Updated on: 2025/08/05 15:25 (UTC)
Overview
The principle law regulating the employment relationship is the Employment Contracts Act. Other important statutes include the Equal Treatment Act, the Trade Unions Act, and the Occupational Safety and Health Act.
Estonian employment law is rather liberal and offers flexibility in agreeing to terms and conditions of employment. The principle of protection of employees as the economically weaker party is applied, however, and any agreement between employee and employer that is disadvantageous to the employee or not in compliance with labor law may be voided.
Hiring
Employment Contracts
The employment contract is generally entered into for an unlimited term unless a limited term is justified by the characteristics of the work. Employment agreements can be amended only by mutual consent of the employer and the employee.
An employment contract (and any subsequent amendment to it) must be in writing if for longer than two weeks.
A written employment contract must contain at least the following information:
- the name, personal identification code or registry code, place of residence or seat of the employer and the employee;
- the date of entry into the employment contract and commencement of work by the employee;
- a description of duties;
- the official title if this brings about a legal consequence;
- the agreed remuneration payable for the work (wages) and the manner of calculation, the procedure for payment, the designated payday and taxes and other amounts withheld by the employer;
- other benefits if agreed upon;
- the time when the employee performs the agreed duties (working time);
- the place of performance of work;
- the duration of vacation;
- the terms for advance notice of cancellation of the employment contract;
- a reference to the rules of work organization established by the employer and
- a reference to a collective agreement if a collective agreement is applicable with regard to the employee.
The employer and the employee can freely detail the terms and conditions of employment, but the terms and conditions cannot be less favorable to the employee than those provided by the law.
Restrictions on Hiring
The minimum working age in Estonia is 15.
An employment contract with a minor under 15 years can only be entered into in specific cases and subject to the obligation not to interfere with school attendance.
An employer cannot enter into an employment contract with a minor or allow a minor to work if the work:
- is beyond the minor’s physical or psychological capacity,
- is likely to harm the moral development of the minor,
- involves risks which the minor cannot recognize or avoid owing to lack of experience or training,
- is likely to hinder the minor’s social development or the acquisition of his or her education or
- is likely to harm the minor’s health due to the nature of the work or the working environment.
Recordkeeping
An employee has the right to access any information gathered about him or her by the employer and demand that incorrect information be removed or corrected.
An employer must ensure that the processing of personal employee data is in accordance with the Estonian Personal Data Protection Act.
All employers are required to register their new employees within the employment register.
Background Checks
Everyone has the right to obtain data from the criminal records database.
Noncompetition Agreements
Employer and employee may agree on a restraint-of-trade agreement if it is necessary to protect the employer’s special economic interest or proprietary information.
A restraint-of-trade agreement that extends beyond the employment relationship is only valid if it:
- is in writing,
- provides reasonable monthly compensation to the employee, and
- has a duration of no more than one year.
Reference Citations
Employment Contracts: Employment Contracts Act, 2009 (as amended) §§ 1-12
Restrictions on Hiring: Employment Contracts Act, 2009 (as amended) § 7
Recordkeeping: Employment Contracts Act, 2009 (as amended) § 41
Noncompetition Agreements: Employment Contracts Act, 2009 (as amended) § 23
Immigration and Work Permits
In General
Citizens of non European Union/European Economic Area countries may apply for residence/employment permits with an employer registered in Estonia that has government permission to hire a foreign national and if the salary meets a prescribed minimum.
Visas and Work Permits
Foreign nationals may apply for residence/employment permits with an employer registered in Estonia that has government permission to hire a foreign national and if the salary paid the employee meets a prescribed minimum.
European Union and European Economic Area nationals have the right to stay in Estonia on the basis of a valid travel or identity document and do not need a visa or a residence permit to work there, although they must register their residence within three months of entry.
Other foreign nationals may work in Estonia temporarily for up to 270 days a year if their employment has been registered prior to commencement.
Post-Entry Requirements
If employment exceeds six months in a year, a foreign national must apply for a residence permit. Separate work permits are not required. Foreign nationals granted a temporary residence permit may work for several employers at the same time.
