Skip to content

Your Guide to Hiring Employees and

Contractors in Estonia

Capital city






Ease of doing business

Very easy

Payroll frequency


Employer taxes



Monthly Payroll

The payroll cycle in Estonia is generally monthly, and payments must be made on the same day of the month and no later than the last working day of the month.

Minimum Wage Requirements:

The minimum wage is EUR 654 per month.

Individual Income Tax

The individual income tax rate is 20% in Estonia. Income tax is calculated using a flat rate. The rate may vary depending on when an employee’s pension fund and unemployment insurance deductions are made.

Employer Cost:

The employer cost is generally estimated at 33.8% of the employee salary.

Social security tax – 33.0%

Unemployment tax – 0.8%

Working Hours

Work Week

Monday to Friday.

Overtime Pay & Maximum Hours

Overtime payment is mandatory. Hours outside of standard work hours are considered overtime. Employees can work a maximum of 8 hours of overtime per week. For additional hours, employees are paid 1.5 times their regular salary or can be compensated with additional PTO.

Employment Termination

A working relationship can be terminated in cases of gross employee misconduct, willful employee resignation, or a winding down of the relationship as prescribed in the employment contract.

Notice period:

Depending on the duration an employee has worked with an employer, the latter should provide written notice to the employee well in advance of termination of the working relationship.

Probation periods

An employer should provide notice at least 15 days before terminating a contract that’s still in the probation stage.

These details are subject to change by the respective government and regulatory authorities in each country.