Alteration of the Contractual Equilibrium Due to COVID-19 in Employment and Civil Law Contracts under Estonian Law

Summary

Following the spread of COVID-19 to Estonia at the beginning of March 2020, the Government declared an emergency situation from 12 March 2020. For officially and voluntarily closed businesses, staffreductions, reduction of remuneration or working load, the amendment or termination of the employment and other contracts for work or services became one of the legal measures in preventing greater damage. The aim of this contribution is to answer the question under what conditions the affected party may demand amendment of an employment contract and civil law contract – with the example of a contract of mandate – in order to restore the original balance of the obligations, and terminate the contract, in order to assess the level of protection of parties’ interests. The comparison of an employment contract and a contract of mandate is based on legal provisions of Estonian law regulating the legal consequences of change of circumstances, which leads to the alteration of balance of contractual obligations in an emergency situation, as was caused by COVID-19.

INTRODUCTION

Most of the countries implemented far-reaching bans and restrictions on freedoms in order to deal with the spread of the COVID-19 pandemic. Following the spread of COVID-19 to Estonia at the beginning of March 2020, the Government declared, according to the Estonian Emergency Act, an emergency situation on the evening of 12 March 2020. Emergency measures were valid until 11 May 2020. The overall emergency situation was terminated on 18 May 2020, though certain limitations and special rules continued to stay in force. It should be mentioned that no essential amendments to employment or contract law were introduced due to the crisis. Beside officially closed businesses, a number of others decided on voluntary closure partly for the safety of their employees, but also partly due to the lack of customers. In the situation of forced staffreductions, reduction of remuneration or working load, the amendment or termination of employment or other contracts for work or services became one of the legal measures in preventing greater damage.