Estonia EOR & PEO
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DID YOU KNOW
- Estonia boasts some of the cleanest air in Europe. Low levels of pollutants like particulate matter and nitrogen dioxide are evident. This is largely due to Estonia’s coastal position, sparse population, and effective emission control policies.
- Estonia is known for their Sauna Culture. Saunas are deeply ingrained in Estonian culture and are often considered a social and relaxing experience.
- Over half of Estonia is covered by forests equating to roughly 2 million hectares.
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Working in Estonia
Financial Year Dates
Estonia’s financial year aligns with the calendar year, running from 1st January to 31st December.
Minimum Wage
The current minimum wage in Estonia is €4.92 per hour or €730 per month.
Standard working hours
The standard working week in Estonia is 40 hours. However, the Working Time Act allows for flexible working arrangements, including flexitime and compressed workweeks, to be agreed upon between the employer and the employee.
Overtime
For work carried out beyond the standard 40-hour work week, employees are entitled to overtime pay. Overtime is usually compensated at 1.5 times the employee’s regular hourly wage. Overtime beyond 48 hours per week requires prior agreement, and any additional overtime may be subject to higher rates.
Holiday Allowance
Employees in Estonia are entitled to a minimum of 28 calendar days of annual leave. The actual amount may vary depending on the length of service and individual employment contracts, but this minimum is designed to ensure a healthy work/life balance.
Sick Leave
Estonia provides statutory sick leave for employees. The first three days of sickness are typically not paid by the employer, but after this period, employees are entitled to sickness benefit from the Estonian Health Insurance Fund (EHIF), which compensates up to 70% of the employee’s average salary.
Maternity & Paternity Leave
In Estonia, maternity leave is granted for a total of 140 days (approximately 4.5 months), with full salary compensation from the Estonian Health Insurance Fund, provided certain conditions are met. Paternity leave allows fathers to take up to 30 days off, with compensation provided by the Estonian Health Insurance Fund.
Public Holiday
Estonia has 13 public holidays:
- New Year’s Day
- Independence Day
- Good Friday
- Easter Sunday
- Labour Day
- Spring Day
- Whitsunday
- Victory Day
- Jaan’s Day
- Day of Restoration of Independence
- Christmas Eve
- Christmas Day
- 2nd Day of Christmas
Social Contributions
In Estonia, social security contributions are calculated based on the gross monthly salary and are shared between employers and employees.
- Employer’s Pension Contribution: 20%
- Employer’s Health Insurance Contribution: 13%
- Employer’s Unemployment Insurance Contribution: 0.8%
- Employee’s Pension Contribution: 2%
- Employee’s Health Insurance Contribution: 1.6%
- Employee’s Unemployment Insurance Contribution: 1.6%
Income Tax
Estonia has a flat income tax rate of 20% on all personal income, including salaries, dividends, and capital gains. This straightforward tax system provides simplicity and transparency for both employees and businesses. There are also a number of deductions available, such as for dependents or specific business-related expenses.
Health Care
Estonia’s public healthcare system is available to all citizens and long-term legal residents. It is funded through the Estonian Health Insurance Fund (EHIF), and contributions to this system are mandatory for all employees, including self-employed individuals. Employees and employers both make contributions based on earnings. In addition, private healthcare services are available, and many individuals opt for supplementary insurance to cover additional medical expenses.
Visas
Estonia offers various visa categories for different purposes. These include:
- Work Visa: For individuals who have secured employment in Estonia. The visa requires sponsorship from an Estonian employer and is typically issued for one year, with the possibility of renewal.
- Self-Employment Visa: For entrepreneurs and freelancers looking to establish a business in Estonia. This visa is granted based on proof of a viable business plan and meeting specific financial requirements.
- Residence Visa: For individuals who can prove financial self-sufficiency and do not intend to work in Estonia.
- Family Reunification: Estonia also offers visas to family members of primary visa holders.
As an EOR provider, Gibson Watts Global can also provide guidance on this process. An EOR can provide a payroll solution in Estonia, so that workers can easily set up in Estonia and businesses can easily place workers in-country.
13th salary
Estonia does not have a legal requirement for a 13th salary or bonus. However, some employers may choose to provide additional holiday bonuses or other forms of compensation as part of their employment agreements.
Cultural Information
- Language: The official language is Estonian, which is part of the Finno-Ugric language family, making it closely related to Finnish but quite distinct from most other European languages. Russian is also widely spoken, particularly in the east of the country.
- Cuisine: Estonian cuisine reflects the country’s rural heritage and its connections to both Nordic and Russian culinary traditions. Traditional dishes include rye bread, smoked fish, sauerkraut, and potato-based meals. Estonia is also known for its dairy products, such as kefir and cheese.
- History and Independence: Estonia has a long history of foreign rule, including by the Germans, Danes, Swedes, and Russians. It regained independence from the Soviet Union in 1991 and is now a proud member of the European Union and NATO. Estonian Independence Day, celebrated on February 24th, is one of the country’s most important national holidays.
Impact of COVID-19
The pandemic has led to a significant shift towards remote and hybrid working models. Many companies are now adopting flexible working policies, which enhance employee satisfaction and productivity.