Digital Nomad Visa. In August 2020, Estonia introduced a digital nomad visa, which allows eligible applicants a temporary basis to live and work remotely in Estonia for up to one year. It is meant for people who can perform their work location-independently using telecommunications technologies and who work for an employer registered outside of Estonia or as a freelancer for clients mostly abroad. The visa does not give the right to obtain Estonian citizenship or permanent residency. Applicants must meet a minimum monthly income threshold.
Penalties
Illegally employing a foreign national in Estonia is punishable by a fine of up to 3,200 euros.
Reference Citations
Visas and Work Permits: Citizenship Act, 1995
Nondiscrimination
In General
No one may be discriminated against on the basis of nationality, race, color, sex, language, origin, religion, political or other views, or property or social status. The employer has the obligation to ensure the protection of employees against discrimination, follow the principle of equal treatment, and promote equality.
EU Pay Transparency Directive: As a member state of the European Union, Estonia has until June 2026 to transpose the minimum requirements of the EU Pay Transparency Directive into its national law or amend any current pay equity laws to conform with the directive, which aims to promote pay equity between men and women. The directive introduces requirements on gender pay gap reporting, salary history bans during the hiring process, and wage disclosure in job vacancy listings. The national law may go beyond the minimum requirements of the directive, but the law may not directly conflict with the directive requirements.
Reference Citations
Nondiscrimination: Constitution of Estonia, 1992 (as amended) § 12; Equal Treatment Act, 2008 (as amended) §§ 2-4
Employee Privacy
Employee Data
On May 25, 2018, the General Data Protection Regulation (GDPR) superseded the Data Protection Directive as the primary law governing data privacy in the EU. The GDPR establishes minimum requirements for the processing of employee data and allows EU member nations to introduce more restrictive local legislation. Stricter requirements can also be established in collective bargaining agreements or work contracts. For more information, see the In Focus: International Privacy Laws.
Employee Monitoring and Surveillance
Under the GDPR, employers can monitor employees only if there is a lawful basis for doing so. Lawful bases can include preventing employee misconduct, deterring crime, and ensuring compliance with health and safety procedures. Employees must be given prior notice, and any data that is collected must be used and kept only to fulfill its original purpose.
Reference Citations
Employee Data: General Data Protection Regulation, 2016
Employee Monitoring and Surveillance: General Data Protection Regulation, 2016
Compensation
Hours of Work
Full-time weekly employment is 40 hours, generally five eight-hour days. All additional work hours are considered overtime. Total working time, which includes regular working time plus overtime, cannot exceed 48 hours per seven days over a calculation period of four months.
Employees must be granted a break for at least 30 minutes after six hours of work to eat and to rest. Employees also are entitled to daily rest time of 11 hours between shifts and weekly rest time of 48 consecutive hours per seven-day period.
Minimum Wage
The minimum wage is 3.86 euros per hour or 654 euros per month.
Work done between the hours of 10 p.m. and 6 a.m. is remunerated at a rate of 125 percent of regular pay, work done on a holiday 200 percent of the normal rate.
Overtime
The employer and the employee can agree on overtime work, and an employer has the right to demand overtime in certain unforeseen circumstances, in particular for prevention of damage. Total working time, which includes regular working time plus overtime, generally cannot exceed 48 hours per seven days over a calculation period of four months. However, if necessary the employer and employee can agree to extend work hours up to 52 hours per week over a calculation period of four months.
Overtime work must be compensated by equivalent time off or by payment at a rate of 1.5 times the employee’s regular wage rate.
Minors may not work overtime.
Wage Payment
An employer must pay wages to an employee at least once a month.
The law does not prescribe a specific payday, but when a regular payday falls on a holiday, wage payment must be made the preceding day.
Mandatory Bonuses
Bonuses may be at the discretion of the employer or provided for in employment contracts or collective bargaining agreements. If the bonus has been agreed between the employer and the employee—for example, in the employment contract—the employee has the right to demand the bonus.
