Your Guide to Hiring Employees and
Contractors in Estonia
Ease of doing business
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.
The employer cost is generally estimated at 33.8% of the employee salary.
Social security tax – 33.0%
Unemployment tax – 0.8%
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.
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.
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.
An employer should provide notice at least 15 days before terminating a contract that’s still in the probation stage.