The Chamber of Commerce compiled an overview of the most important law amendments for businesses, entered into force on January 1, 2021. In total, more than 400 pieces of legislation entered into force on the first day of the coming year, more than twice as many as the previous year.
The system of reimbursement of sick days changes temporarily
From 1 January, an employer is obligated to pay an employee the sickness benefit from the second sick day to the fifth day. Currently, an employer has that obligation from the fourth to the eighth day. Thus, the employer’s liability is reduced by one day. The principle that the employer pays the employee sickness benefit of 70% of the average wage of the employee remains in force.
The amendment also reduces the self-liability of employees. While currently, the employee does not receive compensation for the first three sick days; from 1 January the employee will not receive compensation for only the first sick day. At the same time, the liability of the Health Insurance Fund will increase, as it will pay the employee sickness benefits from the sixth day of sickness. Currently, the Health Insurance Fund is doing this from the ninth day.
It is worth noting that the amendments apply only to sick leave certificates issued between 1 January and 30 April 2021. If the sick leave certificate is issued at any other time, then the system of compensation currently in force must be used. The main purpose of the amendments related to sick leave is to reduce the number of people who go to work while sick.
See also: Occupational Health and Safety Act, Health Insurance Act, Social Tax Act
Theimmigration quota will increase
The immigration limit for 2021 is 1,315 residence permits, which is one more than this year’s quota. It is also the maximum size that the Aliens Act allows to impose at the moment. Of the immigration limit, 25 residence permits have been reserved for creative workers; 24 for athletes, coaches, judges and sports workers; and 5 for temporary residence permits under a cross-border contract. If an alien wants a residence permit for work in some other field or a residence permit for business, the coming year’s quota for them is 1,261.
According to the Chamber of Commerce, it is no longer possible today to book the time for a visit to the Police and Border Guard Board to submit applications for residence permits under the 2021 immigration limit, as all times have been met. If someone cancels a booking, the time will be displayed in the booking system of the Police and Border Guard Board, but those interested must check the availability of visit times on their own.
Temporary residence permits issued to third-country nationals on the basis of employment, business, a cross-border contract, or a substantial national interest fall within the immigration limit. By way of derogation, several residence permits have been exempted from the quota. For example, aliens who are granted a temporary residence permit to work as professionals in information and communication technologies, in a start-up, and as top specialists are not subject to the immigration limit.
See more: 2021 immigration limit, Immigration limit split
The minimum social tax obligation will increase to EUR 193
The monthly rate that the minimum social tax obligation is based on will be EUR 584 starting from the coming year. This means that an employer will have to pay social security contributions of at least EUR 192.72 per month, even if the employee does part-time work. The change concerns employees whose pay remains below the minimum wage. In addition, the change affects management board members who want health insurance for themselves. This means that the management board members will have to pay EUR 192.72 instead of EUR 178.2 in the future in order to obtain health insurance.
See more: 2021 State Budget Act
Theminimum wage will continue to be EUR 584
The coming year will bring neither an increase nor a decrease of the minimum wage. In the case of full-time work, the minimum wage will still be EUR 584 a month, and the minimum hourly rate will be EUR 3.48.
See also: Increasing the minimum wage
The forms oftax declarations change
From the coming year, a number of tax declaration forms will change. The changes are mainly related to the mandatory funded pension reform and the amendments to the Income Tax Act relating to alien temporary agency employees.
See also: Updated tax declaration forms
Significant amendments in the regulation of rental contracts
In the case of residential rental contracts, it will be possible in future for the parties to agree in writing on the payment of a contractual penalty if the tenant materially violates a non-monetary obligation. The violation must be clearly determined and there are limits to its size.
In addition, cancellation of a rental contract in the event of the tenant’s payment delays will become more favourable for the landlord. For example, instead of the previous three months, two months of advance notice will apply, but the landlord will have to give the tenant a further 14-day grace period with a warning that in the event of non-payment, he will cancel the contract.
