Beware of “Mutual Termination” Agreements in Estonia: Know Your Rights

Unfortunately, it's not uncommon for employers in Estonia to use questionable practices when terminating employment contracts.

When an employer wishes to end an employment relationship, there are specific legal procedures that must be followed. However, some employers attempt to sidestep these obligations by pressuring employees into signing a “mutual agreement” for termination. In many cases, the termination is far from mutual and is effectively forced upon the employee.

What You Need to Know Before Signing a Mutual Termination Agreement

Signing a mutual termination agreement can have serious consequences:

• Loss of Unemployment Benefits: If you sign such an agreement, you may not be eligible for financial support from the Unemployment Insurance Fund.

• Limited Legal Recourse: Once the agreement is signed, it becomes extremely difficult to dispute the termination later.

  
  

If your employer presents you with a termination letter or agreement, do not sign it immediately. Take the time to review the document carefully and consult with a legal professional to understand your rights.

Negotiating Compensation for Mutual Termination

If you decide to proceed with a mutual termination, make sure to negotiate fair financial compensation. If the employer truly wants a mutual agreement, there should be a reasonable price attached to it. Don’t hesitate to stand your ground—this is your livelihood.

Special Considerations for Foreign Employees in Estonia

If you’re a foreign national, the end of your employment could affect your legal status in Estonia:

• Residence Permit: If your residence permit is tied to your job, termination may put your right to stay in Estonia at risk. Employers are legally required to notify the Police and Border Guard Board about the termination.

• Health Insurance: Your state-provided health insurance remains valid for only two months after your employment ends. Since valid health insurance is a condition for maintaining a residence permit or visa, you must secure new coverage or employment during this period.

Final Tip: Always seek legal advice before agreeing to any employment termination terms. Knowing your rights can protect you from losing essential benefits—and your legal status in Estonia.