In March 2006, certain changes to the Estonian Employment Contracts Act
came into force. The changes are related to the right of the employer to
unilaterally terminate the employment contract with an old-age employee.
To this day, the Employment Contracts Act (“Act”) allowed the employer
to unilaterally terminate the employment contract, if an employee attained the
age of 65 and had a right to perceive a pension. The regulation was in essence
discriminatory on the basis of age, providing persons who were entitled to
old-age pension less protection against dismissal than other people of the same
The amendment of the Act had two main objectives. Current priority of
the employment policy is to raise the age of retirement in order to mitigate
economic consequences of ageing population and to lower state social security
costs. The amendment also seeks to improve equality of treatment and chances.
unilateral termination of employment contract due to age
The amendment abolished clauses which provided for the employer’s right
of unilateral termination of the employment contract due to the age of the
The above-mentioned changes made the Employment Contracts Act conform to
§ 12 of the Constitution of the Republic of Estonia and European Council
directive 2000/78/EC concerning equal treatment in employment and occupation.
The employer should therefore, when deciding to dismiss an employee, consider
person’s capacity for work and not just the age. If the old-age employee is not
any more suitable for job, the employer has the possibility to terminate the
employment contract with such employees on the ground of inadequacy
(insufficient performance due to health, professional skills or knowledge).
For further information please contact:
attorney at law, partner
Law Office Tark & Co
Roosikrantsi 2, 10119 Tallinn
tel.: +372 611 0900
fax: +372 611 0911