Guide to employment, payroll and benefits in


Rivermate offers complete payroll, benefits and compliance services for


01. Overview

Last updated: 

August 19, 2021

Ease of doing business
GDP growth

02. Grow your team in


with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in


, particularly if you don't have established local relationships. You can hire employees in


effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Estonia is a country in Northern Europe that is officially known as the Republic of Estonia. To the north, the Gulf of Finland separates it from Finland, to the west, the Baltic Sea separates it from Sweden, to the south, Latvia, and to the east, Lake Peipus separates it from Russia. Estonia's jurisdiction consists of the mainland and 2,222 islands off the Baltic Sea's eastern shore, covering a total area of 45,227 km2. It has a humid continental climate. Tallinn, Estonia's capital, and Tartu are the country's two main cities and urban areas. Narva, Pärnu, Kohtla-Järve, and Viljandi are also notable towns. Estonian, the country's official language, is the second most widely spoken Finnic language. Since at least 9,000 BC, the Estonian peninsula has been inhabited. Following the Livonian Crusade in the 13th century, ancient Estonians were some of the last European pagans to convert to Christianity. In the 19th and early 20th centuries, a distinct Estonian national identity began to emerge after centuries of successive rule by Germans, Danes, Swedes, Poles, and Russians. After a brief War of Independence at the end of World War I, Estonians led by General Laidoner had to fight for their newfound freedom, the country was granted independence from Russia in 1920. Estonia, which had been democratic prior to the Great Depression, was ruled by an oppressive regime beginning in 1934, known as the Era of Silence. During World War II, Estonia was repeatedly contested and occupied by Germany and the Soviet Union, eventually being absorbed into the latter as the Estonian SSR. After losing its de facto independence to the Soviet Union, diplomatic representatives and the government-in-exile maintained Estonia's de jure state continuity. After the peaceful Singing Revolution in 1987, the country's de facto independence was restored on August 20, 1991. Estonia is a developing nation with a high-income industrialized economy and a Human Development Index score of 100. The sovereign state is organized into fifteen counties and is a democratic unitary parliamentary republic. It is one of the least populous members of the European Union, the Eurozone, the OECD, the Schengen Area, NATO, and the United Nations Security Council, with a population of 1.3 million.

04. Public holidays

05. Types of leave

Paid time off

Any year, employees are entitled to 28 days of paid vacation.

Public holidays

Estonia recognizes 12 public holidays.

Sick days

Employees are entitled to up to 182 compensated sick days each year, and are paid at 70% of the employee's gross pay for the previous year.Sick leave is compensated by the company beginning on the fourth day of absence. Sick leave is covered for health insurers starting on the ninth day.

Maternity leave

In Estonia, maternity leave lasts 20 weeks (140 days), and a mother will start taking it 70 days before the child's due date. The maternity allowance, which is provided at a 100% basis, is covered by health insurance.Childbirth allowance- When a child is born, a 320 EUR allowance is provided. If you have triplets, you will be charged 1,000 EUR per child

Paternity leave

Fathers are limited to ten working days, which must be taken within two months of the child's intended due date. The father is entitled to two months of paternity leave after the birth of his child. The employee's pay is determined by his or her hourly salary. The father is entitled to 100% of their daily earnings, but the amount is limited to three times the minimum wage.

Parental leave

Paid maternity leave is available in Estonia before the infant hits the age of three. A mother or father will take 435 days of leave, either consecutive or nonconsecutive. This leave can only be taken by one parent at a time.

Other leave

Adopter's leave: An individual who adopts a child under the age of ten is entitled to compensated leave depending on the annual pay of the employee.Child care leave: a mother or parent may take paid leave (pay is equal to the minimum wage) for their child, which varies depending on the child's age:For two children aged under 14 years, the parent employees have three days of leave. For three children under the age of 14, the parent employees have six days of leave. The mother or guardian of an autistic child is entitled to one extra day off every month before the child hits the age of eighteen. The minimum salary is also used to pay for this time off.

06. Employment termination

Termination process

The procedure for terminating an employee varies according to the type of termination:

Employers have the right to quickly terminate an employment agreement in the event of gross misconduct. When an employee resigns, he or she may end an employment arrangement with writing notice, whether the contract is indefinite or definite. In this instance, the employee would be required to give 14 to 30 days' notice. When an employer initiates the termination of an employment agreement, the notice period is defined by the employment's tenure.

Notice period

The length of the notice period is determined by the length of the employment. The notice period is 15 days if you have been employed for less than a year. There will be a 30-day notice period for employees who have worked for 1 to 5 years. There will be a 60-day notice period for employees who have worked for 5-10 years. There will be a 90-day notice period for employees who have worked for more than ten years. Payment in lieu of notice is also an option.

Severance pay

When an employee is laid off as a result of redundancy, he or she is entitled to the average of the previous six months' wages. Employees terminated from fixed-term contracts due to redundancy are entitled to the earnings earned between the date of termination and the contract's expiration date. Employees with a five- to ten-year tenure with the organization are entitled for an additional month's compensation. Employees with a tenure of ten years or more are eligible to an additional two months' pay.

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.

07. Working hours


The typical workweek is 40 hours spread over five days of eight-hour shifts. Employees are permitted to take 11 hours of rest every 24 hours or 48 hours every seven days. Saturday and Sunday are typically rest days. Younger workers are subject to special rules.


In general, the employee and employer must agree on overtime. Overtime hours are limited to a total of eight hours per week.

However, the employee and employer may agree that overtime can average 12 hours every seven calendar days over a four-month time. The employee may terminate this agreement at any time with two weeks' notice.

08. Minimum wage


As of 2020, Estonian compensation laws require a minimum monthly wage of 584 EUR. However, many employees in the country earn at least 1,200 EUR per month. You must pay your employees at least once a month and withhold all payroll taxes at the source as an employer. Remember that a collective bargaining agreement (CBA) could change these laws, so check to see if your industry has an applicable agreement.

09. Employee benefits


Health insurance is financed through a social tax, the rates of which are listed above.

Health insurance in Estonia is intended to cover the costs of health services provided to insured persons, to prevent and cure disease, to finance the purchase of medicinal products and medicinal technical aids, and to provide benefits for temporary incapacity for work and other benefits.

Benefits such as company cars, laptops, mobile phones, and stock options are frequently negotiated.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in


to hire a team takes time, money, and effort. The labor law in


has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into


simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in


give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in


via our Employer of Record / PEO solution.

Ready to get started? Our friendly staff is ready to assist you with all your questions, let's connect.