Supreme Court changes its viewpoint on collecting compensation from the employee

Contractual penalty to the employment contract

The employer could start adding contractual penalty to the employment contract, so that the employee leaving work would not cause more complicated situation to the company than before, Rait Kaarma and Elena Lass, the representatives of law office Kaarma & Partnerid, state.

The solution changing their own practice of the Supreme Court and favouring leaving work without prior notice refuted its earlier understanding in spring. The companies with higher flow of employees with the continuity of business processes being extremely important (e.g. different production companies) are in a difficult situation.

The act obligates the employee to notify the employer of the wish to terminate the employment contract at least 30 calendar days in advance. If the employee pre-notifies of the cancellation less, the employer has the right to receive compensation within the scope it would have had right to receive, if the employee had followed the mentioned date of cancellation. One could as though derive from these two provisions of law that if the employee leaves instantly, the employer could automatically require one month salary from the employee.

Need to prove the damage

The Supreme Court took the viewpoint in its solution that differently from the earlier the will of legislator to obligate the employee to pay compensation within the amount of salary for the time it left earlier before the passing of pre-notification term could not be concluded from the employment contracts act valid from 2009. In the opinion of the panel contradictory interpretation would involve punishing only for not following the pre-notification term stipulated by law when cancelling the employment contract.

Thus the compensation corresponding to the amount of salary could not be automatically collected from the employee for the less notified number of days. The employer could have only the right to require the compensation from the employee, if the employer proves that the leaving of the employee from work before passing of the pre-notification date caused damage to the employer.

Thus the Supreme Court has connected the non-pre-notified leave of the employee with the right of the employer to receive compensation with that the employer should prove that it actually suffered loss from the unexpected leave of the employee. The amount of loss should thereby not at all be limited to the amount of one-month salary of the employee. The proving of such loss could occur troublesome for the employer.

Contractual penalty

How could the employer motivate the employees in such situation to notify of their leave on time? The Supreme Court did not point this answer out in its solutions, but this is fully legal and practical measure.

Namely, the contractual penalty can be agreed with the employee in case of arbitrary culpable leave from work. Such contractual penalty can be included in the employment contract or separate agreement could be prepared. If it occurs later that the actual loss resulted from the leave was higher than the amount of contractual penalty, the sum exceeding the contractual penalty can be claimed.

In case of such contractual penalty the employer should in no way prove whether or how big loss was suffered due to the leave of the employee. The act makes no exact prescriptions to the amount of contractual penalty, the only principle is that it should be reasonable considering the employment relationship. Thus, further on, add the relevant sanction of contractual penalty to the employment contracts of the employers.

The article was published in Äripäev on 29 August 2015.