Country Guides

Estonia

Quick Find

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Capital

Tallinn

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Language

Estonian

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Remote workers

123,000

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Currency

€ Euro (EUR)

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Working hours

40 hours per week

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Public holidays

12 days per year

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Minimum monthly salary

€886

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Tax year

Jan 1 - Dec 31

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Date format

DD/MM/YYYY

Misclassification penalties

Fines up to €32,000 for not registering a worker as an employee.

Fun fact

Estonia is renowned for innovation in government systems, and they offer e-residency to citizens of other countries.

Employer contributions

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    Employer tax: 33.8%
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    Pension: 20%
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    Health insurance: 13%
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    Unemployment insurance: 0.8%

Employee contributions

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    Employee tax: 23.6%
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    Pension: 2%
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    Unemployment insurance: 1.6%
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    Income tax: 22% flat income tax

Looking for a quick cost estimate?

Use our calculator to understand what are all the employment costs you have to consider in Estonia.

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Employer of Record in Estonia

What is an EOR?

An Employer of Record is the legal employer of a worker in Estonia. As such, the Employer of Record takes care of all Estonia compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

EOR responsibilities

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    Ensuring their employment is compliant with local laws
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    Processing local payroll
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    Filing employment related taxes and returns
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    Issuing payslips to the employee
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    Distributing salary payments

How it works

  • Company

    Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

  • Boundless

    Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

  • Employee

    The third party to the employment contract, the employee, fulfils all of their obligations as a worker for the company.

Statutory benefits in Estonia

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    Government healthcare
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    Business travel allowance
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    Unemployment insurance

Common non-mandatory benefits in Estonia

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    Supplementary pension
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    Paid sick leave
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    Private healthcare
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    Wellness
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    Cash bonus
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    Flexible working
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    Telephone costs
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    Stock options
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Written employment contract

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Payslip

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Equal opportunity

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Health & Safety

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Unemployment benefits

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Protection from discrimination

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Protection against dismissal

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Rights to certain working conditions during pregnancy

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Union membership

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Pay transparency

Paid time off

28 days + public holidays

Sick leave

182 consecutive calendar days per illness (240 days in cases of tuberculosis)

Maternity leave

100 calendar days

Paternity leave

30 calendar days

Parental leave

475 days to be shared between the two parents

Non-compete

Employers who would like employees to engage in non-compete clauses after employment termination must conclude a non-compete agreement in writing (setting out the restricted activities, restricted territory and duration of the restriction).

Probation

The maximum probationary period, according to local labour laws, is four months.

Payment frequency

At least once a month.

Payday

Generally, the beginning of the following month (in practice, usually up to the 10th day of the following month).

Employers must have a reason to dismiss employees and present the employee with a written declaration of termination (e-mail, scanned or pdf copies are accepted) stating the reasons for termination and respect the notice period according to the employment duration.

In the event of gross misconduct, the employer may terminate the employment immediately.

Upon termination, all the employer’s items under the employee’s possessions must be returned on the last day of employment at the latest. The employer must deregister the employee from the Working Register administered by the Estonian Tax and Customs Board within ten days of termination.

Employers must warn employees before dismissing them because of a breach of their obligations or a decrease in their work capacity.

According to local regulations, the employer has the right to terminate the employment contract for economic reasons /due to redundancy in case of any cessation of work (e.g. due to decrease in the work volume or reorganisation of work; in case of liquidation or bankruptcy of the employer).

FAQs

Companies looking to hire in Estonia generally consider four approaches. You can run payroll from your HQ for short-term cases, engage contractors for project-based work, set up a local entity to hire directly, or use an Employer of Record. Setting up locally is straightforward but the ongoing compliance load is real. An EOR allows you to hire in Estonia compliantly without setting up a local company.

Contractors work well when the relationship is project-based, and the person serves multiple clients. If an individual gives their full and undivided attention to your company in Estonia, employment is the right structure under Estonian law, covering entitlements like paid annual leave, sick leave, and social tax contributions. For project-based contractor engagements, Boundless’s Agent of Record (AOR) service handles classification, contracts, and payments compliantly in Estonia.

HR compliance in Estonia means your policies and procedures respect all applicable Estonian employment laws and regulations. When you hire in Estonia, this matters both to safeguard employee rights and to reduce employer risk. Compliance covers labour law, sick leave, annual leave (28 days), minimum wage (€886/month), tax credits, and a 40-hour working week. Following these is fundamental for running the business well.

An Employer of Record is the legal employer of the individual in Estonia for government, tax, and employment purposes. It provides a locally compliant contract, runs payroll, files employment taxes, and manages statutory benefits such as 100 calendar days of maternity leave and 28 days of annual leave. You remain responsible for sourcing workers, managing day-to-day work, and funding payroll each cycle.

Boundless ensures HR compliance in Estonia by partnering with local employment lawyers and advisers who review contracts and documentation for legal accuracy. We align on key requirements such as payroll, social protection, data protection, notice periods, and work-from-home regulations. When sensitive issues arise, our internal team works with local experts to resolve them promptly and in line with Estonian regulations.

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