When expanding your business to Estonia, designing a competitive compensation and benefits package is crucial for attracting and retaining top talent. A comprehensive plan must meet all statutory requirements and should also include supplemental benefits to position your company as a preferred employer.
Compensation regulations in Estonia
As of January 1, 2025, the national minimum wage in Estonia is EUR 886 per month. While this sets the legal baseline, it’s important to note that average salaries are significantly higher.
Employers must pay salaries at least once per month and are responsible for withholding income tax (20%) and social security contributions at the source. It is also essential to check for any applicable Collective Bargaining Agreements (CBAs), as they may stipulate higher minimum wages or different terms for your specific industry.
Statutory employee benefits in Estonia
A compliant benefits package in Estonia must include several guaranteed entitlements.
Working hours and overtime
The standard workweek in Estonia is 40 hours, based on an 8-hour day, 5 days a week. Any work beyond these hours is considered overtime and must be compensated at a rate of 1.5 times the employee’s standard wage, unless otherwise agreed for it to be compensated with paid time off.
Annual leave in Estonia
Employees are entitled to a minimum of 28 calendar days of paid annual leave. This entitlement is earned on a pro-rata basis throughout the year. Certain employees, such as minors or those with partial incapacity for work, are entitled to 35 calendar days.
Public holidays in Estonia
In Estonia, employees are entitled to 12 public holidays each year. The working day preceding four specific public holidays—New Year’s Day, the anniversary of the Republic of Estonia, Victory Day, and Christmas Eve—must be reduced by three hours
Sick leave in Estonia
Employees are eligible for paid sick leave, which is compensated as follows:
- Days 1-3: Unpaid.
- Days 4-8: Paid by the employer at 70% of the employee’s average salary.
- Day 9 onwards: Paid by the Estonian Health Insurance Fund (Tervisekassa) at 70% of the employee’s average salary.
Parental leave in Estonia
Estonia offers a flexible and generous parental leave system:
- Maternity leave: An expecting mother is entitled to 100 calendar days of leave, which can begin 30-70 days before the estimated due date.
- Paternity leave: Fathers are entitled to 30 calendar days of paternity leave, which can be taken up to 30 days before the due date or within the first 3 years of the child’s life.
- Shared parental leave: After the initial maternity leave period, parents can share a parental benefit (vanemahüvitis) for 475 days (or 605 for multiples). This can be used flexibly by either parent until the child turns 3.
Learn more about global maternity and paternity leave.
Supplemental benefits and perks
To remain competitive, many employers in Estonia offer supplemental benefits beyond the statutory minimums. Common perks include company cars, mobile phones, private health insurance, and flexible working arrangements. Offering such benefits can significantly improve employee satisfaction and retention.
Partner with G-P for compliant benefits management in Estonia
Navigating Estonia’s employment laws to create a compliant and competitive benefits package can be complex, especially without a registered local entity. Setting up a subsidiary can take months, delaying your ability to hire.
With G-P — the #1 Rated Global Employment Platform — you can offer global employees local, competitive benefits that are continuously updated by our in-house experts to meet country-specific regulations and norms. Easily administer benefits plans through our EOR platform to provide a smooth employee experience.
Learn more about our platform and request a proposal today.