EOR Service in Estonia

Hire, Onboard and Pay Employees in Estonia Quickly and Efficiently

Hiring in Estonia at a glance

CURRENCY
Euro (€, EUR)
working hours
Typically, 35-40 hours per week
public/bank holidays
12 Public holidays
capital
Tallinn
language
Estonian
date format
DD/MM/YYYY
remote workers
1.2M
tax year
January to December
minimum hourly salary
No minimum wage
CURRENCY
Euro (€, EUR)
working hours
Typically, 35-40 hours per week
public/bank holidays
12 Public holidays
capital
Tallinn
language
Estonian
date format
DD/MM/YYYY
tax year
January to December
payroll frequency
Monthly
GDP
€37.19 billion in 2021 (estimate)

Employer of Record in Estonia

Estonia is an ideal destination for expanding businesses, offering a skilled workforce and a supportive business environment. When it comes to hiring in Estonia, partnering with an Employer of Record (EOR) can be useful. EORs in Estonia ensure compliance with local labor regulations, protecting businesses from legal complexities. 

Embracing the opportunities in Estonia requires leveraging the expertise of an EOR service provider.


Why use Estonia EOR?

Tapping into the Estonian labor market requires a comprehensive understanding of its labor laws. Estonia boasts a unique employment landscape, and may present challenges for inexperienced foreign employers. Estonia's labor market is known for its flexibility. The regulations are designed to protect employees while giving employers the ability to adapt quickly to changing economic conditions. This is different from many markets like the USA, Singapore where laws are designed to be employer-friendly. For example:

  • Estonia’s laws mandate employers to offer annual leaves, maternity leaves, etc. However, employers in the USA aren’t obliged to provide any leaves as such.
  • Social security is fully funded by employers unlike other countries where employees also share a certain percentage of their salary.

Gloroots’ Estonia EOR/PEO brings invaluable expertise in navigating Estonian labor laws, ensuring legal compliance for your business. They handle crucial aspects such as employee contracts, payroll processing, tax obligations, and administrative tasks in adherence to Estonian regulations. By partnering with an Estonia EOR/PEO, you gain access to local knowledge, networks, and cultural insights, facilitating business establishment and growth in Estonia.

EOR Costs in Estonia

The cost of Estonia EOR/PEO services may differ based on the number of employees, the extent of services needed. The pricing structure for Estonia EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

Key Metrics For Foreign Employers

Estonia has a talented pool of professionals, particularly in technology and entrepreneurship. The country's favorable government policies, streamlined bureaucracy, and startup-friendly ecosystem make it an attractive destination for career growth. 

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Estonia.

Factors Global Ranking Interpretation
Rule of law 20 Indicates effectiveness of law enforcement
Labour-employer cooperation 13 Indicates positive labor-employee relationships
Reading Maths, and Science 3 Indicates average scores in OECD's survey of 15-year old students
University Ranking 52 Indicates average QS rankings
Labour productivity per employee 33 Indicates total output by the total labor input used to produce that output
Ease of finding skilled employees 85 Indicates findability of skilled talent
Workforce with tertiary education 24 Indicates % of workforce with PG degrees
Digital Skills 25 Indicates prevalence of advanced digital skills in the population

Source: The Global Talent Competitiveness Index 2022

Through the Gloroots' Recrew platform, you can discover amazing talent in Estonia and grow your team effectively.

Why work in Estonia?

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Grow your team in Estonia

Employers in Estonia must establish a local legal entity and leverage local resources to ensure compliance with employment regulations, payroll management, tax obligations, and benefits administration. The intricacies of employment laws in Estonia require employers to navigate a complex landscape to ensure compliance. By partnering with local experts, businesses can streamline their operations and effectively manage their workforce, ensuring adherence to Estonian employment regulations and optimizing their business operations.

With Gloroots' global Employer of Record (EoR) service, you can let Gloroots handle the heavy lifting of payroll, tax, benefits, and compliance, allowing you to concentrate on what matters most: your employees and company growth.

Risks of misclassification

Estonia treats contractors, sole proprietors, self-employed individuals and full-time workers differently and there are significant risks associated with misclassificatiThe issue of "employee misclassification" also exists in Estonia and refers to the incorrect categorization of workers by employers. It occurs when an employer wrongly classifies a worker as an independent contractor, depriving them of the employment rights and benefits that should be provided to a regular employee, even if the worker performs duties similar to those of a permanent employee.

Partnering with a PEO/EOR in Estonia can assist in properly distinguishing worker classifications and preparing accurate employment agreements. By entrusting employment-related responsibilities to knowledgeable professionals, businesses can focus on their core operations while maintaining compliance with Estonian labor regulations.

on.

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Employing in Estonia

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Tax

INCOME TAX 

The individual income tax rate is 20%.

Other Taxes and Social Security contribution

Tax Employer Contribution
Corporate Tax 20%
VAT 20% (standard rate)

Social Security Contribution (Employers) Rate
Public Pension Scheme 20%
Public Health Insurance 13%
Unemployment Insurance 0.8%
Employers 33.8%

Social Security Contribution (Employees) Rate
Public Pension Scheme 2%
Unemployment Insurance 1.6%
Employees 3.6%

Separation

Termination Process

An employment relationship can be terminated in situations involving severe employee misconduct, voluntary resignation by the employee, or as specified in the employment agreement when the relationship comes to an end.

Notice Period

The length of advance notice for terminating an employment relationship varies based on the employee's duration of service with the employer. The notice should be provided in writing and adhere to the following guidelines:

Duration of Employment Minimum Notice Period
Less than 1 year 15 calendar days
1 to 5 years 30 calendar days
5 to 10 years 60 calendar days
10 or more years 90 calendar days

Severance Pay

For fixed-term employees, if their contract is terminated prematurely, the employer must pay them the wages they would have received for the remaining duration of the contract.

For permanent employees, the conditions that trigger severance pay are as follows: 

  • In cases of redundancy, the employee is entitled to six months' salary
  • Employees with a tenure of five to 10 years receive an extra month of gross salary, while those employed for 10 years or more are entitled to two additional months of gross salary.

Probation Periods

The duration of a probation period in Estonia can be up to four months, for permanent employees.

For fixed term employees, the probation period cannot exceed half of the total term of the employment contract. For example, if the employment contract is for 12 weeks , the probation period cannot exceed six weeks. However, even for fixed term employees, this period cannot last for more than 4 months.

If an employer wishes to terminate an employment contract during the probation period, they must provide at least 15 days' notice before the termination takes effect.

Start Hiring in Estonia today

When it comes to global hiring, ensuring compliance can be a complex endeavor. Employers must navigate through employment laws, payroll procedures, DE&I compliance, GDPR, and other data protection regulations to ensure a smooth and legally compliant onboarding process. Setting up the necessary infrastructure and staying up-to-date with the ever-evolving compliance landscape can add significant complexity to the hiring process.

At Gloroots, we are here to simplify this journey for you. Our comprehensive solutions offer a centralized platform to efficiently manage all aspects of hiring in Estonia. With our in-house experts, you can confidently navigate cross-border employment and payroll compliance risks. We provide support in generating employment contracts, ensuring timely payments, and offering compliant benefits, allowing you to focus on screening and selecting the right talent.

Our promise is to provide you and your employees with a seamless global employment experience.

Contact our experts today to kickstart your global hiring campaign in Estonia.

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Experience Seamless Hiring in Estonia?

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