Estonia
Before hiring
Before hiring employees in Estonia, there are a few important things you’ll need to know. In Estonia, all employees pay an income tax of 20% no matter their salary bracket. Employees also pay 3.6% of their salary into social security.
Employers should also know that notice periods in Estonia depend on an employee’s tenure with the company, or what has otherwise been outlined in their employment contract.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Estonia below.
At a Glance
CURRENCY
EURO
OFFICIAL LANGUAGE
ESTONIAN
PAYROLL FREQUENCY
MONTHLY
EMPLOYER TAXES
33.8%
13th / 14th SALARY
N/A
Good to know
- Estonia's new Digital Nomad Visa enables remote workers living in Estonia to work for their foreign employer or their own company registered abroad.
- Any unused holiday entitlements are transferred to the next calendar year, and expire within one year from the end of the calendar year for which the holiday entitlement has been calculated. Unused, non-expired entitlements can also be cashed out upon termination of an employment contract.
- Non-compete agreements in Estonia cannot last more than a year from the termination of the employee's contract. In return, the employee is entitled to a reasonable monthly compensation, the amount of which should be evaluated on a case-by-case basis depending on the extent of the restrictions.
Employment in
Estonia
Employees in Estonia work eight hours per day, 40 hours per week. After working for six hours, employees are entitled to a 30-minute break. Typical business hours are 9:00am to 6:00pm Monday to Friday, with an hour-long lunch break.
The probationary period in Estonia is no longer than four months.
For resignations, employers are required to give notice of 14 days to one month, depending on their employment contracts.
When it comes to dismissals, the notice period is determined by the length of the employee's service. The breakdown is as follows:
- Less than one year: 15 days of notice
- One to five years of employment: 30 days of notice
- Five to 10 years: 60 days of notice
- 10+ years: 90 days of notice
Non-compete agreements must be clear and reasonable in scope. They can’t last more than one year from the termination of an employee's contract. Employers must pay the employee a reasonable monthly compensation in return for adhering to the agreement, the amount of which should be evaluated on a case-by-case basis depending on the extent of the restrictions.
Employment cost calculator
Paid time off
Employees in Estonia receive 28 days of leave per year, paid for by their employer.
Any unused holiday entitlements are transferred to the next calendar year, and expire within one year from the end of the calendar year for which the holiday entitlement has been calculated. Unused, non-expired holiday entitlements can also be cashed out upon termination of an employment contract.
Sick leave in Estonia is paid starting from the fourth day of illness and is paid for by the employer. From the ninth day onwards, it is paid by health insurance.
Employees in Estonia are allowed to take up to 182 days of paid sick leave in the event of serious illness. This leave is paid at a rate of 70% of the employee’s previous year's average salary.
Employees are entitled to 20 weeks (140 days) of maternity leave. This can begin 70 days before the expected due date. Maternity leave is paid by health insurance at a rate of 100% of the employee's salary.
Employees are also entitled to paternity leave of 30 calendar days that can be taken within two months before the expected due date, and up to two months after the child's birth. Social security covers the leave. Paternity leave is capped at three times the national wage or 100% of the employee's salary, whichever is higher.
Employer tax
Employers in Estonia pay 33.8% in social contributions. This includes:
- Pension: 20%
- Health Insurance: 13%
- Unemployment Insurance: 0.8%
Individual tax
Employees in Estonia pay 20% income tax no matter their salary bracket. Employees also pay 3.6% in social security contributions.
Termination of employment
In Estonia, employers can choose to dismiss an employee by paying them compensation in lieu of notice.
Employees being made redundant are entitled to one month's average salary of their previous six months' wages as severance pay. Employees who have worked between five and 10 years are entitled to an additional month’s salary as severance pay. Employees who have worked for over 10 years are entitled to an additional two months’ salary.
Start hiring employees in
Estonia
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
