Previous competition restrictions may be void

The case of Mazeikiu Nafta Trading House concerns the application of the Employment Contracts Act (ECA) to employment contracts agreed before the ECA came into force (i.e before 1 July 2009). According to the facts of this case (No 3-2-1-39-11), the employee was terminated on 20 March 2008 but the competition restriction was to be effective for two years after termination (i.e until 20 March 2010). Subsequently, the employer demanded a penalty payment for the breach of this obligation. The employee claimed that the competition restriction was a standard term and, as such, was unreasonably harmful and invalid. In response, the employer argued that employment contracts are not subject to the regulation of standard term contracts.

On 23 May 2011, the Supreme Court upheld the opinion of the lower courts that employment contracts concluded before and after 1 July 2009 may be subject to the regulation on standard term contracts (although this may not be the case where both parties can influence and negotiate the terms of the employment contract). Furthermore, the Supreme Court noted that employment contracts concluded before 1 July 2009 are subject to the ECA which provides that competition restrictions may only be imposed for up to one year. As the employment contract in question provided for a two year restriction and by 1 July 2009 one year had passed, the restriction terminated on 1 July 2009.

Court fees are not payable on employment claims relating to unpaid salary and unlawful termination of employment

According to the Civil Procedure Code and the State Fees Act, a court fee must be paid upon filing a claim. However, there is an exemption under the Act where the claim is for unpaid salary and/or for a declaration that the termination of an employment was void. In the case of Bravocom Mobiil, the employee complained that his employment had been terminated on unlawful grounds and claimed compensation for redundancy, unlawful termination and the withholding of final settlement monies. The Tallinn District Court rejected the employee's case due to the non-payment of court fees. In the Supreme Court (case No 3-2-1-27-11), it was decided that the Act provides an exemption from court fees for all compensation claims which result from a declaration that a termination of employment was void.

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