As from 1 July 2014 all natural and legal persons providing work are required to register the persons employed by them with the employment register held by the Estonian Tax and Customs Board. This is probably one of the most important legislative changes to enter into force in 2014.

All employers, including resident or non-resident legal persons and public authorities, shall record in the employment register all natural persons employed by them, irrespective of the form of a contract. The most important change for the companies is that as from 01.07.2014 also short term contracts for services and authorisation agreements concluded with natural persons will need to be registered, which was not done before. Data of the persons working on a voluntary basis in a company, i.e. the persons who are receiving no remuneration for their work that would be subject to taxation, must also be recorded in the employment register.

The employment must be recorded latest by the moment when an employee commences the work. There is no need to submit again data that has been already entered to the Estonian Health Insurance Fund – all valid data in the current Health Insurance Fund database are automatically transferred to the new register as on 01.07.14 and the Health Insurance Fund´s register will be closed. Only persons working under contracts for services and authorisation agreements and are not registered with the Health Insurance Fund will need to be registered. Therefore it is recommended to check the list of registered persons.

The employment registration procedure is mandatory. Tax administrator may give a warning or establish a penalty for the failure to perform the registration obligation or the obligation to end a registration. In the case of first offence, the penalty may be up to €1300 and in the case of the second offence €2000. Additionally, a misdemeanour penaltyup to €3,200 can be imposed in the event of failure to register.

All question related to the employment register may be adressed to partner Kristi Sild

By Kristi Sild