Europe
How to hire and pay employees in Poland
Want to learn how to hire and pay employees in Poland? We can help your business expand into new markets with our payroll & Employer of Record...
How to hire and pay employees in Estonia
Slasify
Jun 21, 2025
| Key Takeaways |
|---|
| 1 Estonia offers a digitally advanced and entrepreneur-friendly environment, making it an attractive hub for startups and international operations. |
| 2 Employers must comply with Estonia's payroll, tax, and contribution system, including a flat 22% personal income tax and mandatory employer contributions for health insurance, pensions, and unemployment. |
| 3 Monthly payroll is standard, and wages must be paid at least once per month. Late payment rules apply if intervals aren't pre-agreed. |
| 4 The national minimum wage is EUR 886 per month (EUR 5.31 per hour), with no statutory bonus requirement. |
| 5 Termination rules distinguish between ordinary and extraordinary cancellations. Notice periods range from 15 to 90 days depending on length of service, and severance pay may be applicable in certain circumstances. |
| 6 Standard working hours are 40 hours per week with overtime capped at 48 hours per week over 4 weeks. Employees are entitled to minimum breaks and weekly rest periods. |
| 7 Employees receive 28 days of paid annual leave plus 12 public holidays. Working on public holidays requires double pay or compensatory time-off. |
| 8 Estonia provides structured family leave, including up to 100 days of maternity leave, 30 days of paternity leave, and 60 days of parental leave, with additional allowances for adoptive and disabled child care. |
| 9 Probation periods are typically 4 months, but can be shortened or eliminated by mutual agreement. Fixed-term contracts have proportional probation limits. |
| 10 For seamless hiring, payroll, compliance, and EOR support in Estonia, Slasify provides end-to-end HR solutions across 150+ countries, ensuring regulatory accuracy and operational efficiency. |
Discover the global hiring and employment landscape in Estonia – known as part of the Baltic Tiger during its economic boom, Estonia has become a startup hub, thanks to entrepreneur-friendly advantages.
Personal Income Tax
Effective January 1, 2025, personal income tax in Estonia is set at a flat rate of 22%.
Local Taxes
There are no local taxes on employment income in Estonia.
Statutory Contributions
Social tax paid by the employer, which constitutes contributions to Public Health Insurance and Public Pension Insurance, is calculated based on a monthly minimum of EUR 820.
Employer Contributions
| Contribution Rates | |
|---|---|
| Public Health Insurance | 13% |
| Public Pension Insurance | 20% |
| Unemployment Insurance | 0.8% |
Employee Contributions
| Contribution Rates | |
|---|---|
| Funded Pension | 2% |
| Unemployment Insurance | 1.6% |
Note: Contributions made for the funded pension is only mandatory for tax residents and those who are born in 1983 onwards.
Payment of Wages
Employers must pay their employees at least once a month unless a shorter term has been agreed upon.
Minimum Wage
Effective January 1, 2025, the minimum wage in Estonia is set at EUR 5.31 per hour or EUR 886 per month.
Statutory Bonus
There is no statutory bonus in Estonia.
Termination
Both the employer and employee can terminate an employment relationship at any time by mutual agreement. However, where one party seeks unilateral termination, the terminating party must be aware of whether they are terminating the employment relationship by means of "ordinary" or "extraordinary" cancellation.
| For employees | For employers |
|---|---|
| Employees can ordinarily cancel an indefinite-term employment contract at any time, but not fixed-term contracts unless they are concluded for the temporary substitution of another employee | Employers can only dismiss their employees by means of extraordinary cancellation. |
Ordinary cancellation does not require the terminating party to justify their decision, while extraordinary cancellation must be reserved for cases of fundamental breach of contract or if the continuance of the employment relationship cannot be expected.
| Reasons justifying dismissal | Reasons justifying (extraordinary) resignation |
|---|---|
| Decrease in capacity for work due to the employee's state of health, provided that they are unable to continue working for over 4 months | Employee's health or family duties do not allow them to perform the agreed work and the employer does not provide them with suitable alternatives. |
| Decrease in capacity for work due to the employee's incompetence, non-suitability for the position or inadaptability | |
| Employee disregarded the employer's reasonable instructions or breached their duties despite being given a warning | Employer has degraded the employee or threatened to do so, or allowed the employee's colleagues or third parties to do so |
| Employee has been intoxicated at work despite being given a warning | |
| Employee has committed theft, fraud or another act bringing about the loss of the employer's trust in the employee | |
| Employee has brought about a third party's distrust in the employer | Employer has considerably delayed the payment of wages |
| Employee has wrongfully and to a significant extent damaged the employer's property or caused a threat of such damage | Employee's continuance of work is related to a real threat to the employee's life, health, morals or good name |
| Employee has violated the obligation of maintaining confidentiality or restriction of trade |
Notice Period
Employers dismissing their employees must observe the following notice period unless, considering all circumstances and mutual interests, it cannot be reasonably demanded that the performance of the contract be continued:
| Length of service | Notice period |
|---|---|
| Less than a year | 15 calendar days |
| 1–5 years | 30 calendar days |
| 5–10 years | 60 calendar days |
| 10 or more years | 90 calendar days |
Dismissed employee are entitled to a reasonable time off during their notice period to look for new employment.
