Hire employees in Estonia
With Nomad Global Hire PEO / EOR services, you can easily hire employees in Estonia, without having to set up your own entity. No risk and fully compliant with HR support included
What to know about Estonia
Estonia’s e-residency has attracted numerous businesses in the country
Employer Tax
Estimated at 33.8%
Currency
EUR, Euros
Available Employee Benefits
Medical insurance, Meal Vouchers
Employee Tax
up to 20%
Payroll Frequency
Monthly over 12 payments
Main Universities
University of Tartu, The Tallinn University of Technology (TalTech), Tallinn University
Capital
Tallinn
Population
Circa 1.4 Millions
Available Contracts
Fixed Term Contract, Indefinite/Permanent
Estonia is one of the Baltics country. Over the past decade it has become a digital nation. Many have become e-residents of Estonia and it is known for holding the world record for opening a business (in 15 minutes!). Although the process of opening an entity is not complicated, it is still necessary for businesses to rely on vendors and partners to manage Accounting, Employment and Payroll in particular. You can recruit directly or partner with local recruitment agencies (we can help find the right one), and NOMAD will manage the local employment for your new employees as well as Payroll
Payroll, Benefits & Tax in Estonia
- Average Salary in Estonia is 1,700 Euros per Month
- Employer Tax in Estonia is about 33.8%
- This includes Social Security tax and Unemployment Tax
- Employee Tax in Estonia is a Flat rate income tax of 20%
- There can be some add-ons because of pension fund contributions and unemployment insurance
- Overtime in Estonia has to be paid by law and is limited to 150 hours annually and can be compensated up to 200%
- Payroll Frequency in Estonia is Monthly over 12 months
- Maternity Leave in Estonia is up to 100 paid days. The Mother can start maternity 70 days before the birth and use it for 30 days after the birth of the child. Payment during this leave is covered by the Social Security fund.
- Paternity Leave is 30 days and can be taken anytime during the first 3 years of the child
- Parental Leave is 60 days in Estonia and can be used by both parents. The salary will be paid by the Social Insurance Fund during this period.
- Sick Leave is covered for up to 182 days per year. The first day is Not paid and the days 2 to 5 are paid at 70% by the employer. After that, The Estonian Insurance fund will cover the cost.
- Statutory Leave is 28 days minimum per year
- Bank holidays: there are 12 national days in 2023 in Estonia
- Termination can only be done for a valid cause in Estonia, see below
- Notice period is depending on the length of service of the employee in the business, from 2 weeks to 3 months
The Estonian Labor Code is setting the framework for employment in Estonia. This covers all individual and collective working relationships, Compensation and Benefits, Workers rights as well as Leave (Sick, Parental), employment Termination and Discrimination.
Onboarding and Termination in Estonia
- Probation period are not mandatory under Estonian Labor Law
- Probation period in Estonia however can be of a maximum of 4 months or 120 days
- You can hire through Fixed Term Contracts, Indefinite / Permanent contract or BtoB contracts
- Employment Contracts are drafted in Estonian but can also be in English (and not necessarily both at the same time)
- Termination is Estonia is generally a complicated process and requires particular care. In order to be compliant, Termination can occur as such:
- By mutual agreement
- By resignation of the employee
- By expiration of contract
- By the employer on grounds of disciplinary dismissal, failure to perform in probation period, reduction of work or end of the activity
- It is always advised to reach a Mutual Agreement to validate a Termination in Estonia
- The minimum notice period in Estonia is 2 weeks (for length of service of less than 1 year), then 1 month for service of 1 to 5 years, and then 3 months after 10 years
- Severance payments in Estonia are mandatory and can go from 1 month to 3 months salary depending on the reason for Termination
Fixed Management Fee
We charge a fixed monthly fee depending on the level of the salary of the hired employee
- Local Contract Management
- Payroll Management
- Tax and Compliance
- HR Support
Employee Nomad set up fee
Everything to get you started on Nomad and ensure piece of mind for you and your new hire
- Sign up to the NOMAD Services
- Benefits Setup (if available)
- Tax authority liaisons
- An additional Deposit of 1 full month salary cost will be required
Estimated Employer tax costs
Employer Tax in Estonia is estimated around 33.8% (may vary depending on circumstances)
- Social Security Tax
- Unemployment insurance
- Others
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