Employers are sometimes unsure of themselves when hiring a person with a disability. They ask themselves whether they should even take the person on in the first place; what they will have to take into account if they do; and many other questions. Often the same questions will be asked by different people.
As something of an FAQ, the following is an overview of the main issues employers are interested in and should take into consideration when hiring a person with a disability.
Disability allowance for working age people and/or pension for incapacity for work
Employers often ask whether allowances and/or pensions are suspended for people with disabilities if they begin working.
The disability allowance for working age people is not suspended if the person starts work. The benefit is designed to help compensate the additional costs disabled people incur due to their disabilities. As such, there is no reason to suspend payment of the benefit simply because they take up work. On the contrary: the Social Benefits for Disabled Persons Act stipulates that the benefit may continue to be paid to people with disabilities who have found employment. It is meant to assist them in covering any expenses related to their work.
The amount of a pension for incapacity for work is determined on the basis of the degree of incapacity. Assessment of this is carried out from anywhere between every six months to every five years. Pensions for incapacity for work are not suspended if a person with a disability finds work. However, their degree of incapacity may be revised downwards during the next assessment, as a result of which the amount of their pension may be reduced.
Exceptions in the payment of social tax
The state covers part of the cost of the social tax paid on employees of companies, non-profit organisations, foundations and sole proprietors (hereafter referred to as the employer) who receive a pension for incapacity for work on the basis of the State Pension Insurance Act. People are entitled to receive such a pension when the degree of the incapacity for work is determined to be at least 40%. However, the state does not pay social tax for people who have been registered as incapable of working but who do not have a sufficient history of employment to obtain a pension for incapacity for work. Such people receive a national pension.
The state pays social tax starting from 320,00 €, which is the monthly base rate for the payment of social tax in 2014.
In order for the state to pay the social tax on an employee, the employer must submit monthly applications to Social Insurance Board indicating these details of employees receiving a pension for incapacity for work:
- first name and surname;
- personal identification code;
- date of commencement/termination of working relationship;
- the amount of social tax to be paid by the state.
Applications must be submitted by the 2nd of the month following the month of calculation of the salary.
Will the state pay social tax for a sole proprietor who is incapable of working?
The exception on the payment of social tax described above is designed as a subsidy for employers who pay social tax for their employees. If a sole proprietor is an employer to a person who has been determined to be incapable of working, the state will pay the social tax on that employee on behalf of the sole proprietor (see the previous point). However, a sole proprietor cannot act as their own employer.
Another exception to the Social Tax Act applies to sole proprietors who are incapable of working. They are not required to meet the minimum obligation of payment of social tax if they do not receive any income. The minimum obligation means that if no income is earned, social tax must be paid during the year on an amount equal to 12 times the monthly rate. The monthly rate in 2014 is 320,00 €, which means that the minimum obligation is 3840,00 €. If sole proprietors earn income, they must meet this minimum obligation.
Income Tax Act
The following are exempt from income tax:
- The expenses incurred by employers in the treatment of impaired health suffered by an employee as a result of occupational accidents, illnesses and diseases.
- Technical aids obtained by an employer for an employee whose incapacity for work has been designated as at least 40% (or in the case of people with hearing disabilities, a loss of hearing of at least 30 decibels) or who have a certified disability. The value of a technical aid in this case may not exceed 50% of the amount of payments made to the employee and is subject to income tax in a calendar year.
- Benefits paid by the employer to a person with a disability in regard to their use of a personal vehicle for travel between work and home in the event that it is not possible to use public transport for this purpose or if the use of public transport would result in a significant reduction in capacity for work or movement.
Tax benefits arising from extended holidays
On the basis of the Holidays Act, those receiving pensions for incapacity for work have the right to 35 days of holidays per year instead of the ordinary 28 days of annual holidays. The extra days are taxed from state budget resources, and therefore do not lead to any additional direct costs for employers.
In-service training allowance
In accordance with the Social Benefits for Disabled Persons Act, a person with a disability who is working can apply for an in-service training allowance. They can submit such an application themselves or have one submitted on their behalf by their legal representative. In addition to the application itself, the disabled person must submit documents evidencing their employment (such as their employment record book) and training costs to the Social Insurance Board closest to their place of residence or work.
The in-service training allowance can be paid for work-based training or formal education acquired within the adult education system. Work-based training enables people to obtain or update their professional and vocational skills and knowledge as well as to retrain, either in a training institution or the work place itself.
Depending on the decision of the Social Insurance Board, the allowance is paid to either the person with the disability or the party providing the training.
Starting from the first time it is approved, the in-service training allowance can be paid to a value of up to 613,68 euros over three calendar years (i.e. 24 times the social benefit rate in 2014). The allowance is paid for the covering of actual training costs. More detailed information is available online from the Social Insurance Board at www.sotsiaalkindlustusamet.ee.
The in-service training allowance enables people with disabilities to become more qualified and therefore more competitive. Employers gain more qualified employees. Sole proprietors with disabilities can also apply for the benefit.