Employees choosing to resign must also observe a notice period of 30 calendar days if they do so by means of ordinary cancellation.
Note: The failure to observe the required notice will entitle the other party to be paid in lieu of the notice period at an average day's wage for each day of notice not served.
Severance Pay
The are no statutory severance in Estonia. However, depending on the circumstances behind the termination, the employee may be entitled to receive certain compensation from the employer.
| Compensation | |
|---|---|
| Employees dismissed due to economic reasons (i.e. lay-offs) | A month's average wage |
| Employee resigns due to the employer's breach of contract | 3 months' average wage |
Probationary Period
A probationary period of 4 months shall be applied to employees at the start of their employment, with the employee being notified of the duration of the probationary period. This period can be shortened or eliminated by agreement between the contracting parties.
Both the employer and employee can freely terminate the employment contract during the probationary period, provided that a 15-day notice period is observed.
Note: Employees engaged in fixed-term contracts of up to 8 months shall not have probationary periods that exceed half their contract duration.
Work Time Rules
Standard Working Hours
Standard working hours for a full-time employee in Estonia is subject to a maximum of 8 hours per day or 40 hours per week. However, both the employer and employee may agree in writing for some aspects of the working hours rules to not apply if, due to the nature of work, the employee is free to organize their own working time.
In any case, working hours before New Year's Day, the anniversary of the Republic of Estonia, Victory Day and Christmas Eve must be shortened by 3 hours.
Break Period
A break period of at least 30 minutes must be granted to employees who work more than 6 consecutive hours. This shall not be considered working time unless the employee is required to work continuously due to the characteristics of their work.
Employees who are required to work continuously must, however, still be given the opportunity to take their break during work hours.
In addition to the above, a mother who is raising a child up to 1.5 years old shall be allowed an additional paid nursing break of at least 30 minutes per child, which can be taken every 3 hours.
Overtime
Any work performed in excess of the agreed working hours are considered overtime, and the consent of both parties are required for its execution. Overtime cannot be planned in advance and must be agreed to separately each time the need for overtime arises.
Employers may require their employees to work overtime in exceptional cases where it is necessary in unforeseeable circumstances, in particular to prevent damage, provided that they are compensated with either equivalent time-off or 150% of their regular wages.
Those working overtime shall not have their total working hours exceed an average of 48 hours per week over a 4-week period. A separately recorded agreement can be made for a longer overtime where the employee can work a total of up to an average of 52 hours per week over a 4-week period as long as the employee's right to cancel the agreement anytime by giving their employers a 2-week notice is maintained.
Weekly Rest Days
Employees must have at least 11 consecutive hours of rest between working days and 48 consecutive hours of rest every week, which usually means that employees have Saturdays and Sundays off.
Holiday and Leave Entitlements
Public Holidays
Employees have the right to refuse to perform any work during holidays. There are 12 days of public holidays in Estonia for 2025.
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Independence Day | February 24 |
| Good Friday | April 18 |
| Easter Sunday | April 20 |
| Spring Day | May 1 |
| Pentecost | June 8 |
| Victory Day | June 23 |
| Midsummer Day | June 24 |
| Day of Restoration of Independence | August 20 |
| Christmas Eve | December 24 |
| Christmas Day | December 25 |
| Boxing Day | December 26 |
Employees required to work on a public holiday must be paid double their usual rate for the work performed or, if there is an agreement between the concerned parties, be compensated with additional time-off
Note: Working hours before New Year's Day, the anniversary of the Republic of Estonia, Victory Day and Christmas Eve must be shortened by 3 hours.
Annual Leave
Employees who have completed a year of service shall be entitled to 28 days of paid annual leave, and they can start to take their leave pro-rata once they have worked for the employer for at least 6 months.
The time of annual leave is set by the employer, taking into account the requests of employees and the interests of the business. This leave can be taken over multiple periods, provided that at least one of the period is for 14 consecutive calendar days. The employer shall reserve the right to refuse any leave request for a period of less than 7 days.
This leave should generally be taken within a calendar year, and can only be interrupted or postponed if there is a legitimate basis for doing so. In a situation where an employee has not taken all of their leave in the calendar year, the unused leave must be carried over to the following calendar year before expiring if still unused by the end of that year.
