According to Human Capital Report Estonia is a success story concerning successful human capital potential maximization, ranking 15th globally.
The Estonian labour market can be described by:
Additionally, if employees from abroad are needed, the process for hiring is as simple and straight-forward. Although Estonia has introduced the annual immigration quota for non-EU nationals, there is no limit to startups (incl. founders, developers), IT specialists, and top-level specialists, whose monthly income is at least equal to double the average gross salary in Estonia.
Work in Estonia has listed several useful services that can be helpful when hiring either from Estonia or abroad, finding short-term employees, relocating employees, etc. Besides, Work in Estonia’s website boasts an interactive roadmap for hiring from abroad.
The legislation is liberal and offers a lot of flexibility in agreeing on terms and conditions of employment. Regulations regarding employment and labour contracts are regulated by the Employment Contracts Act.
A list of sample contracts in English can be found on the Work in Estonia webpage.
Information on labour taxes can be found here.
When planning to hire from abroad (non-EU or EU countries other than Estonia), the For Employers section of Work in Estonia can be a useful source of information on different legislation-related issues.
The standard working schedule in Estonia is eight hours a day, five days per week. The duration of one shift may not exceed 12 hours.
Working overtime is allowed by mutual agreement. The working schedule together with overtime cannot exceed an average 48 hours per seven days over a calculation period of four months unless a different calculation period has been provided by law. Employer and employee may agree on a longer working schedule than 48 hours if the working schedule does not exceed, on average, 52 hours per seven days over a calculation period of four months and the agreement is not unfair to the employee. An employee may cancel the agreement at any time, giving two weeks’ advance notice thereof.
The duration of the annual vacation is 28 days, an extended vacation is granted in case of some professions, such as state officials and local government officials, teachers, academic, pedagogical and scientific staff, and others. National holidays and public holidays are not included in the vacation duration calculations. An employee may be granted unpaid leave at his or her request for a period of time established by the agreement of the parties.
Maternity leave – A woman is granted 140 days of pregnancy and maternity leave, which may commence at least 70 days before the estimated birth date of the child. The maternity benefit is paid by the state.
Parental leave – A mother or a father shall be granted parental leave at her or his request for raising a child of up to 3 years of age. The parental benefit is paid by the state. Together the maternity benefit and the parental benefit are paid for a period of 575 days.
Sickness – in case of sickness, the employee can be given up to 182 calendar days of paid sick leave (max 250 days per year). The gross wage during this period is 70% of his or her last years` average salary. The employer pays the wage from the 4th to 8th day of sickness and the state starting the 9th day.
For more information on working and living in Estonia, please see the A to Z list of topics on the Work in Estonia webpage.
The average monthly gross salary in 2020 was 1,448 €. The specific salary information is available from Statistics Estonia.
Wages must be paid at least once a month and it is the employer’s obligation to calculate and withhold all payroll taxes.
When hiring, the general standard is a 4-month probation period with a one-day notice period. Long-term employees have usually a 1 month notice period. If the working hours are at night (from 10:00 pm to 6:00 am), employers shall pay wages exceeding the normal wages by 1.25 times, unless it has been agreed that the wages include remuneration for working at night.
Work during public holidays may be compensated either by offering time off or by paying 2 times the wages for the work.
Payment for overtime – additional remuneration per hour of overtime is at least 50% of the rate of the hourly wage.
Information on labour taxes can be found here.
Prime Minister Kaja Kallas: We have chosen to be front-runners of GreenTech who develop and introduce innovative technologies and services.
The transition to green energy does not happen by itself. Estonia has a clear goal for this, and agile actions have begun here in both, the public and private sectors, to make Estonia the world’s top GreenTech development centre and largest producer of green energy per capita in the coming years.
What is it like to run a business in Estonia? How to benefit from the e-solutions and the efficiency of our business culture? What are the opportunities in specific sectors? Who to partner up with?
The Estonian Investment Agency’s team is happy to help you via its complimentary e-Consulting service, organize online or offline follow-up events such as virtual investment visits and guide you through the fairly simple process of investing in Estonia.