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Factsheet for measure EE-2002-1/2605 – measures in Estonia

Benefits in case of employer insolvency

Hüvitis tööandja maksejõuetuse korral

Country Estonia , applies nationwide
Time period Open ended, started on 01 January 2002
Context Restructuring Support Instruments
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g., short-time work)
Author Ingel Kadarik (Praxis Center for Policy Studies) and Eurofound
Measure added 23 June 2022 (updated 04 November 2022)

Background information

In order to ensure that employees can cope financially in case of the employer's insolvency, the Estonian Unemployment Insurance Fund pays insolvency benefits to the employees. Insolvency is understood as either the bankruptcy of the employer or the abatement of bankruptcy proceedings (if the assets cannot meet the costs of liquidation). The terms and conditions of the benefit are based on the Unemployment Insurance Act (chapter 4).

Other cases related to the Estonian Unemployment Insurance Fund (EUIF) are:

Content of measure

The benefits include:

  • Pending salary from the period before the declaration of the employer as insolvent.
  • Pending holiday pay from the period before the declaration of the employer as insolvent.
  • Benefits from the period before or after the declaration of the employer as insolvent which were not received at the time of cancellation of the employment contract.

In case of unpaid wages, the amount to be paid covers up to the employee's gross wages for the last three months of work, but not exceeding the amount equal to three average gross monthly wages in Estonia during the quarter preceding the declaration of the employer as insolvent (data published by the Statistical Office is the reference point).

In case of unpaid holiday pay, the maximum paid amount is one gross monthly wage of the employee, but not exceeding the amount equal to one average gross monthly wage in Estonia during the quarter preceding the declaration of the employer as insolvent (according to the data published by the Statistical Office).

In case of benefits not received, the maximum paid amount is equal to the employee's two gross monthly wages but not exceeding the amount equal to one average gross monthly wage in Estonia during the quarter preceding the declaration of the employer as insolvent (according to the data published by the Statistical Office).

The benefit is financed from the national fund, i.e., from the unemployment insurance premiums paid by employers and employees which are gathered into a national fund administrated and used by the Unemployment Insurance Fund. 

Use of measure

According to data provided by the Estonian Unemployment Insurance Fund, the number of people entitled to benefit upon insolvency of the employer was significantly higher during the Great Recession in 2008-2010, when it served its purpose well. The COVID-19 pandemic also increased the number of cases. 

Data for recent years:

  • 2018: Number of people entitled to benefit - 1,090; average benefit - €2,772
  • 2019: Number of people entitled to benefit - 1,200; average benefit - €3,092
  • 2020: Number of people entitled to benefit - 2,424; average benefit - €3,367
  • 2021: Number of people entitled to benefit - 1,235; average benefit - €2,919
  • 2022 (up to the end of September): Number of people entitled to benefit - 714; average benefit - €3,379

Manufacturing, accommodation and catering, construction, and transportation and storage have been the sectors where the number of people receiving the compensation has been the highest during recent years.

Source of data: Estonian Unemployment Insurance Fund statistics

Target groups

Workers Businesses Citizens
Employees in standard employment
Does not apply to businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Public employment service
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Unknown Unknown
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • Unknown
  • Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Unknown

Sources

Citation

Eurofound (2022), Benefits in case of employer insolvency, measure EE-2002-1/2605 (measures in Estonia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/EE-2002-1_2605.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.