When collecting required information and forwarding it to the state or third parties according to the Employment Contracts Act, expenses are inevitable. The aim of this study is to find out how high the expenses are.
The study reveals that the yearly expenses arising from following the Employment Contracts Act to employers are more than 146 million Estonian kroons (EEK). Most of it is made up from expenses related to employees, most notably the ones that come from compiling and introducing internal procedure rules and managing documents such as employment record books etc. In case the internal procedure rules are compiled only to follow the Act and are not actively used, they present only cost for employer without having any real merit. The cost of keeping up with labour- and work-related legislation is also quite significant. .
For the Labour Inspectorate, the expenses are considerably smaller – 557 thousand EEK per year.
One way to cut costs, especially those of archiving contracts and other documents would be to use more information technologicy and digitalize the documents. The benefits to employers, especially to those seeing the need for documents like employment record books as just a bureaucratic burden, would be significant.
It is a bit more difficult to assess the administrative burden of informing and consulting employees, since employers might not do this systematically. Specifying the parts of the Act that concern informing obligations could help solve this issue.