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Compensating employers for holiday pay and average wage from the state budget

Annual holiday of an employee with partial or no work ability or a minor employee

Every year employees with partial or no work ability and minor employees have the right to 35 calendar days of annual holiday. The state compensates the employer for 7 calendar days of holiday pay.

The following have the right to 35 calendar days of annual holiday:

  • Persons receiving pension for incapacity for work, including persons receiving national pension based on incapacity for work;
  • People with partial/no work ability;
  • Minors.


As of 1 October 2019, in the calendar year a person takes up employment or terminates their employment relationship that person will be compensated for holiday pay in proportion to the time worked. Consequently, if an employee has not worked for an entire calendar year, the employer shall calculate the employee’s remaining holiday in proportion to the time worked. The Social Insurance Board also calculates the number of days subject to compensation proportionally.

N.B. This change only affects holiday taken starting from 1 October 2019. If an employee took a holiday before 1 October, the former procedure applies.

  • Example: Employees with partial or no work ability and minor employees whose holiday per calendar year is 35 calendar days and who commence employment halfway through the year earn 17.6 calendar days of holiday in the six months.
    Calculation: 184 (number of calendar days worked) / 365 (number of calendar days per year) * 35 (annual holiday of employees with partial or no work ability and minor employees) = 17.6

    The Social Insurance Board compensates 20% of earned days of holiday because the seven additional calendar days a year account for 20% of the 35-day annual holiday.
    Calculation: 20% of 17.6 calendar days = 17.6 * 20/100 = 3.5 calendar days.

    The holiday reserve may be rounded up or down to a whole number. So the employee’s remaining holiday is 18 calendar days. And the Social Insurance Board compensates for the holiday pay for four days.

A claim for annual holiday expires after one year as of the end of the calendar year for which the holiday is calculated. For example, holiday earned in 2018 can be used until the end of 2019.

The amount of holiday pay must be calculated on the basis of the employee’s six months’ average calendar day wage. Holiday pay is subject to income tax. No social tax, unemployment insurance premiums or contributions to a mandatory funded pension are paid on extended holiday pay.
The employer is required to pay the employee the holiday pay on the penultimate working day before the beginning of the holiday or by agreement at another time but no later than the pay day following the use of the holiday.

We compensate for holiday pay for 7 calendar days of a 35-calendar-day annual holiday.
As of 01.07.2019 we compensate employers for the holiday pay for all seven days even if the days of holiday have not been used by the end of the relevant employment relationship. The law requires employers to compensate employees for the holiday pay for days earned but not used, which are compensated to employers by the state.

If an employment relationship is terminated before the end of a calendar year, the principle applied states that only the holiday pay for days earned by the moment of termination of the employment relationship is compensated.

  • Example:  An employee with partial or no work ability or a minor employee has earned 12 calendar days of holiday by the time they are taking a holiday. The employer allows this employee to take all 35 calendar days at once and applies to the Social Insurance Board for the compensation for seven calendar days of holiday pay.

    But before the end of the calendar year the employee wants to terminate their employment relationship; during the time worked the employee earned 24 calendar days of holiday. The Social Insurance Board compensates for 20%, which means five calendar days.

    Since the employer has already applied for compensation for seven calendar days, the employer is required to file with the Social Insurance Board an application for correction and refund the overpaid amount of two days’ holiday pay.

If an employee has several employers, we will compensate all the employers for extended annual holiday.
If an employee’s employment contract sets out additional days off, these will be added to the extended annual holiday.

Submission of an application for compensation for holiday pay: http://www.sotsiaalkindlustusamet.ee/en/employers#filling_application

 

Paternity leave

If a child is about to be or has already been born into the family of an employee, the child’s father is entitled to 10 working days of paternity leave. Paternity leave can be taken as early as two months before the child is born until the child reaches the age of two months. The state compensates the employer for the paternity leave pay.

In order to take paternity leave the employee must give the employer the name and personal identification code of the child. If the father to be wants to take a paternity leave during two months prior to the birth of the child, the estimated date of birth and the name and personal identification code of the child’s mother must be given instead. The employer has the right to request additional necessary documents (for instance, the midwife’s statement confirming the estimated date of birth).
Paternity leave can only be taken on the employee’s working days.

The amount of holiday pay must be calculated on the basis of the employee’s past six months’ average working day wage. The compensation cap is three times the average gross wage in Estonia in the next-to-last quarter preceding the use of the holiday.
Information on average gross wages is available on the website of Statistics Estonia.
If an employee has several employers and the employee wants to take a paternity leave at several employers’ at the same time, we will compensate all the employers for the paternity leave pay.

The employer is required to pay the employee the holiday pay on the penultimate working day before the beginning of the holiday or by agreement at another time but no later than the pay day following the use of the holiday.

Example:
If a father takes a paternity leave in the III quarter of 2016, the cap is based on the average wage in Estonia in the I quarter of 2016, which was 1091 euros.
Therefore, the holiday pay cap is 1091*3 = 3273 euros, which makes 3273/10=327.30 euros per day for 10 days.
If the father takes five working days of paternity leave, the Social Insurance Board will compensate the employer for no more than 3273 / 10 x 5 = 1636.5 euros.

Example 2:
Jüri works under an employment contract in two companies and he wants to take a paternity leave of 10 working days during the period of 07.07.2016–18.07.2016. Jüri submits an application to both employers, stating in his application that he wants to take the leave during the period of 07.07.2016–18.07.2016. The employers file an application with the Social Insurance Board for the compensation for the holiday pay. The Social Insurance Board compensates both employers for the holiday pay but applies the cap of three times the gross wage of the I quarter of 2016 which means a total of 3273 euros.

