Estonia
Estonia is a magnet for people who work remotely—it’s a magical part of Northern Europe. And, if you’ve found someone you’d like to hire there, you’re in the right place. By the end of this page, you’ll learn how to hire someone remotely in Estonia, no matter where your company’s based. And you’ll learn how to do it without paying thousands in fees.
Country snapshot
CURRENCY
Euro (EUR)
EMPLOYER TAXES
33.8%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Estonian
It’s the fastest way to hire globally
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It’s a lot cheaper
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
It’s more flexible for you & your team
Can be less risky than hiring employees
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
Some people want to be employees
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
You might not have as much control over your talent
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
When you hire abroad, you have to make a decision: Should you hire talent as employees, or as contractors? Both have their advantages and disadvantages. Below, we’ll give you the information you need to make a decision.
Hire talent as contractors
Hire talent as employees
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Estonia than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Estonia
Employer tax
Employer Contributions
- 33.8%
Paid Time Off (PTO)
Employees are entitled to 28 days of paid leave per year.
Public Holidays
There are 12 public holidays.
Sick Days
Employees are entitled to up to 182 paid sick leave days per year, paid at a rate of 70% of the employee’s previous years’ average salary.
Sick leave is paid starting from the 4th day of illness and is paid by the employer. From the 9th day onward, sick pay is paid by health insurance.
Maternity Leave
Maternity leave is 20 weeks (140 days) in Estonia and a mother may begin taking this 70 days before the expected due date of the child. Health insurance pays the maternity allowance which is paid at a rate of 100%.
Childbirth allowance- When a child is born, an allowance of 320 EUR is granted. If triplets are conceived, the amount is 1,000 EUR per child.
Paternity Leave
Fathers are entitled to 10 working days and can be taken within 2 months of the expected due date of the child. After the birth, the father is entitled to 2 months’ paternity leave. Pay is based on the average wage of the employee. The father is entitled to 100% of their regular wages, however, is capped at 3 times the minimum wage.
Parental Leave
In Estonia, paid parental leave can be taken until the child reaches the age of 3. The mother or father is able to take 435 days of consecutive or inconsecutive leave. However, only one parent can take this leave at a time.
Other Leave
Adopter’s leave: a person who adopts a child under the age of 10 is entitled to paid leave based on the employee’s average salary.
Child care leave: a mother or father is able to take paid leave (pay is equal to the minimum wage) and varies based on the age of the child:
- Up to 2 children under the age of 14 – 3 days of leave
- 3+ children under the age of 14- 6 days of leave
For parents with a disabled child- the mother or father is able to take off an additional day of work each month until the child reaches the age of 18. This leave is also compensated based on the minimum wage.
Marriage Leave
None.
Bereavement Leave
None.
Termination Process
The termination procedure differs based on the type of termination:
- Immediate termination- an employer is able to terminate an employment agreement immediately in the event of gross misconduct.
- Employee resignation- An employee can terminate an employment agreement with written notice for an indefinite or definite contract. In this case, the employee would need to give between14- days- one months’ notice.
- Termination with notice- If the employer initiates the termination of an employment agreement, the notice period is determined based on the duration of the employment
Notice Period
Notice period varies based on the duration of the employment:
- Less than 1 year – 15 days’ notice
- 1-5 years of employment- 30 days’ notice
- 5-10 years- 60 days’ notice
- 10+ years- 90 days’ notice
It is also possible to give pay in lieu of notice.
Severance Pay
In the case of termination due to redundancy, the employee is entitled to the average of the previous 6 months’ salary.
For fixed-term contracts that were terminated due to redundancy, the employee is entitled to the wages that they would have received from the date of termination to the expiry date of the contract.
Employees who have been employed for 5-10 years are entitled to an additional month’s salary. For employees who have been employed for 10+ years, they are entitled to an additional 2 months’ salary.
Probation Period
The probation period cannot be more than 4 months.
For fixed-term contracts, the probation period cannot be more than half of the term of the contract.
If an employer decides to terminate an employment contract during the probation period, the employer must give the employee 15 days’ written notice.
Working Hours
A full workweek in Estonia is 40 hours for employees over the age of 18.
Overtime
In general, overtime must be agreed upon by the employee and employer. Overtime hours cannot exceed a total of 8 hours within a 7-day period.
However, the employee and employer may agree that overtime over a 4-month time frame can average 12 hours for every 7 calendar days. This agreement may be canceled at any time by the employee so long as 2 weeks’ notice is given.
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