Thematic feature - individual labour/employment disputes and the courts

Source: Labour Inspectorate.

Other means of resolving individual disputes

Is there any kind of legal mechanism forcing or encouraging the two parties (management and employees) to resolve a dispute by prior negotiation? Where there is such a mediation process foreseen, please give details. Is there any evidence that mediation has had an effect on the volume of claims handled by courts? Are there any corporate policies built into the structure of organisations in your country specifically to deal with disputes? How are the employees’ representative bodies involved in the process?

The law specifies that, whenever possible, any disagreements between employee and employer should be resolved between the parties through an agreement. If necessary, the mediation of the employees’ representative organisation or an authorised person may be used. The employer may establish a reconciliation commission in order to solve the issue. However, where a dispute is resolved by an agreement between the parties, they maintain the right to have recourse to the official dispute-resolution machinery. According to Renno Mägi, a lawyer at the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F), employers do not see any benefits in using workers' representatives in resolving disputes, due to their lack of impartiality, and are thus not interested in this method. Merle Muda, associate professor of labour and social welfare at the University of Tartu, argues that in reality the functioning of this system depends on the strength of trade unions. Where there are strong unions, reconciliation commissions have been established, but not frequently. In a couple of cases, the establishment of such commissions has been laid down in collective agreements but they have not actually met.

In conclusion, the existence of this potential workplace-level system of resolving disputes has no effect on the number of cases referred to the formal dispute-resolution machinery. According to Vaike Parkel, a lawyer at the Estonian Employees’ Unions’ Confederation (Teenistujate Ametiliitude Keskorganisatsioon, TALO) (EE0308101F), the deadlines for referring cases to the official judicial channels are too short and do not leave time for reconciliation commissions to do their work, and this is one of the reasons why the system does not work. Also employers are generally not interested in the establishment of reconciliation commissions, it is said.

Debate

Please summarise any current debate on the issue of employment/labour disputes litigated by courts in your country.

The ETTK employers' organisation sees the issue of individual labour disputes as important. It has some concerns about LDCs, not because it sees them as being biased against employers' interests, but because it believes that the law itself is unbalanced in favour of employees. According to ETTK, the number of cases taken to LDCs by employers is too low, and they are discouraged because it is hard to prove an offence and the procedures are complicated. Over 1996-2003, cases brought by employers have made up an average of only 1%-2% of all cases referred to LDCs..

TALO legal staff are satisfied with the functioning of LDCs because they solve many disputes, and worker' representatives may obtain relevant documents from employers through these commissions. On the other hand, they propose that labour cases should be dealt not by civil courts but by special labour courts, claiming that:

• in civil courts the dispute is between equal parties, while in labour relations the employee is the weaker party (factually and in law);

• it is hard for employees to prove breaches of their rights in the civil courts; and

• although labour cases are free of state duty, there is a risk for employees that if they lose a case, they will have to pay the other party's costs. Employers normally do not have to pay such high costs if they lose the case, so they have more incentives to appeal against a ruling.

The Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) has opposed a proposed change to the Employment Contracts Act, whereby the employer would have no obligation to reinstate unlawfully dismissed employees. The most recent draft of the revised Employment Contracts Act specifies that in cases of unfair dismissal the worker should be reinstated and the average wage for the period of absence from work should be paid (up to a maximum of one year's pay). The fulfilment of the employment contract can be replaced with monetary compensation.

The functioning of LDCs have on several occasions been disrupted by either workers’ or employers’ representatives withdrawing their members, in order to express dissatisfaction with government policies on labour market issues. The financing of LDCs has also been an issue and during the debates on the 2003 state budget the head of the Labour Inspectorate announced that there was a possibility of closing the LDCs as a response to budget cuts.

According to commentators, the main problem with the civil courts is that they are overloaded with civil lawsuits and the waiting lists are quite long. The functioning of the LDCs has arguably proved that a simpler and faster way of resolving labour disputes is possible, and this may also encourage the introduction of special labour courts. Though in the past there has been talk about the introduction of labour courts, more recently these discussions have fallen off, as the creation of such special courts is costly and LDCs are fulfilling their aims of decreasing the number of court cases. On the other hand, LDCs have also been criticised for making low-quality decisions.

Another issue is that court or LDC decisions may depend on the local or regional labour market situation; According to a study conducted by Jaan Masso of the University of Tartu, at regional level the unemployment rate and the proportion of LDC decisions favourable to employees have a positive effect on the number of cases brought per employee. However, the unemployment rate is not associated with how favourable for employees LDC decisions are (possibly affected by selection bias). Unemployment affects positively the number of court cases, but negatively the proportion of cases resolved favourably for the claimant (usually the employee). The reason for this may be that if employees believe that decisions are more likely to be favourable to them where there is higher unemployment, only those cases where the employers’ position is rather strong reach the trial stage. (Jaan Masso and Kaia Philips, University of Tartu)