Note: The expiry of unused leave shall be postponed if the employee's service is suspended due to the employee being on maternity, paternity, adoption or parental leave, in compulsory military service or in alternative service.
Sick Leave
In the event that the employee is not able to work due to a sickness or an accident, they shall be entitled to take time off work. The employee will not receive any benefit for the first 3 days of their absence.
From the 4th day onwards, the sickness benefit is paid at 70% of the employee's daily income, as follows:
| Who is responsible for paying for sickness benefit? | |
|---|---|
| 4th–8th day | Employer |
| 8th day onwards | Health Insurance Fund |
Maternity Leave
Employees are entitled to up to 100 calendar days of maternity leave, provided that the employer is notified 30 days in advance. This leave may commence 70 days before the expected date of birth and taking the leave any later shall not result in a transfer of the leave over to the post-natal period.
It is recommended for maternity leave to be taken 70–31 calendar days before the estimated birth of the child to maximize parental leave benefits from the Social Insurance Board.
| If maternity leave is taken less than 70 days before the estimated date of birth | If maternity leave taken 30 days or less before the estimated date of birth |
|---|---|
| The maternity leave will be shortened by the respective period, meaning that the length of maternity leave will depend on when the mother goes on maternity leave. For example, if the leave is taken 40 calendar days before the estimated date of birth, the total length of maternity leave shall be 70 calendar days (40 days before birth + 30 days after birth). The remaining 30 calendar days are added to a period of shared parental benefit, which can be used flexibly by both parents if they so wish. |
The period covered by maternity benefit is shortened by the number of days by which the mother later began using the maternity leave. The unused days of maternity benefit are not transferred over to the period of shared parental benefit. |
Paternity Leave
Employees are entitled to 30 calendar days of paternity leave, which can be taken all at once or over multiple parts until the child reaches 3 years of age. This leave may commence 30 days before the expected date of birth and the employee is expected to give their employers an advance notice of at least 30 days before going for their leave.
Employers shall reserve the right to refuse requests for paternity leave in a part shorter than 7 calendar days.
Parental Leave
A parent raising a child in Estonia has the right to parental leave, provided that the employer is given an advance notice of at least 30 days before the employee goes for their leave. This leave may be taken by one parent at a time or by both parents simultaneously for up to 60 calendar days until the child reaches 3 years old.
Parental leave may be transferred over to the actual caregivers of the child if they are not being used by the child's parents, especially when the parents have been deprived of custody.
Furthermore, there are certain rights and obligations that may apply to the employee before, during and after their parental leave period. More information on these can be accessed here.
Other Leave
Employees may be entitled to the following leaves, and while most are unpaid by the employer, the employee may still be able to receive grants and allowances from the Social Insurance Board:
| Leave Type | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Adoptive Parent Leave | Paid by the Social Insurance Board | 70 calendar days | To be taken by parents adopting an underage child within 6 months of the date of entry into force of the court judgement approving the adoption, provided that they do not already receive equivalent parental leave benefits. The 70 calendar days of leave is the total leave that can be taken by both parents. |
| Carer's Leave | Paid | 5 working days per year | This leave can be taken to care for an eligible adult with a profound disability. Employees can take 5 working days per year for each person cared for. This leave shall be paid by the employer at the minimum wage, which can then be claimed from the state budget. |
| Child Leave | Paid by the Social Insurance Board | 10 working days per child | This can be taken until the year the child reaches 14 years old. Parents with multiple children can take this leave for a maximum total duration of 30 days per year. Additional leave may be granted to single parents and no leave shall be granted to parents who have been deprived of the child's custody. |
| Disabled Child Care Leave | Paid by the Social Insurance Board | 1 working day per month | For a parent of a disabled child until the year the child reaches 18 years old. Parents with multiple disabled children get additional leave according to the number of disabled children. No leave shall be granted to parents who have been deprived of the child's custody. |
| Study Leave | Both | 30–45 calendar days per year | Employees are entitled to 30 calendar days of leave per year for degree and job-related trainings. This leave shall be paid by the employer for 20 calendar days, while the remaining 10 days go unpaid. An additional 15 calendar days of leave may granted to complete formal education studies, compensated at the minimum wage. More information on the calculation of study leave pay can be accessed here. |
| Unpaid Child Leave | Unpaid | 10 working days per year | This is an additional unpaid leave granted to employees who are also entitled to Child Leave and Disabled Child Care Leave. |
Get In Touch
Slasify is a one-stop platform offering Global Payroll, Employer of Record (EOR), and HR Outsourcing functions for the remote working generation. Our proven track record with Forbes Top 100 Companies and dedication to Diversity, Equity and Inclusion (DEI) make us your ultimate payroll partner. Join us on a global HR journey, where we cater to your needs across 150+ countries and unlock HR solutions tailored to you—Book a free consultation now!