Reference Citations
Hours of Work: Employment Contracts Act, 2009 (as amended) § 43
Minimum Wage: Minimum Wage Regulation (Estonian)
Overtime: Employment Contracts Act, 2009 (as amended) § 44-45
Wage Payment: Employment Contracts Act, 2009 (as amended) § 33
Benefits
Vacation
The minimum amount of annual leave for employees who have worked for the company for at least a year is 28 days. Employees who have worked six months but less than a year are entitled to prorated vacation. The timing of annual leave is mandated by the employer, taking into account the requests of the employee and the interests of the company.
Employees have to take one period of annual leave no less than 14 consecutive calendar days in length. Employers can refuse to allow employees to take leave in increments shorter than seven days. The annual leave payment must be made no later than the penultimate working day before commencement of the leave. Any unused annual leave may be carried over into the next year.
An employee may apply for additional vacation without pay, if necessary. Employers must draw up an annual leave schedule for each calendar year and present it to employees within the first quarter of the year.
Holidays
There are 12 public holidays in Estonia:
- Jan. 1: New Year’s Day
- Feb. 24: Independence Day
- Good Friday
- Easter Sunday
- May 1: Spring Day
- Whitsunday
- June 23: Victory Day
- June 24: Midsummers Day
- Aug. 20: Independence Restoration
- Dec. 24: Christmas Eve
- Dec. 25: Christmas Day
- Dec. 26: Boxing Day
When the holiday falls on a Saturday or a Sunday, the following Monday is a regular working day in Estonia.
The working day before New Year’s Day, Independence Day, Victory Day, and Christmas Eve is three hours shorter than the regular working day.
According to the general rule, public holidays are not working days. The need for an employee to work on a public holiday may arise (for example) due to the employer’s economic activity. In these cases, the employer must pay the employee two times his or her regular wages for the time worked. Employer and employee can agree that the compensation for work done on a public holiday be granted in the form of additional time off.
Maternity Leave
An expectant mother has the right to paid pregnancy and maternity leave of 140 calendar days. She is entitled to maternity leave of at least 70 calendar days before childbirth. If an expectant mother starts using pregnancy and maternity leave less than 30 days before the estimated date of birth, pregnancy and maternity leave is shortened by the unused leave. The leave is paid by the social security system.
Following maternity leave, employees have the right to return to the same or an equivalent position under conditions no less favorable than before and to any benefits to which they would have been entitled during their absence.
Paternity Leave
A father has the right to receive up to 30 working days of paternity leave. The leave can be used during the 30 days before the estimated date of birth and until the child is three years old. Paternity leave is remunerated based on the father’s average wages but by no more than three times the average gross monthly salary in Estonia.
Sick Leave
Temporary changes to Estonia’s sick leave payment requirements were extended to June 30, 2023. Employers must pay the second through fifth days of leave instead of the fourth through eighth. The temporary policy did not change the amount that must be paid, which is 70 percent of the employee’s average salary.
The employee’s illness must be certified by a physician, and the employee must inform the employer of the necessary absence and of its probable duration.
Other Leave
Adoptive parent leave. An adoptive parent of a child under 10 years of age has the right to paid adoptive parent leave of 70 calendar days as of the date of entry into force of the court judgment approving the adoption.
Child care leave with pay. Parents are entitled to paid child care leave each year as follows:
- three working days if they two or fewer children under 14 years of age,
- six working days if they have at least three children under 14 years of age.
The benefit is paid by the social security system.
Child care leave without pay. Mothers or fathers who are raising a child up to 14 years of age are entitled to up to 10 days of unpaid child care leave per year.
Parental leave. Parents, step-parents, adoptive parents or guardians of a child are entitled to 435 days of paid parental leave until the child reaches three years of age. Only one parent can take leave at the same time. The father of a child has the right to the parental benefit once the child has reached the age of 70 days. The benefit is paid by the social security system.
Pensions and Social Security
Under the social insurance system, the legal retirement age is 63 and will rise by three months a year from January 1, 2017 until reaching 65 in 2026. To qualify for a pension, an employee must have at least 15 years’ service. Earlier retirement is allowed under certain conditions but may result in decreased benefits.
