Court dismisses EUR 183,000 claim of ex-CEO of Novatours' Estonian branch

  • 2020-01-13
  • BNS/TBT Staff

TALLINN – The Tallinn Circuit Court has dismissed the action of Andree Uustal, former CEO of Novatours' Estonian branch, against the travel company with which Uustal demanded that the company pay him over 183,000 euros for unpaid remuneration, holiday allowance and compensatory interest. 

With this, the circuit court annulled the July 25 ruling of Harju County Court with which the county court satisfied Uustal's claim against Novatours and ordered the latter to pay Uustal over 183,000 euros.

At that, the procedural expenses of all court tiers were left to Uustal to cover.

The parties were disputing whether Uustal's employment contract continued to be valid after he was elected management board member. Uustal believes that the employment contract signed between the parties is valid to this date.

The circuit court found that the plaintiff's contract of employment was terminated by the election of the plaintiff as a board member as the contractual obligations coincided with those of board member. The action was therefore dismissed.

Cooperation between Uustal and Novatours ended on September 2017. In February 2018, Uustal informed the media that he was threatened upon his resignation, that the company's Estonian branch has conducted questionable transactions and the situation of the company is unclear. 

Uustal submitted applications to the labor dispute committee in April and June, last year, to have Novatours pay him a total of some 122,600 euros for unreceived remuneration and holiday allowance, plus compensatory interest.

The labor dispute committee decided not to satisfy Uustal's claims in July. The  former CEO of Novatours OU then submitted an application for the matter to be handled by the Harju County Court. 

The two parties entered into an employment contract for an unspecified term in October 2009, pursuant to which Uustal took up the position of Novatours' CEO. A month later, he was also appointed a member of the company's management board.

In September 2017, Uustal was recalled from the management board and has not been allowed to work in Novatours since.

According to Novatours, Uustal's employment contract was terminated with his appointment to the company's management board. The company said that this is corroborated by the parties' conduct henceforth, as well as the changes made in the company's statute immediately following Uustal's appointment and the establishment of restrictions regarding the power of representation.

The Harju County Court ruled that none of the aforementioned circumstances proves that the employment contract was terminated by agreement between the two parties.

"Termination of an employment contract must be clearly documented. It is important that both parties understand that the contract has ended, which in this matter was not the case," the county court's decision reads.

According to Novatours, the CEO position was eliminated as in relation to the implementation of new management principles, the position ceased to have a function. Uustal was also remunerated for his work as a member of the management board.

The employment contract, however, remains valid as neither of the parties have sought its termination, the county court said.

The court decided that Novatours is to pay Uustal his average salary for a total of 11 months, for a period from September 2017 to July 2018, which amounts to 155,700 euros, and a gross 23,500-euro holiday allowance for 49 days of leave.

"Obviously, I'm certain that Novatours will contest the court's decision as it will in any case be cheaper than paying me the ordered sum -- I'm not even sure Novatours could presently even afford to do so," Uustal, who relayed the court's decision to the media, said in August of last year.

The Harju County Court in May decided not to satisfy Uustal's action against Novatours seeking the refutation of inaccurate data.

"Novatours OU presently has a tax risk amounting to millions, and the company's only notable assets are its claims against its Lithuanian parent," Uustal told the media in February 2018, four months after the cooperation between the parties had ended.

"Considering the millions of euros Novatours OU is collecting from its customers in advance payments, I believe the customers have the right to know what is happening in the company which they are trusting their money with," he said at the time.

Novatours has previously announced that a civil action has been brought against Uustal in relation to the latter making unsubstantiated payments for his own benefit.

In April and June 2018, Uustal submitted an application to the labor dispute committee of the Labor Inspectorate with the claims that Novatours be ordered to pay him unpaid remuneration and holiday allowance in the total amount of some 122,600 euros, plus compensatory interest.

At the time, the labor dispute committee dismissed Uustal's claims, but in August, the former CEO of Novatours OU submitted an application to Harju County Court for the review of the matter in action proceedings.

Uustal's unreceived salary totals some 156,000 euros, holiday allowance 23,500 euros and the compensatory interest that has become chargeable since Uustal initiated the action against Novatours in October 2017 until the court delivered its decision in August 2018 was 3,900 euros.

Novaturas' shares are quoted on Nasdaq Vilnius and on the Warsaw stock exchanges.

Regarding the ruling of the circuit court, an appeal can be filed with the Supreme Court within 30 days.