Employer of Record in Estonia

An Employer of Record in Estonia employs workers on behalf of a foreign company, taking on full legal responsibility for payroll, tax filings, and compliance under Estonian law.

The most immediate compliance requirement is the employer social tax at 33% of gross salary. Before the first working day, employers must also register with the Estonian Health Insurance Fund and the Unemployment Insurance Fund. Missing either registration creates retroactive liability.

• Time to hire: 2 to 5 days via EOR vs. 4 to 6 weeks to set up a local entity
• Employer social tax: 33% of gross salary
• Employer notice period: Up to 90 days for employees with 10 or more years of tenure
• Minimum wage: EUR 946 per month from April 1, 2026

This page covers Estonian employment law, payroll obligations, visa requirements, contractor risks, and how an EOR compares to other hiring models. Each section addresses one decision point.

Gloroots is an Employer of Record provider. This guide presents the full range of hiring options in Estonia so readers can identify the path that fits their situation.

What Is an Employer of Record in Estonia?

An Employer of Record becomes the statutory employer under the Estonian Employment Contracts Act, taking on full liability for payroll, tax withholding, and employment compliance on behalf of the client company.

Foreign companies without a local entity, companies testing the Estonian market, and those formalizing existing informal worker relationships all use an EOR.

In practice, the client selects the candidate. The EOR issues a compliant Estonian employment contract, registers the employee with the Estonian Tax and Customs Board (MTA) and the relevant social funds, runs monthly payroll, and manages all statutory filings. The client directs day-to-day work. You can read more about how does EOR work in our detailed explainer.

EOR vs. PEO in Estonia: A Professional Employer Organization (PEO) requires the client to have its own registered Estonian legal entity (OÜ). An EOR does not. If you have no local entity, a PEO is not an available option.

Your Hiring Options in Estonia: EOR vs. Entity vs. PEO vs. Contractor

Foreign companies hiring in Estonia have four main paths: setting up a direct entity, using an EOR, engaging a PEO, or contracting independent workers. Each suits a different scale, timeline, and risk profile.

A direct entity makes sense when you plan sustained headcount, need full operational control, and are committed to the Estonian market long term.

An EOR or contractor engagement fits market testing, a single hire, situations where no local entity exists, or retroactive compliance for workers already on the ground. Gloroots EOR services cover entity-free employment with local execution and centralized governance.

Path	Setup Time	Compliance Ownership	Cost Structure	Best For
Direct Entity (OÜ)	4 to 6 weeks	Employer	EUR 2,500 capital plus ongoing legal and accounting fees	Long-term, multi-hire market presence
EOR	2 to 5 days	EOR provider	Per-employee monthly fee, no setup capital	Fast hiring, no entity, market testing
PEO	Requires existing OÜ	Shared with client	Per-employee fee plus client entity costs	Companies with an existing Estonian entity
Contractor	Days	Contractor (risk of reclassification)	Invoice-based, no benefits	Short-term, project-based, low-integration work

Note: A PEO in Estonia requires the client to have a registered Estonian OÜ. An EOR does not require any local entity from the client.

How to Hire in Estonia Through an EOR: Step by Step

Hiring through an EOR in Estonia follows six steps, from choosing the right model to running the first compliant payroll cycle. Each step has a defined owner and a clear output.

1. Step 1: Decide between EOR, entity, PEO, or contractor
2. Step 2: Select and vet an EOR provider
3. Step 3: Sign the client services agreement with the EOR
4. Step 4: Issue a compliant Estonian employment contract to the worker
5. Step 5: Complete employee registration with MTA and social funds before the first working day
6. Step 6: Run the first monthly payroll cycle, including social tax at 33% and income tax withholding

The sections below cover Steps 1 and 2 in detail. Later sections address contract requirements, payroll mechanics, and ongoing compliance obligations.

Step 1: Decide Between EOR, Entity, PEO, or Contractor

Use the four-path comparison table in the previous section to match your headcount size, hiring timeline, and risk tolerance to the right model before engaging any provider or registering any entity.

Step 2: Select and Vet an EOR Provider

Confirm the provider operates its own Estonian legal entity rather than a partner network, review its local compliance track record, and verify that pricing is itemized and fixed before signing.

Step 3: Draft and Sign a Compliant Employment Contract

The contract must be written in Estonian and include party identities, start date, job description, title, wages, working hours, place of work, holiday duration, notice period terms, and any applicable collective agreement reference.

Step 4: Register the Employee and Complete Onboarding

The EOR registers the employee with the MTA and relevant social funds before the first working day. Provide health and safety training, a company policy induction, and all required equipment before the employee starts.

Step 5: Run Compliant Monthly Payroll

The EOR calculates gross-to-net pay, withholds 22% income tax, remits 33% social tax and 0.8% unemployment insurance, and files the monthly TSD declaration with the MTA on the employer's behalf.

Step 6: Manage Offboarding and Exit

Provide written notice per the tenure-based schedule, settle accrued salary and unused leave, pay severance where applicable, deregister the employee with the MTA, and issue the final payslip.

How to Choose the Right EOR in Estonia

Selecting an EOR provider in Estonia requires evaluating several operational and legal criteria before committing.

Use the criteria below to assess any provider. For a broader comparison of providers, see our guide to the best employer of record options available globally.

• Local legal knowledge: The provider must understand the Estonian Employment Contracts Act, the 2025 income tax rate change to 22%, and post-2022 parental leave reforms.
• Own entity vs. partner network: Confirm whether the provider employs workers through its own Estonian legal entity or relies on third-party partners, which adds compliance risk.
• Support model: Assess whether you receive a named account owner or a shared support queue. Human-led operations reduce resolution time.
• Pricing transparency: Look for predictable, country-specific pricing with no hidden fees for filings, benefits administration, or offboarding.
• Data security: Confirm the provider meets GDPR requirements and holds relevant security certifications for handling employee data in the EU.
• Integration capability: Check whether the provider connects with your existing HR and finance systems to maintain centralized governance.

