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Reduction of Remuneration Payment

Viimati uuendatud: 25.02.2017

As a general rule, the Employment Contracts Act prohibits the one-sided changing of the remuneration. Law enables exceptions if the employer cannot provide the employee with the agreed work due to unforeseeable economic circumstances not dependant on the employer. Remuneration decrease is an exceptional and drastic measure, which requires the simultaneous fulfilment of both following assumptions:

  1. Due to unforeseeable economic circumstances not dependant on the employer, they are unable to provide the employee with work in the agreed extent. This does not include the seasonal change in workload nor success in concluding supply contracts. Unforeseeable are only such circumstances that the employer could not be able to reasonably foresee when concluding the contract of employment.
  2. Paying the agreed remuneration is unreasonably burdensome to the employer. Remuneration may not be decreased in a situation when the employer cannot provide the agreed work to the employee but does have enough finances to pay remuneration. In this case, there is no actual need to decrease the remuneration.

Offering alternative work

Prior to decreasing remuneration, the employer must offer the employee some alternative work, if possible. As the Employments Contract Act does not limit offering another work with different qualification requirements or speciality, the employee must be offered such work that they are capable of doing with their skills and knowledge, including positions with lower qualification or differing from the agreed work. Decreasing remuneration is illegal if the employer does not offer alternative work to the employee, if it exists. However, the employee is not obliged to accept another work and refusal to accept the offered work may not trigger termination of the employment contract.

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