The law will also become clearer, stating that the tenant must bear other expenses related to the rented thing if it is agreed in a form reproducible in writing. So far, it has been generally stated in the law that there must be an agreement for that.
In the case of a rental contract for immovable property for an indefinite term, rent increases are currently permitted every six months after the contract has been entered into, but this may be done only once a year in the future.
Amendments related to rental contracts will take effect on 14 January.
See also: Law of Obligations Act
3 amendments to the Bankruptcy Act
On 5 January, several amendments to the Bankruptcy Act will come into force, with the main aim being to speed up bankruptcy proceedings. For example, one amendment will no longer require a court hearing to review a bankruptcy petition. It will be required only if the debtor, the creditor or the trustee so requests, or if the court considers it necessary to hold a hearing. Consequently, in the future, an application for bankruptcy will be decided in a written procedure, as a general rule.
A specific time limit will be added to the Bankruptcy Act, within which a judge attending a general meeting of creditors must determine the votes of creditors in the event of a dispute. As a general rule, the judge must do so at the same meeting, but if exceptional circumstances arise, the judge may also determine the votes on the following working day.
In the future, in the event of the bankruptcy proceedings of a debtor who is a natural person, a business ban will not apply automatically to the natural person and, like in the case of a bankruptcy of a legal person debtor, the business ban will apply only if the court so decides.
Additionally, a number of significant amendments to the Bankruptcy Act will come into force on 1 February, 2021. For example, those amendments will ensure that courts will be more specialised in insolvency matters, that the system of remuneration for bankruptcy trustees will change and that the circle of persons with an obligation to file a bankruptcy petition will expand.
See also: Bankruptcy Act
The conditions for training support paid to employers will change
As of 1 January, the new employment programme will be in place, including the employment services and benefits that employers will have access to. The state will continue to provide additional labour market services and labour market services on preferential terms in the same way as in the current programme, but will change the conditions for obtaining some services and benefits, such as the conditions for training support.
Starting from the coming year, employers will additionally be able to receive training support for the development of an employee’s information and communication technology skills if his or her employment contract will be valid for at least six months after the application is submitted. While in the past the course had to be at least 80 academic hours to qualify for the support, now only 50 academic hours will be required. The self-investment rates of training costs will also change. From the coming year, the Unemployment Insurance Fund may pay the employer up to 80% of the total cost, but a maximum of EUR 2,500 per employee (the current rates are 50% and a maximum of EUR 1,250, respectively). If an employee is recruited from among people registered as unemployed in the Unemployment Insurance Fund, the support rate may be up to 100% of the total cost and up to a maximum of EUR 2,500 (currently 80% and up to a maximum of EUR 2,000).
However, some restrictions are also added to the programme. For example, the same employer may receive training support for the same employee for up to a maximum of just EUR 2,500 in three years. In addition, the Unemployment Insurance Fund will be able to refuse or reduce the training support if the costs applied for are unreasonable. Unlike the current programme, the Unemployment Insurance Fund will not pay an employer the travel expenses related to an employee’s participation in training, except for training abroad, come the coming year.
In addition, the Unemployment Insurance Fund will start offering continued support services starting from the coming year, i.e. advising the person and their employer to support the person’s stay at work if staying at work is aggravated by reduced capacity for work, lack of work experience, long unemployment, or other obstacles. Also, the ceiling for start-up support will rise to EUR 6,000 under the new programme.
See more: Employment programme 2021-2023
The excise duty on one item will increase
The excise duty on cigarettes will increase by 5% from 1 January. In addition, the excise duty on smoking tobacco will also increase. The rest of the excise duties will not change.
See also: Alcohol, Tobacco, Fuel and Electricity Excise Duty Act
The fees for food, feed and veterinary supervision will remain unchanged
The fees for food, feed and veterinary supervision will not increase from 1 January. The hourly rate for food supervision will continue to be EUR 23.84, the fee for feed inspection EUR 33.70 and the fee for veterinary supervision EUR 14.90.
See also: Hourly fee rate for carrying out food, feed and veterinary supervision activities in 2021
Mining rights’ fees will increase
From the coming year, the fees for the mining rights for construction gravel, sand, limestone, clay, low degradation peat and dolomite will increase. The fees will grow by ca 5 percent.
