The decision to hire is usually a big, sometimes tedious, step for entrepreneurs. Not so much in Estonia — here, you can start a company fully online using e-Residency, and build your dream team. What do you need to know before diving in? Learn more in this guide from e-Residency team.
Is Estonia a good place to hire?
Estonia is an excellent place when it comes to human capital, and employment prospects. Europe’s leader in PISA scores, it also benefits from a simple, fair tax structure and all-online approach to bureaucracy. The e-Residency team recently put together a one-pager that explores benefits Estonia offers to employers. For e-residents, employment registration and payroll can be completed 100% online. Many e-Residency Marketplace service providers also provide payroll services.
Company hiring administration can be managed online, and it is possible to manage it in English. Employment contracts must be in English or Estonian, or in both languages.
A business-friendly legal framework for employers is no less important. Some European countries have very strict employment legislation, where letting go of employees can be very costly and difficult. This sometimes leads to situations where small entrepreneurs try to avoid taking on full-time employees, hindering their growth opportunities.
E-resident Luke Seelenbinder co-founded Funktional OÜ and has had experience hiring in both Estonia and outside. About his experience, he notes: “We have consistently experienced simplicity and efficiency in the Estonian ecosystem. Minimal paperwork, practical visas, clear employment regulations, and straightforward taxes combine for efficiency and give us confidence that we are doing everything correctly. While not always the lowest cost, the advantages provide us with room to focus on our business—not employment bureaucracy.”
In order to survive in an increasingly fluctuating global economy, businesses need to have the flexibility to downsize when necessary. Estonia’s pro-business legislation permits ending an employment relationship in Estonia quite easily, with 3-month remuneration being required for a role that is no longer necessary.
Startup companies in particular need flexibility with employment decisions. For example, at the beginning of the Covid-19 crisis, Starship Technologies, an Estonian startup offering autonomous robot deliveries, had to let go of around 100 people. Only 3 months later, they were able to grow their head count by 60.
Last but not least, Estonia’s entrepreneurial spirit and can-do attitude also reflects in our multilingual workforce. Having employees in Estonia will help e-resident founders to connect and benefit more from Estonia’s entrepreneurial and startup ecosystems.
What is the main limitation of Estonia as a place to employ?
It is important to stress that Estonia’s population of 1.36 million does not always allow you to find a large pool of candidates for each specific business role that you may be looking for. Unemployment in Estonia is relatively low at 6.4% as of 2024. For Ida-Viru county in Northeast Estonia where unemployment tops 10% there are grants available for SMEs to enable local hiring.
It should also be noted that Estonia is not a low-cost location for hiring. The average monthly salary in Estonia is around 1,900 Euros as of Q4 of 2023. However, Estonia’s average wage still significantly lags the EU average. Some regional differences also exist with Estonia’s average wage being below 1,500 Euros in 12 of its counties. Paying bonuses is not strictly required, but nonetheless a widespread practice.
Overall employer costs for salary sums can be calculated here. And to get a rough idea of average monthly salaries for specific roles, here are some examples:
- Software developers: 4,420 Euros (per calendar month)
- Chief Financial Officer: 3,909 Euros
- HR manager: 3,501 Euros
- IT system administrators: 3,249 Euros
- Senior PR specialists: 2,768 Euros
- Senior production and manufacturing engineers: 2,620 Euros
- HR assistants: 2,056 Euros
- Executive assistants and secretaries: 1,707 Euros
- Administrative staff: 1,262 Euros
How to bring employees to Estonia from non-EU countries
Citizens of the EU and Schengen Zone are free to move to Estonia and work here, as long as they register within 90 days if they stay longer. But what about people from outside the region?
To enable a larger pool of hires, Estonia has a number of measures in place to make it easier to attract and move employees here from outside the EU.
ICT specialists in particular are exempt from Estonia’s migration quota, allowing them to easily move to Estonia in order to take on a role. Estonia’s startup visa allows growth companies to easily move employees for any role from outside the EU to Estonia. US and Japanese citizens also enjoy an exemption from Estonia’s immigration quota. Estonia’s Police and Border Guard Board’s migration advisers available free of charge, whereas Work in Estonia also offers some relocation advisory and services.
For specific roles where there is simply not enough talent available in Estonia, employers can also use employees of record service by intermediaries, including e-Residency Marketplace Partner Deel.
Deals from our partner network to help you get started
The e-Residency Team has reached out to HR, hiring, coworking and relocation partners in Estonia to secure some great deals for e-resident founders. View these deals here.
Why should companies hire in Estonia?
Those who are more familiar with cross-border taxation topics would know that tax treaties consider the location of company directors and employees as a key variable to measure where a company should pay income tax.
Therefore, hiring a local director and other employees supports your business claim to substance in Estonia. This means your company will be more likely to take advantage of Estonia’s competitive tax system, and help de-risk a permanent establishment forming in your own country of residence. Similarly, having employee(s) and a base in Estonia makes it much easier to open business banking accounts with traditional Estonian banks and financial institutions.
Nevertheless, the possibility to get more out of Estonia’s ecosystem, to use Estonia to test new products and ideas, build stronger ties to our institutions, education system and collaborate with fellow Estonian enterprises and startups also becomes much easier whilst having a stronger base in Estonia through employee(s).
About hiring in Estonia for his company, e-resident Damir Tomicic notes: “We can confirm that Estonia offers employer-friendly labour laws, hiring, payrolling, and less bureaucracy than most other EU nations based on our eighteen years of presence in the country and hundreds of successful staff hires over the years. We sincerely value the government’s assistance and its adaptability in resolving challenging situations.”
Interested to hear more about hiring? Book a call with E-Residence team. Ready to invest in Estonia? Use our 1:1 e-Consulting service to get started.