Submission of an application for compensation for holiday pay: http://www.sotsiaalkindlustusamet.ee/en/employers#filling_application

 

 

Child leave

An employee may take a child leave each year as follows:

  • If the employee has one or two children under 14 years of age – three working days;
  • If the employee has at least three children under 14 years of age – six working days;
  • If the employee has one child under 3 years of age – six working days.

In the calendar year the employee’s child reaches the age of 3 or 14 years, respectively, the employee can take a child leave to the prescribed extent until the end of that year. Child leave can only be used during the current calendar year.
The state compensates the employer for the child leave pay.

If an employee is a guardian or a foster care contract has been concluded with the employee, they also have the right to child leave.
Since both parents are entitled to child leave the employee must inform their employer whether and how many days of child leave the other parent has taken.

The child leave pay disbursed is calculated on the basis of the minimum wage:

  • In 2019 the minimum wage is 540 euros per month and the child leave pay is 25.61 euros a day.

The employer is required to pay the employee the holiday pay on the penultimate working day before the beginning of the holiday or by agreement at another time but no later than the pay day following the use of the holiday.

Submission of an application for compensation for holiday pay: http://www.sotsiaalkindlustusamet.ee/en/employers#filling_application

 

Child leave for parents of a disabled child

If a child of an employee is diagnosed with a disability, the employee has the right to one working day per month of child leave for parents of a disabled child until the child attains 18 years of age, which means a total of 12 working days per calendar year. By agreement with the employer the employee may take the leave all at once within a calendar year for previous months. The state compensates the employer for the holiday pay.

If there are several disabled children in the employee’s family, the employee can take a leave according to the number of disabled children.

The amount of holiday pay must be calculated on the basis of the past six months’ average working day wage of the parent of a disabled child. The employer is required to pay the employee the holiday pay on the penultimate working day before the beginning of the holiday or by agreement at another time but no later than the pay day following the use of the holiday.

If the employee works for several employers and wants to take child leave for parents of a disabled child at same period of time at several employers’, we will compensate all employers for the holiday pay.

Example:
Jüri works under an employment contract in two companies and he wants to take a child leave for parents of a disabled child at both employers’ in June of this year, but on different dates. Jüri submits an application to both employers, stating in his application to one employer that he wants to take 3 working days of child leave for parents of a disabled child during the period of 02.06.2016–06.06.2016 and in his application to the other employer 3 working days during the period of 07.06.2016–09.06.2016. Since those days do not overlap, Jüri has taken a total of 6 working days of child leave for parents of a disabled child.

Submission of an application for compensation for holiday pay: http://www.sotsiaalkindlustusamet.ee/en/employers#filling_application

 

As of 1 July 2018, the carer or a person close to an adult with a profound disability will have the right to up to 5 working days of carer’s leave per calendar year. The leave can be used by an employee who is a person close to a person with a profound disability (sibling, half-sibling, mother, father, parent and grandparent), the spouse or registered partner, for the purposes of the Registered Partnership Act, of a person with a profound disability or the guardian or official carer, appointed by the local government, of a person with a profound disability. The carer’s leave can only be used during the current calendar year.

The holiday pay is paid to the employee by their employer and an application for the compensation for it can be submitted to the Social Insurance Board no later than within 3 months as of the use of the carer’s leave. The holiday pay for the additional days off is calculated at the rate of the minimum wage, which is 25.61 euros per day in 2019.

Example:
Mari’s mother has a profound disability. Mari works under an employment contract and in June 2018 she wants to use 2 days of the carer’s leave to go with her mother to a doctor.
The employer grants Mari the days off and pays her holiday pay for 2 days: 25.61 x 2 = 51.22 euros. No later than within 3 months after the use of the carer’s leave the employer submits to the Social Insurance Board an application for the compensation for the holiday pay. The Social Insurance Board compensates the employer for the holiday pay.

To take the additional days off the employee must come to an agreement with the employer and submit an application to that effect. If necessary, the employer is entitled to request additional documents proving the right to carer’s leave, such as:

  • effective decision on determination of the degree of severity of the profound disability of the person being cared for;
  • population register statement or similar proving that the employee who wants to use the carer’s leave is a person close to the person being cared for or the latter’s guardian or carer.

The employer is also entitled to request a confirmation that the employee or other entitled persons have not already used and do not want to use the carer’s leave in the employment of another employer. If the employee or other entitled persons have already used or want to use the carer’s leave in the employment of another employer, the employee is required to note in their application the number and period of days used and to be used in the employment of the other employer.

 

Compensation for average wage retained for breaks for nursing a child

If an employee in your company has a child under 18 months of age whom she nurses, she is entitled to additional breaks for nursing and to her average wage for that time. The state compensates for the average wage paid for that time if the employee receives no parental benefit.

Additional breaks for nursing may be taken until the child reaches the age of 18 months after every three hours with the duration of no less than 30 minutes at a time. If the employee has two or more children under the age of 18 months, the additional break for feeding the children shall last for at least one hour.

The amount of the remuneration paid for additional breaks must be calculated on the basis of the employee’s past six calendar months’ average wage. If the employee has not worked that long, the remuneration shall be based on the average wage of the period worked or on agreed wage if the first pay day has not yet arrived.
Additional breaks shall be included in the employee’s working time.

Submission of an application for compensation for holiday pay: http://www.sotsiaalkindlustusamet.ee/en/employers#filling_application