See also: The fees for mining rights of State-owned earth deposits, other than energy-related earth deposits
Income tax must be paid on the remuneration of an alien temporary agency worker in Estonia
A number of amendments to the Income Tax Act will enter into force on 1 January, related to the taxation of alien temporary agency employees. According to an amendment, a non-resident who has leased its employee to an Estonian company must withhold income tax on remuneration paid to that employee for work performed in Estonia. The non-resident will incur that obligation from the day the alien starts working in Estonia. For example, if a Polish company leases Ukrainian employees living in Ukraine to an Estonian company, the Polish company will have to pay income tax to Estonia on the wages of the Ukrainian employees.
Initially, the State came up with a proposal that an Estonian company must pay income tax on the remuneration of its foreign temporary agency employee if the foreign lessor of that employee has not paid the tax in Estonia. As a result of the opposition of the Chamber of Commerce, the State abandoned this proposal. Thus, the amendment that comes into force from the coming year does not impose an obligation on Estonian companies using alien temporary agency employees to pay income tax on the remuneration of those employees. For example, if a Polish company does not pay income tax in Estonia on the remuneration of Ukrainian temporary agency employees, it will not entail an additional tax liability for the Estonian company using the employees.
See also: Income Tax Act
Subsistence debtors also impose additional obligations on their companies
The coming year adds an obligation for those companies that make cash payments of more than EUR 5,000 to people and must identify the persons when doing that. In making such a payment, the company must subsequently verify whether the person is a subsistence debtor. The check can be made from the enforcement register. If it appears that the person is a subsistence debtor, he or she must not be paid and the company must send the information to the bailiff. If the bailiff does nothing within five working days, the amount may still be paid out. The amendment concerns, for example, gambling operators, pawnmakers, insurance companies, etc., but it does not extend to banks.
Additionally, the law clarifies hidden income. If an employer pays to a third party for work performed by a debtor, the bailiff may seize that third party’s remuneration claim. Employers will also be also affected by the amendment that, in the case of subsistence debt, a court may also invalidate, inter alia, a seafarer’s service book and a seafarer’s certificate of navigation. Debt collectors are affected by an amendment that restores the previously existing situation that the money from the sale of an immovable property goes first to cover a child’s subsistence claim and only then to cover the remaining arrears.
See also: Code of Enforcement Procedure
The requirements forthe translation of foreign-language documents will become less stringent
From the coming year, foreign-language documents may be submitted to the Commercial Register and the Land Register if accompanied by a notary’s translation into Estonian, if the notary has drawn up a notarial act or notarial notation in the foreign language. Currently, documents in foreign languages are allowed to be submitted only with an Estonian translation made by a sworn translator.
See also: Commercial Code, Land Register Act
The Traffic Act will establish rules for electric scooters
From 1 January onwards, the Traffic Act will apply rules for the use of electric scooters and other light electric vehicles (e.g. electric skateboards, self-balancing vehicles, etc.). In the Act, these will be called personal light electric vehicles. Requirements will enter into force for the power, width, use of retro-reflectors and lights, requirements for stopping and parking, and penalty rates for traffic offences concerning personal light electric vehicles. For example, the design speed of a personal light electric vehicle shall not exceed 25 km/h and its maximum engine power shall not exceed 1 kW from the coming year (except for a self-balancing vehicle). If the personal light electric vehicle does not comply with these technical requirements, it shall not be placed on the market or put into service. However, more powerful personal light electric vehicles already made available on the market before 1 January may also be used, but their design speed shall not exceed 25 km/h. In addition, the requirements for cyclists, mini moped drivers, and moped drivers will also be specified from the coming year, for example, stating the EU requirements that will apply to the type-approval of mopeds, mini mopeds and motorcycles.
See also: Traffic Act
All questions about the legislation that will enter into force in the coming year can be posed to the Chamber of Commerce lawyers by email at firstname.lastname@example.org