Employees born after 1982 are also required to participate in the mandatory individual account system. As under the social insurance system, the minimum retirement age is 63 and will rise by three months a year until reaching 65 in 2026, but only five years’ service is required to qualify.
Employees are required to contribute 2 percent of earnings to their individual accounts but make no contribution to the social security system. The employer contributes 16 percent of gross payroll to the social insurance system and 4 percent to individual accounts.
Worker’s Compensation
There is no specific worker’s compensation program in Estonia. Benefits are provided through the sickness and maternity and old age, disability, and survivor programs and by employers. All employed persons residing permanently in Estonia are covered for occupational diseases and for accidents that occur at work or while commuting to and from work.
Total disability is defined as a loss of at least 40 percent of earning capacity and qualifies an employee for a pension benefit of 100 percent of the reference wage (the insured’s average gross daily wage in the previous calendar year). A partial benefit is paid for a loss of earning capacity between 10 percent and 40 percent, calculated by multiplying the reference wage by the assessed loss of earning capacity as calculated by a medical commission.
Reference Citations
Vacation: Employment Contracts Act, 2009 (as amended) §§ 55, 68-70
Holidays: Employment Contracts Act, 2009 (as amended) §§ 45, 53
Maternity Leave: Employment Contracts Act, 2009 (as amended) § 59
Paternity Leave: Employment Contracts Act, 2009 (as amended) § 60
Other Leave: Employment Contracts Act, 2009 (as amended) §§ 61-62; Family Benefits Act, 2016 (as amended) §§ 32-34
Pensions and Social Security: Funded Pensions Act, 2004 (as amended), § 66
Labor Relations
In General
Membership or nonmembership in a trade union is voluntary and must not be the basis for discrimination or termination. A trade union can be established by as few as five employees and must be registered with the government. Organizers of a strike are required to notify the employer and the government in writing at least two weeks in advance.
When ownership of a business is transferred, the successor employer becomes responsible for its predecessor’s rights and duties under an existing collective agreement.
Right to Organize
Union activity is significantly lower in Estonia than in western Europe and is concentrated in transportation, health services and the processing industry.
The purpose of a trade union is to represent and protect the occupational, service-related, professional, economic and social rights and interests of employees. Membership or nonmembership in a trade union is voluntary and must not be the basis for discrimination or termination.
A trade union can be established by as few as five employees and must be registered with the government.
Collective bargaining agreements can be entered into by employees, individual unions or federations of unions and individual employers or associations or federations of employers. Currently, slightly over 800 collective agreements are registered in Estonia.
Works Councils
Estonia’s labor laws do not address works councils.
Dispute Resolution
If a dispute between an employer and union-represented workers cannot be resolved through negotiation, the parties have the right of recourse to federations of employers and employees to reach agreement. If an agreement still cannot be reached, the federations have the right of recourse to labor dispute committees or the courts for resolution of the dispute.
Strikes and Lockouts
A strike can be declared by a general meeting of employees or by an association or a federation of employees. Organizers of a strike are required to notify the other party, the Public Conciliator and the local government of a planned strike in writing at least two weeks in advance. Employees are not paid wages for the period of a strike.
Successorship Clauses
In cases where a business is sold or transferred, the successor employer becomes responsible for its predecessor’s rights and duties towards the employees under the collective agreement.
Reference Citations
Right to Organize: Trade Union Act, 2000 (as amended), § 19
Strikes and Lockouts: Collective Labor Dispute Resolution Act, 1993 (as amended), §§ 14-23
Successorship Clauses: Employment Contracts Act, 2009 (as amended) § 112
Safety, Health and Security
In General
Employers have the obligation to ensure compliance with occupational health and safety requirements in every work-related situation and must cooperate with workers to maintain a safe working environment. All enterprises must appoint a working environment specialist to help ensure workplace safety, those with 10 or more employees must have an employee-elected working environment representative, and those with 50 or more a working environment council of employee and employer representatives.
Employers are obliged to suspend employees who report for work under the influence of alcohol or drugs.
