Could Estonians successfully drive your company’s projects and initiatives? The answer is a resounding “yes!” These workers are highly proficient in the English language and tend to be very savvy when it comes to technology. And these are just a couple of reasons foreign businesses all over find the Estonian workforce attractive. 

But before you jump into the Estonian talent pool, it’s important to do your research on employee benefits. Estonia has enacted many rules and regulations regarding mandatory worker benefits, and understanding them is crucial if you hope to craft a quality benefit plan.

In this article, we’ll share all you need to know about employee benefits in Estonia, from non-negotiable benefits to supplemental benefits to compliance penalties and more. By the end, you’ll have the tools to build a benefit plan that serves your business well.

The Labor Law in Estonia

You can find official information on the labor laws in Estonia on the Republic of Estonia Labour Inspectorate and the EURES website. On these sites, you’ll find laws and regulations surrounding wages, rest time, insurance benefits, etc. 

Mandatory Employee Benefits in Estonia

There are several mandatory benefits that employers of Estonians must include in their benefit plans. Below, we’ll cover them all – leave entitlements, working hours, minimum wage, social insurance contributions, and more. 

Working Hours

Employees in Estonia are to work a max of 8 hours per day and 40 hours per week with exceptions. They typically have Saturday and Sunday off. If an employee is made to work on a Saturday or Sunday for a special case, the employer is expected to allow the worker to take time off during the upcoming week. 

The working hour requirements differ for minors. Learn more on the EURES website in the “Working Conditions” section. 

Monthly Minimum Wage

Regardless of the job you’re hiring for, you cannot pay Estonian workers less than the country’s minimum wage. As of the time of this writing (2024), the minimum wage stands at 4.86 euros per hour or 820 euros per month. That’s 5.14 USD per hour or 866.78 USD per month. There are other minimum wages for specific industries and job positions – for instance, Estonian employees who work as teachers earn a much higher minimum wage – 1,803 euros per month or 1,905.86 USD. 

If the employee works at night or over 40 hours in a week, they should be paid 1.5 times their regular wage.

Learn more about wages in this Estonian government resource. 

Leave Entitlements

Like many other countries, Estonian labor laws mention leave entitlements for employees. 

Annual Holiday Leave 

According to the Employment Contracts Act, Estonian employees are entitled to 28 calendar days of annual leave. Certain groups get more than 28 days. We’ve outlined these groups in the table below.

Type of Employee Extended Annual Leave Duration (calendar days)
Minors 35 days
Researchers and academic staff 56 days
Government officials 35 days
People with national pension or incapacity benefit 35 days

Public Holiday

The above leave time does not include public holidays. So, you’ll have to give your Estonian employees the below public holidays days off as well: 

  • January 1st – New Year’s Day 
  • Good Friday
  • Easter Sunday
  • May 1st – May Day
  • Whitsun
  • June 23rd – Victory Day
  • June 24th – Midsummer Day
  • August 20th – Day of Restoration of Independence
  • December 24th – Christmas Eve
  • December 25th – Christmas Day
  • December 26th – Boxing Day

Sick Leave

Starting within 30 days of the baby’s date of birth, male employees are eligible to take paid leave for the below durations:

Sickness Leave Duration Who Pays? Amount
Days 1 to 3 N/A N/A
Days 4 to 8 Employer 70% of daily wage
Days 9 and up Health Insurance Fund 70% of daily wage

Parental Leave

Female employees who have a certificate for maternity leave can take 100 calendar days off. And male employees who are going to be fathers, get to take 30 days. They can take the leave all at once or in multiple stints between the child’s birth and their third birthday. 

There are many other parental leave regulations that employers need to know about – all the information is laid out on the EURES website. 

Social Insurance Contributions - Pension and Health Insurance

Estonian law requires employers to pay a social tax every month using the TSD declaration form. The funds you pay go to your employee’s pension and health insurance.

As of the time of this writing, the minimum social tax payment for any employee is 239.25 euros per month. 

There are exceptions and special situations that change the minimum social tax payment. Learn more about pension and health insurance here. 

Supplementary Employee Benefits in Estonia

Employee benefits in Estonia aren’t as loaded as those of other countries – France, for example. Though that may initially seem like a minus, it makes it easy for you to bulk up your employee benefits package in a meaningful way.

Here are some supplementary employee benefits you can include for your Estonian employees: 

  • Health and wellness benefits like workout club passes and yoga classes. 
  • Work flexibility to promote a feeling of autonomy and work-life balance. 
  • Home office setup stipends to make work-from-home employees more comfortable.
  • Employee recognition programs to boost morale on your teams. 
  • Savings plans to help employees create a financial cushion and foster peace of mind. 
  • Opportunities for advancement in your company or further education in their chosen career path. 
  • More leave days than are required by law. 
  • Regular health checkups for free.

Compliance Concerns When Hiring from Estonia

Compliance is always a concern when expanding into a foreign country, including Estonia. When you hire workers from Estonia, you not only have to abide by the laws in your own country, but you also have to comply with foreign labor laws.

If you don’t follow Estonian labor laws, you could be hit with hefty fines and your business’s reputation could suffer. The best course of action is to work hard on compliance upfront, so you won’t have to deal with the negative consequences later.

Best Practices to Keep in Mind When Drafting Your Employee Benefit Plan

Keep the below best practices in mind as you’re putting your employee benefit plan together:

  • Dig deeper into Estonia’s local laws: To fully understand each of the mandatory benefits outlined above. There are special situations and exceptions involved in many of the laws, so it’s critical to look at the laws themselves. If you need help with this step, we recommend getting in touch with an attorney with experience in international labor law. 
  • Be sure to make the correct social security contributions for your employees: Your employees won’t be left in need when it comes time to use their benefits. 
  • Start with the mandatory benefits: Once those are in place, move to supplementary benefits tailored to your ideal job candidates.
  • Use the resources available to you: It’s no secret that building an employee benefit plan for employees in Estonia is no easy task. and there are resources out there to help you. We will take a look at those under the following heading. 
  • Clearly communicate all benefits to your Estonian employees: Using excessive business jargon or advanced English can confuse employees. Also, consider translating employment documents and any other documentation into Estonian for ease of reading. Doing so will also foster trust.

Resources to Use While Building Your Employee Benefits Plan

As you’re building your employee benefits plan for Estonian employees, chances are you will run into one or more roadblocks. Common ones include: 

  • Not quite understanding the regulations and laws concerning Estonian employees and employers. 
  •  Knowing which supplementary benefits to include as part of the employee benefit Plan. 
  •  Getting employees registered with the social security system and any other funds. 
  •  Budgeting for benefits to be included in Estonian worker benefit plans. 
  •  Effectively communicating the benefits in the benefit plan. 

And these are just a few of the issues you could come across. Whenever you need a hand, trust that there is a solution for you. Here are some of the main resources to draw upon as a global employer looking to hire Estonian talent:  

So, there you have it – everything you need to know about employee benefits in Estonia. Keep in mind that laws and regulations may vary based on the region, the type of employment, and more. So, it’s essential to continue your research by taking an even closer look at the regulations either on your own or under the guidance of a professional.

We hope that the information in this guide has served as a helpful introduction to the Estonia labor laws and we wish you the best as you prepare to expand into this great country.