Employment Law

Estonian Employment Contract

A formal employment contract is a legal requirement in Estonia. These contracts should be provided to each employee and include all relevant details of the employment agreement, such as working hours, description of duties, wages, etc. Contracts should always be written in Estonian and use the local currency Euro.

Fixed Term

Indefinite

Working Hours in Estonia

The normal working week for Estonian employees consists of 5 8-hour days, totaling 40 hours per week.

Holiday Policy

Estonia Vacations

Generally speaking, employees in Estonia are entitled to 28 days of paid leave per year.

Estonia Sick Leave

Workers in Estonia are entitled to up to 182 days of sick leave per year, which is paid by both the employer and the state at 70% of regular wages. From the fourth to the eighth day of absence, the employer pays the compensation, and the state takes over the compensation for subsequent absences.

Maternity and Paternity Leave in Estonia

Female employees in Estonia are entitled to up to 140 days of paid maternity leave, during which the government pays benefits.

Fathers can take up to ten days of paid paternity leave, which is also paid for by the government.

Parental leave can also be taken until the child is three years old. The duration of this leave (together with maternity leave) is 575 days and is also borne by the state.

Employee Severance Pay and Termination of Contract in Estonia

In Estonia, the standard notice period for employees before dismissal is between 15 and 90 days, depending on how long they have worked for the employer.

In the event of layoffs, employees are entitled to severance pay of one month's salary. The payment will be an additional month of wages (covered by unemployment insurance) for employees who have been employed between five and 10 years, and an additional two months of wages if they have been employed for more than 10 years.

The probation period in Estonia is four months.

Estonian Tax Law

Employers in Estonia are required to spend a certain percentage of wages on employee benefit plans. 20% must be spent on pensions and 13% on health insurance, for a total of 33% in addition to wages.

There is also an unemployment insurance scheme, where employers must contribute 0.8% of wages and employees must contribute 1.6%.

The income tax rate in Estonia is 20%. Estonia's corporate tax rate is generally 20%, but this rate may vary in certain circumstances.

Health Insurance in Estonia

Estonia has state-funded healthcare, so employers are not required or expected to provide private health insurance.

Salary and Benefits

Compensation Law in Estonia

As of January 2020, the minimum wage in Estonia is €3.48 per hour.

Welfare Administration in Estonia

Setting up a benefits system for the Estonian workforce can be difficult and complex if you are not familiar with the country, its customs and employment laws. Standalone setup can take weeks and may cause unexpected delays.

Remoly can help you significantly simplify this step of your Estonia expansion by providing benefits administration outsourcing. Our team can advise you and handle the set-up of your benefits plan, allowing you to focus on expanding your organization in Estonia.