Workplace Safety and Health
Employers have the obligation to ensure compliance with occupational health and safety requirements in every work-related situation. Employers cannot allow employees to work if they lack the necessary professional expertise or knowledge about occupational health and safety.
Employers and employees are required to cooperate to maintain a safe working environment. The employer must consult employees, a working environment representative or an employees’ trustee concerning measures to improve the working environment, provide first aid, designate employees responsible for worker rescue and evacuation, plan and organize occupational health and safety training and select new technology and equipment.
Working environment representative. If their enterprise employs 10 employees or more, workers must elect one employee to serve a four-year term as their working environment representative. If an enterprise employs fewer than 10 employees, the employer is required to consult with the employees in matters of occupational health and safety.
The working environment representative has the right to:
- demand that the employer implement prescribed occupational health and safety measures and provide the employees with personal protective equipment in good working order,
- make proposals to remove sources of danger and improve the working environment,
- access all workplaces in the enterprise necessary for the performance of his or her duties,
- receive information from the employer concerning labor inspections,
- contact a labor inspector or meet with the inspector during inspections and
- halt dangerous work or prohibit the use of dangerous equipment if there is a direct risk to the life or health of an employee and it is not possible to eliminate the risk in any other manner.
In the event of a work stoppage, the working environment representative must promptly notify the employer of the hazard. Work must not be resumed until the hazard has been eliminated.
The employer must provide at its own expense any training necessary for a working environment representative to perform his or her obligations and allow the representative to perform necessary tasks during working time with no reduction in wages or in rights under law, contract or collective agreement.
Working environment specialist. Every employer, regardless of size, must select at least one employee to serve as a working environment specialist and provide necessary training and equipment to allow the specialist to perform required duties. The employer must notify the working environment specialist of known workplace hazards and of measures taken to eliminate or ameliorate them. The specialist must be familiar with the legislation regulating occupational health and safety, monitor working conditions in the enterprise and take measures to reduce workplace hazards. A working environment specialist is required to temporarily stop work if there is a direct risk to the life or health of an employee and if it is not possible to eliminate the risk in any other manner.
In the absence of a qualified employee, the employer must engage a competent external service provider to act as a working environment specialist. The number of working environment specialists in an enterprise must be sufficient to ensure the implementation of protective and preventive measures.
Working environment council. An employer with 50 or more employees must establish a working environment council of at least four members, half each chosen by the employer and the employees for terms of up to four years. The Labor Inspectorate has the right to demand that a working environment council be set up in an enterprise with fewer than 50 employees if conditions warrant. A working environment council is a body for cooperation between an employer and the employees’ representatives to resolve occupational health and safety issues.
A working environment council must:
- regularly analyze the working conditions in the enterprise, document developing problems, make proposals to the employer for their resolution and monitor the implementation of adopted safety measures;
- participate in the preparation of an occupational health and safety development plan;
- analyze occupational accidents, occupational diseases and other work-related illnesses and monitor the implementation of measures for their prevention by the employer and
- assist in the creation of suitable working conditions and work organization for female employees, minors and disabled employees.
Drug and Alcohol Use
Employers are obliged to suspend employees who report for work under the influence of alcohol or drugs.
Reference Citations
Workplace Safety and Health: Employment Contracts Act, 2009 (as amended) § 28; Occupational Safety and Health Act, 1999 (as amended) § 16-18
Drug and Alcohol Use: Occupational Safety and Health Act, 1999 (as amended) § 13
Termination
Termination by Employer
The employment contract can be terminated upon agreement between the parties at any time, and either party can terminate the contract with 15 days’ notice during a probationary period of four months from the date of commencement of employment. The probationary period does not have to be specified in the employment contract unless the employer and the employee agree to a period shorter than four months.
An employer can terminate an employment contract for cause if the employee:
- is unable to perform his or her duties for a period of at least four months due to ill health;
- is unable to perform his or her duties due to lack of skills, unsuitability for the position, or inability to adapt to changed working conditions;
- in spite of a warning, disregards the employer’s reasonable instructions or breaches his or her duties;
- in spite of the employer’s warning, comes to work in a state of intoxication;
- commits theft, fraud, or another act resulting in loss of the employer’s trust;
- damages the employer’s reputation;
- causes or threatens significant damage to the employer’s property; or
- violates the employer’s confidence.
