Trade unions protest against variable-hours employment contracts: are employees' income and financial security at risk?

A large-scale trade union demonstration took place in front of the Riigikogu on Monday, focusing on the government's plan to amend the Employment Contracts Act and allow wider use of so-called employment contracts with variable hours (work with variable hours). This is one of the most controversial changes to employment law in recent years, potentially affecting tens of thousands of employees across Estonia.

Under the amendment, an employer could enter into a contract with an employee that guarantees only 10 hours of work per week, while the rest of the workload would depend entirely on the company's needs. Trade unions warn that such a system could lead to unstable income, increased psychological pressure, and a significant weakening of workers' rights.

According to the government, the amendment gives businesses greater flexibility, but critics emphasize that flexibility must not come at the expense of workers’ security. The protesters’ message to Riigikogu was clear: the bill must be rejected.

What is an employment contract with variable hours?

Current law allows certain flexible forms of work, but these still require a clearer agreement on workload and working hours. Under the new bill, the employer could determine:

• the minimum number of hours per week – at least 10;

• all remaining hours would be variable, depending on the employer's discretion;

• the employee would have to be prepared to work an unstable schedule, with the exact number of hours potentially varying from week to week.

According to supporters of the law, it is especially useful in sectors where the workload depends on the season, the number of customers or the volume of orders – for example, food service, retail, logistics or cleaning services.

Trade unions believe, however, that this sets a precedent in which the economic risk is shifted entirely onto the employee's shoulders, while the employer can avoid existing obligations such as fixed pay or a stable workload.

The main criticism from trade unions: income may fall 4 times

A specific example that has received widespread attention was highlighted at the demonstration:

Under such a contract, some employees' income could fall by as much as fourfold, reaching approximately 266 euros per month, which is significantly below the subsistence level.

Under such a scenario, the employee would be paid for only 10 hours per week. If the employer has no additional hours to offer, the employee's pay would remain minimal.

According to labour experts, this is a real risk, especially in sectors where workloads are already unstable. These are often low-paid employees whose monthly budgets are already tight.

Why do trade unions believe that the change will deepen inequality?

According to the trade unions, the bill is fundamentally at odds with the long-term objectives of the labour market. Their main arguments are:

1. Income instability increases

The employee cannot plan their monthly income, which makes it difficult to:

• payment of rent and bills,

• meeting loan obligations,

• planning the family budget,

• day-to-day subsistence.

According to employees, uncertain pay may also increase stress, anxiety, and work-related strain.

2. Increased risk of poverty

If a person's income depends entirely on the working hours allocated by the employer, the employee's financial situation becomes extremely vulnerable. According to trade unions, this may lead to a visible:

• employee impoverishment,

• an increased need for social benefits,

• a greater burden on the state.

3. Unequal bargaining power in the employment relationship

Trade unions warn that the employee becomes too dependent on the employer's goodwill:

“If an employee knows that more hours are given to those who do not complain, ask for leave or request a pay rise, there is a risk that people will become afraid to exercise their rights.”

4. Work–life balance deteriorates

Unpredictable working hours mean that:

• parents cannot plan childcare or training,

• working and rest hours become unstable,

• the employee's life becomes dependent on the employer's schedule.

5. The working environment becomes less safe

An unstable schedule may result in the employee feeling constant pressure to be “on standby”, which in the long term leads to a risk of burnout.

The government's position: businesses need more flexibility

Supporters of the bill emphasise that Estonia's economy is changing and the labour market must remain competitive. The Minister of Economic Affairs and Employment has explained that:

• variable hours help companies survive difficult times,

• workloads are not stable in many sectors,

• a flexible contract makes it possible not to lay off employees at all,

• this increases the likelihood of maintaining the employment relationship even during difficult periods.

The government emphasizes that this is not a mandatory type of contract – both the employer and the employee must agree to it. Trade unions, however, note that low-paid workers often have little opportunity to negotiate the terms.

How would the change affect the labour market? Analysis and forecasts

The Estonian labour market already faces several challenges: low productivity, labour shortages, inflation and sectoral fluctuations. Experts see both potential and risks in the new draft law.

Potential positive impacts

• Greater flexibility in seasonal work

• Less pressure on companies to lay off employees

• The possibility of hiring people part-time on a project basis

• Faster response to an economic downturn

Possible negative impacts

• The vulnerability of low-wage workers increases

• In-work poverty increases

• Unstable income limits consumption

• Long-term impact on employee health and well-being

• Greater need for social assistance

• Unequal working conditions where the risks are shifted onto the employee

Several employment law experts emphasize that, in the longer term, such a model may actually hinder Estonia’s economy:

“If employees' sense of security decreases, so does their consumption. This, in turn, affects the companies that claim they need flexibility. It is a vicious circle.”

Trade unions' demand: the draft law must be rejected

At the demonstration, trade union representatives submitted a formal appeal to Riigikogu, demanding that:

• the draft legislation must be referred back to the Economic and Social Committee,

• the government must prepare an impact assessment of working conditions,

• clear restrictions must be added to the draft law to ensure a minimum level of security for employees.

Trade unions emphasise that they are not opposed to flexible forms of work, but the amendment must include a balance between employer flexibility and employee social security.

Why does this issue affect a large proportion of Estonian employees?

Statistics show that approximately 70 000 people work in sectors where workloads are already unstable:

• commerce

• catering

• tourism

• logistics

• cleaning services

• customer service

These are sectors where wages are often already low, the workforce is young or financially vulnerable, and many work part-time.

If variable-hours contracts become the norm in such sectors, instability may become systemic.

How will the change affect employers?

Opinions are also divided among employers.

Supporters see advantages

• the ability to adapt quickly to market changes,

• a lower risk of struggling with costs during difficult times,

• more flexible use of resources,

• employees do not have to be laid off when there is temporarily less work.

Critical employers warn

• employee motivation may decline,

• it will not be possible to retain qualified employees under such conditions,

• unstable schedules create chaos in work organisation,

• the employer's reputation may deteriorate.

Several employers have already noted that an unstable working hours model is unsuitable for those who want a loyal team in the long term.

How does this issue relate to Estonia's broader labour and economic environment?

In recent years, the Estonian labour market has moved towards greater flexibility. Remote work, project-based work and part-time work have become more common. However, experts warn that flexibility must not become a risk for employees.

The principle of European Union labour law provides that:

• employees must be guaranteed a predictable income,

• employment contract terms must be transparent,

• the employee must know what their minimum workload is.

Trade unions argue that the bill proposed by the government runs counter to these principles.

What happens next?

Riigikogu will discuss the bill again in the coming weeks. The amendment may be sent back to the committee for revision. It is also possible that pressure from the protests and public opinion will influence the politicians' final decision.

The trade unions have announced that, if necessary, they will continue to hold demonstrations and raise public awareness until they see that employees' rights are protected.

Summary

The bill on employment contracts with variable hours has sparked one of the most significant debates on employment law in recent years. The government is seeking to create a more flexible labour market, but trade unions warn that flexibility must not lead to greater insecurity and a higher risk of poverty for employees.

The trade unions' position is clear:
the bill must be rejected and stronger guarantees must be put in place to protect employees.

How the Riigikogu ultimately decides will directly affect thousands of Estonian workers, their income and quality of life.