Amendment creates possibility of €50,000 bonuses for public servants
The government on Thursday approved amendments to the Civil Service Act allowing officials whose work delivers major societal benefits or significant savings to receive performance bonuses of up to €50,000.
Prime Minister Kristen Michal said at a press conference that amendments to the Civil Service Act provide for performance bonuses for major reforms.
"The idea is that if a civil servant's work leads to a larger socioeconomic benefit for society, it will be possible to pay a one-time performance bonus. Projects will be selected by an independent commission with representatives from various sectors of society, including the media," Michal explained.
According to him, the bonus could be up to €50,000 per official and up to €500,000 per project.
Michal said the measure should encourage civil servants to make a greater effort. If decisions with a major impact are involved — even those that might include eliminating the official's own position — an additional bonus could be awarded.
According to the explanatory memorandum attached to the bill, performance bonuses could also be paid to people who contributed to a project under a contract for services or authorization agreement. However, the bonus would only be paid if the project achieves its expected impact in full; partial payments are not prescribed.
The system is modeled on private-sector incentive schemes in which employees share in the gains from successful outcomes, such as through stock options.
The legislative changes would also harmonize working conditions, hiring requirements and pay structures for people employed in state institutions.
The organization of government agencies will also change: mid-level managers, such as department heads, will in the future be appointed for five-year terms to support career mobility and improve management quality.
When the law enters into force, current managers will remain in their positions until July 1, 2031, after which a competition will be held to fill the posts. The change will affect about 800 mid-level managers.
Rules on redundancies will also change. Previously, the notice period for layoffs was linked to the length of time a civil servant had worked in public service; it will now be tied to the length of service at a specific agency.
Under the current system, people working in state agencies are divided into civil servants and employees working under employment contracts, which means different incentive systems and working conditions. The amendments would harmonize working and pay conditions for both groups and employees would also become subject to the ethical standards that apply to civil servants.
All employees would have the same salary components: base pay, variable pay and bonuses, along with limits on their payment. This is intended to increase transparency and make pay decisions easier.
The government on Thursday sent the bill to the Riigikogu for debate.
About 28,000 people work in public service in Estonia, including around 6,000 officials in state agencies and 3,000 in local governments.
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Editor: Karin Koppel, Marcus Turovski
