki tal õigust tulemustasule. Kui töötajal ei ole tekkinud õigust tulemustasule, ei saa TLS § 37 mõttes öelda, et tööandja on töötaja töötasu tulemustasu võrra vähendanud. Selles olukorras saab töötaja töölepingus kokkulepitud tingimuste kohaselt lihtsalt vähem töötasu kui ta sai näiteks eelmisel kuul, kui ta täitis tulemustasu saamise eelduseks olevaid tingimusi. Kuivõrd TLS § 37 kohaselt ei saa tööandja töötaja töötasu vähendada alla töötasu alammäära, ei ole eelnevalt toodud näite puhul ka töötasu vähendamine võimalik. 

Kui töötajaga kokkulepitud töötasu on nt 900 eurot, millele lisandub 10% läbimüügist, on töötasu vähendamine võimalik. Aluseks võetakse 900 eurot, millele töötajal on õigus isegi siis kui müügieesmärk on saavutamata. Tööandjal on õigus TLS § 37 alusel, järgides seaduses toodud nõudeid, vähendada töötaja töötasu 900 eurolt töötasu alammäärani.

Pursuant to the Employment Contracts Act currently in force, it is not forbidden for an employee to work for several employers. Therefore, an employee is allowed to work for more than one employer at the same time. It is important to remember that the employee must be able to perform all the employment contracts they take on. Therefore, the employee must take into account that by working, for example, for two separate employers, they must be able to carry out the occupational duties for both of them.

Section 37 of the Employment Contracts Act, i.e. reduction of wages, cannot be applied to foreign employees who are subject to the wage requirement arising from the Aliens Act, as this would create a conflict with the Aliens Act. The Police and Boarder Guard Board have clearly stated regarding this issue that there are currently no special orders applicable to the employment of foreigners. Thus, the Aliens Act must still be followed and the person must receive the wage prescribed by the wage requirement.

However, if changing the work load has been agreed with the foreigner, the person must receive the hourly wage based on the wage requirement depending on their work load. Further information about the payment of wages to foreigners can be obtained from the migration consultants of the Police and Border Guard Board, whose contact details can be found here: https://www.politsei.ee/en/migration-consultants.

Pursuant to subsection 37 (1) of the Employment Contracts Act, an employer may, for up to three months over a period of 12 months, reduce the wages to a reasonable extent, but not below the minimum wage established by the Government of the Republic, if payment of the agreed wages would be unreasonably burdensome to the employer or if an employer, due to unforeseen economic circumstances beyond their control, fails to provide an employee with work to the agreed extent. 

Even though, in this case, the wages of employees are fixed in a collective agreement, an employer has the right to reduce the wages to a minimum rate as established by the Government of the Republic (820 euros per month) pursuant to section 37 (1) of the Employment Contracts Act. Whereas the circumstances described in subsection 37 (1) of the Employment Contracts Act are and must be extraordinary, e.g. they must meet certain conditions (economic circumstances beyond the control of the employer), it is also allowed to reduce the wages of employees whose wages are fixed under a collective agreement to a minimum rate established by the Government of the Republic. We will hereby bring your attention to the fact that pursuant to subsection 37 (3) of the Employment Contracts Act, an employee has the right to refuse to perform work in proportion to reduction of the wages.

Set-off of wages

The employer may set off their financial claims against the employee’s wages with the employee’s consent. Deductions from an employee’s wages cannot be done by the employer unilaterally. An agreement with the employee is needed for set-off of wages. For example, the employee has caused damage to the employer and the employee is entitled to wages. Compensation for damage at the expense of wages can only be made by the employer if the employee has given their consent. If consent is not obtained, the employer has the right to apply to a labour dispute committee or a court.

The employee’s consent to the set-off must be either in a form that can be reproduced in writing (for example, by e-mail or SMS) or in writing (handwritten or digitally signed).

Consent for set-off cannot be pre-given. For example, when concluding an employment contract between an employee and an employer, it cannot be agreed that the employer can set off their claims against the employee’s wages. The employee’s consent is required in each case separately, i.e. the employee’s consent to set-off cannot be obtained until the claims to be set off have arisen.

Consent to set-off wages can only be given to set-off an amount that exceeds the agreed cost limits. For example, when concluding an employment contract, the employee and the employer may agree on a monthly petrol limit, above which the employee’s wages in excess of the limit are withheld.

Exceptions to the above are advances paid to the employee and, at the end of the employment contract, remuneration for unearned annual holiday, which may be deducted from wages without the employee’s consent. For example, the employee’s consent is not required for set-off in a situation where, at the end of the employment relationship, it becomes apparent that the employee has taken leave in advance. In such a situation, the employer can set off the holiday pay paid against the final settlement to be paid.

Wages of a crew member

The operator shall provide the crew members with information about the previous month’s wages which have been calculated and paid or which are subject to payment, including information about the currency exchange rate if necessary, unless agreed otherwise.

Reasonable costs related to the payment of wages shall be covered by the operator. On board ships with a gross tonnage of 200 or more, engaged in international shipping, the operator shall ensure that the crew members have the possibility to transfer their wages to the bank account of a third person. In the case of fishing vessels the aforementioned obligation applies on board ships with a gross tonnage of 300 or more.

If during the term of the seafarers' employment contract a crew member takes up or stops work on a ship that’s not located at the place of conclusion of the seafarer’s contract, the operator shall calculate for the crew member compensation equal to the crew member’s wages as of the moment the trip to or from the ship starts, unless agreed otherwise in the seafarer’s employment contract.

The master of a ship has the right to increase the workload of a crew member if due to an unforeseeable event the number of crew members who are able to work decreases during a voyage. If the workload of a crew member is increased, the operator shall pay to the crew member additional remuneration the amount of which shall be calculated in proportion to the increased workload of the crew member and to the amount saved by the operator on wages due to the decreased number of crew members.

An operator whose ship is required to have a maritime labour certificate pursuant to section 1113 subsection 1 clause 1 of the Maritime Safety Act or to whom it is issued under subsection 2 of the aforementioned section is required to continue paying a crew member who is held captive on or off the ship in connection with acts of piracy or armed robbery against the ship wages and other remuneration to which the crew member is entitled under the seafarers’ employment contract, collective agreement or the law

If the operator and crew member had an earlier agreement on payment of wages to the bank account of a third person, the making of payments to the third person must be continued in the aforementioned cases.

The obligation remains effective during the entire period of captivity of the crew member until the crew member is released and duly repatriated. If the crew member dies while in captivity, the aforementioned obligation will remain effective until the date of death of the crew member.

Wage subsidy

The purpose of the wage subsidy is to support the employer in employing a long-term unemployed, a young person, a person with reduced working capacity, a beneficiary of international protection or a person recently released from prison.

The period of payment of the wage subsidy is six or 12 months, depending on the basis for granting it.

Read more about the wage subsidy on the website of the Unemployment Insurance Fund.