The employer must give employees advance notice of termination of employment for breach of contract or inability to perform required duties as follows:
- 15 calendar days, if employed less than one year;
- 30 calendar days, if employed one to five years;
- 60 calendar days, if employed five to 10 years and
- 90 calendar days, if employed 10 or more years.
The employer also may pay compensation in lieu of notice.
Termination by Employee
An employee has the right to cancel an employment contract for an indefinite term at any time with 30 days’ notice. Employment contracts entered into for specified terms can only be terminated for cause.
An employee has cause to terminate an employment contract without notice if the employer commits a severe breach of the contract, in particular if:
- the employer has degraded the employee or allowed others to,
- the employer has considerably delayed payment of wages or
- continuation of work would pose a real threat to the employee’s life, health, morals or good name.
An employee also has cause to terminate employment if the employee’s health or family obligations prevent the performance of agreed-to work and the employer does not provide suitable alternative work.
Plant Closings and Mass Layoffs
Mass layoffs can be justified if there is a significant decline in production, a significant reorganization or a termination of the business. Under the Employment Contracts Act, a mass layoff is defined as the laying off within 30 calendar days of no less than:
- five employees in an enterprise where the average number of employees is up to 19;
- 10 employees in an enterprise where the average number of employees is 20–99;
- 10 percent of the employees in an enterprise where the average number of employees is 100 to 299 or
- 30 employees in an enterprise where the average number of employees is at least 300.
Before the employer decides on a layoff, it must consult with its employees with the goal of reaching an agreement on prevention or reduction of the planned layoffs or a mitigation of their consequences, including retraining or assistance in finding a new job.
Payment on Termination
Upon cancellation of an employment contract due to layoff, an employer must pay an employee compensation of one month’s average wages. If the employer gives the employee less than the required notice of termination, the employee is entitled to the wages that would have been paid had proper notice been given.
If the employment contract is for a specified term, the employer must pay the employee any wages the employee would have been entitled to until the expiration of the contract.
Unemployment Insurance
Unemployment insurance contributions must be paid by both the employer and the employee.
To qualify for unemployment benefits, the worker must have been employed and made premium contributions for at least 12 months in the preceding 36.
Reference Citations
Termination by Employer: Employment Contracts Act, 2009 (as amended) §§ 85-103
Termination by Employee: Employment Contracts Act, 2009 (as amended) § 98
Plant Closings and Mass Layoffs: Employment Contracts Act, 2009 (as amended) §§ 89-90
Payment on Termination: Employment Contracts Act, 2009 (as amended) § 100
Personal Taxes
Residency Requirements
An individual is considered a tax resident if present in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months.
Taxable Income
A resident must pay tax on worldwide income, a nonresident only on income earned in Estonia. Income tax is charged on all compensation paid an employee, including wages and salaries, bonuses, holiday pay, severance, and sick pay.
Tax Rates
Estonia taxes personal income at a flat 20 percent rate.
Estonian employers are required to withhold 20 percent in income taxes from employee wages and to contribute 33 percent in social taxes (20 percent for social security, 13 percent for health insurance). The employer also pays an unemployment contribution of 0.8 percent.
Estonian employees are required to pay an unemployment contribution of 1.6 percent of their gross salary, which is withheld by the employer. The employer also withholds contributions to mandatory funded pensions, which are mandatory for employees born after 1983, at a rate of 2 percent of gross salary.
The personal tax return filing date is the end of March every year (for the income gained in the previous year). Extensions are not possible.
Reference Citations
Residency Requirements: Income Tax Act, 1999 (as amended) § 6
Web References
In English unless otherwise noted.
Law and Regulation
Constitution of Estonia
Employment Contracts Act
Equal Treatment Act
Funded Pensions Act
Occupational Safety and Health Act
Personal Data Protection Act
Unemployment Insurance Act
Government Websites and Publications
Labor Inspectorate (Estonian)