Employment Conditions in Estonia

Terms & Conditions of Employment in Estonia

Probation period

The maximum probation period is four months. For fixed-term contracts, the probation period cannot be more than half of the contract term (in any case not more than four months). If the employer and employee wish to apply a shorter probation period or not apply one at all, the employment agreement should expressly state that.

Pay deduction

The employer may only deduct the employee's wages if a statutory or contractual provision requires or permits it or the employee has given their prior written consent to the deduction.

Non-compete restrictions

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). They have to pay reasonable monthly remuneration to the employee throughout the port-termination restriction, which can last up to 1 year after the employment termination. The law does not specify what fair compensation is. In practice, it usually ranges between 50-75% of the employee's monthly salary as at employment termination.

Parties may agree that the employee may not work or provide services for the competitor during the employment relationship, but the restrictions must be quite specified (setting out the restricted activities, restricted territory and duration of the restriction) so that the employee would understand the essence of the obligation. If the employee breaches the non-compete obligation, the parties may agree on a contractual penalty that the employer may claim for the breach. The contractual penalty usually does not exceed the employee's 4-6 months' salary. If the contractual penalty amount is too large, the court may declare it invalid. The employer can terminate the non-compete agreement at any time by 30 calendar days' notice.

Confidentiality

According to the Employment Contracts Act and the Law of Obligations Act, employers determine which information employees have to keep as production or business secret. Employers and employees may agree on a contractual penalty for a breach of the duty to maintain confidentiality.