Payroll and Benefits Guide - Estonia

Estonia
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Currency

Euro (EUR)
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Capital

Tallinn
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Employer Taxes

33.80%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Estonia is a country located in Northern Europe and is one of the three Baltic states, along with Latvia and Lithuania.

Estonia has a rich history and cultural heritage. It was under Soviet occupation for several decades before regaining its independence in 1991.

Estonia is known for its digital advancements and is often referred to as the “E-Government” or “E-Stonia” for its widespread use of digital technology.

The Estonian language is known for its distinctive vowel sounds.

The country has a high literacy rate, and Estonians are known for their love of literature and reading.

Estonia has a strong sauna culture, and saunas are an integral part of Estonian life.

Estonia

Contributions

Employee Payroll Tax

Unemployment Insurance1.60%
Compulsory Pension for those born after December 31, 19822.00%

Employer Payroll Tax

Pension20.00%
Health Insurance13.00%
Unemployment Insurance0.80%

Payroll

Payroll Cycle

Payments must be made on the same day of the month and no later than the final working day of the month in Estonia, where the payroll cycle is typically monthly.

13th Salary

A 13th-month pay is not required in Estonia. However, bonuses are typical and frequently distributed yearly.

Work Hours and Week

In Estonia, an average work week is 40 hours long, or roughly 8 hours per day for a five-day workweek.

Overtime

Every additional hour of work is compensated as overtime, and employment contracts and collective agreements govern how much overtime is paid. There are no restrictions on the maximum number of hours an employee may work when requested to perform overtime or on a holiday, with the exception of minors.

Estonia

Leave

Paid Time Off

Depending on the job function and employment contract/collective bargaining agreement in force, different people in Estonia are entitled to different amounts of yearly leave. Unless the employee and the employer have agreed to a longer annual leave or unless otherwise permitted by law, an employee’s yearly paid leave is 28 calendar days, as per Section 55 of the Employment Contracts Act. For instance, academic and research staff is granted 56 days of paid leave, whereas government employees are granted 35 days of annual leave.

Public Holidays

There are 12 public holidays in Estonia.

Sick Days

In Estonia, employees are allowed up to 182 calendar days annually. Days 1 through 3 are unpaid leave, days 4 through 8 are compensated by the employer, and days 9 through 182 are covered by health insurance at a 70% rate of pay.

Through June 30th, 2023, employees will continue to be paid for sick days starting on the second day of their illness.

Maternity Leave

In Estonia, pregnant workers are entitled to 140 days of maternity leave, which can begin as early as 70 days before the due date and must include at least 30 days.

With no maximum payment, maternity leave is rewarded at 100% of the average annual salary determined based on work over the prior calendar year. Mothers who hadn’t worked in the previous calendar year but did so prior to the birth of their kid are paid the minimum salary of 654 EUR per month.

Paternity Leave

Ten working days of paternity leave may be taken by fathers within two months of the due date. The father is entitled to two months of paternity leave following the birth. The employee’s average wage serves as the basis for pay. 100% of the father’s regular income is his right, but only up to three times the minimum wage.

Parental Leave

Beginning on April 1, 2022, parents will be able to take up to two months of paternity leave at once and earn parental benefits at that time. The overall duration of the payment of parental benefits will not be cut by more than 30 days for parents of premature babies and multiple births. This will guarantee that these families may care for their children at home until they are 18 months old. Parental benefits are also claimable up until the child turns three.

Termination

Termination Process

A fixed-term contract may be terminated by the employer for any of the following reasons: business, personal, or employee misconduct. It necessitates notice and a justification for the termination in writing. A warning must be delivered and the employee is given the option to defend actions if the reason is misconduct.

Notice Period

In Estonia, the length of service a worker must have at a single company determines the notice period.

  • 15 days’ notice with a duration of under a year
  • 30 days’ notice after one to five years of work
  • 60 days’ notice, 5-10 years
  • 10 years or more; 90-day notice

Pay in lieu of notice is an additional option. Employers are required to provide 15 days’ written notice before terminating an employee’s employment during the probationary period.

The employee must provide 30 days’ notice if he decides to resign.

Severance Pay

When an employment agreement is terminated owing to redundancy, the employer is required to provide compensation equal to one month’s income (determined using the employee’s average pay for the prior six months).

Employees who have worked for their company for five to ten years are entitled to an additional one month’s pay from the unemployment insurance fund (Töötukassa); if they have worked for the company for ten years or longer, they are also entitled to an additional one month’s pay.

Probation Period

Probation Period

The maximum length of a probationary period is four months.

Immigration

Unless they are exempt from visa requirements due to their nationality or a treaty, business travelers to Estonia normally utilize a Schengen C Visa. The Schengen Area imposes a 90-day maximum stay every 180 days. The visa may be sought at the closest Estonian consulate or the consulate of another Schengen nation that is Estonia’s representative.

VAT

In Estonia, the usual VAT rate is 20.00%.