Local Legal Knowledge

Confirm the provider understands the Estonian Employment Contracts Act, the 2025 income tax rate change to 22%, and the post-2022 parental leave reform that restructured leave entitlements for both parents.

Own Entity vs. Partner Network

An EOR with its own Estonian OÜ carries full statutory employer liability directly. A partner-network model adds a layer of legal and operational risk that can affect payroll accuracy and compliance accountability.

Support Model and Response Times

Confirm whether the provider offers dedicated in-country HR support. The team must handle MTA queries, Health Insurance Fund coordination, and employee disputes without routing every issue through a generic helpdesk.

Pricing Transparency

Request a fully itemized quote. It must cover the EOR fee, social tax (33%), unemployment insurance (0.8%), and any severance accrual handling. Bundled pricing obscures true employment costs.

Data Security and GDPR Compliance

Estonia is an EU member, so GDPR applies in full. Confirm the provider holds current data processing agreements and relevant security certifications before sharing any employee personal data.

Payroll System Integration

Check whether the EOR platform integrates with your HRIS. It should produce bilingual (Estonian and English) payslips and MTA-compliant reports without requiring manual data exports.

Workforce and Talent Pool in Estonia

Estonia has approximately 700,000 employed individuals. Around 40% hold tertiary qualifications, with strong concentration in IT, engineering, and sciences. The median age is 42 years.

Tallinn leads in tech, finance, and startups. Tartu anchors research and biotech. Narva supports manufacturing.

Estonian work culture runs on flat hierarchies and direct communication. Employees expect high autonomy and flexibility. Remote and hybrid arrangements are standard, not exceptions. English is widely used in business, and many professionals also speak Russian and Finnish. Salary costs remain significantly lower than in Western Europe, making Estonia a cost-effective market for skilled hiring.

Metric	Detail
Workforce Size	~700,000 employed
Median Age	42 years
English Proficiency	High; widely used in business
Top Talent Hubs	Tallinn, Tartu, Narva
Key Industries	IT, Fintech, Cybersecurity, Biotech

Local job portals include CV Keskus, CV Online, EkspressJob, EURES, Skillific, and GoWorkaBit. Staffing agencies active in the market include Arista HRS and Ancor Estonia.

Employment Law Essentials in Estonia

Estonian employment law is governed by the Employment Contracts Act, which aligns closely with EU labor directives. The law requires written contracts, sets minimum wage floors, caps working hours, and mandates specific leave entitlements.

Employers must register with the Estonian Tax and Customs Board, the Health Insurance Fund, and the Unemployment Insurance Fund before the first payroll run. Each registration carries ongoing monthly filing obligations.

Estonia's rules on probation, overtime consent, and termination notice differ from many Western European markets. Employers unfamiliar with these specifics face compliance gaps that can result in retroactive liability. For a comparable EU market with similarly detailed employment law, see employer of record Germany.

Gloroots manages employment contracts, payroll filings, and statutory registrations for companies hiring in Estonia without a local entity.

Employment Contracts

Every Estonian employment contract must include: the identities of both parties, the start date, a job description, the official title, agreed wages and benefits, working time arrangements, place of work, holiday duration, notice period terms, a reference to the employer's work rules, and a reference to any applicable collective agreement. Gloroots provides bilingual compliant contracts covering all mandatory clauses.

Working Hours and Overtime

Standard working time is 40 hours per week. Overtime requires employee consent and is capped at 8 hours per week, compensated at a minimum of 150% of regular pay or replaced by equivalent time off if agreed in writing.

Under Estonian law, the working day immediately before New Year's Day, Independence Day (24 February), Victory Day (23 June), and Christmas Eve (24 December) is shortened by 3 hours.

Minimum Wage

Estonia's minimum wage is EUR 946 per month (EUR 5.67 per hour), effective 1 April 2026. This is up from EUR 886 per month in 2025 and EUR 820 per month in 2024.

The minimum wage is set by government decree and reviewed annually. Employers must apply the updated rate from the effective date to remain compliant with payroll obligations.

Leave and Statutory Benefits in Estonia

Estonian law provides a structured set of paid leave entitlements funded through a combination of employer obligations and state insurance schemes. Understanding which days are employer-paid and which are state-covered is essential for accurate payroll.

Sick leave: the first 3 days are unpaid. The employer pays 70% of the employee's average salary from days 4 to 8. From day 9 onward, the Health Insurance Fund covers the benefit.

Maternity leave totals 100 calendar days: up to 70 days before the expected birth date and at least 30 days after. The Health Insurance Fund pays the benefit at 100% of the employee's average salary.

Parental leave under the post-2022 reform provides 475 days shared between both parents, with a combined paid parental benefit cap of 575 days. Each parent has a non-transferable portion to encourage shared use.

Child leave entitles each employed parent to 10 paid days per child under 14 per year. Parents of a child with a disability receive an additional 12 paid days per year.

For pension contributions, employees can elect a second-pillar contribution rate of 2%, 4%, or 6% of gross salary from 2025 onward, replacing the previous fixed 2% rate.

Leave Type	Entitlement	Pay Rate	Key Conditions
Annual leave	28 calendar days minimum	Average salary	Accrues from start of employment
Sick leave	Days 1-3 unpaid; days 4-8 employer-paid; day 9+ state-paid	70% (employer); 70%+ (state)	Medical certificate required
Maternity leave	100 calendar days	100% of average salary	Up to 70 days pre-birth, min 30 post-birth
Parental leave	475 days shared; 575 days combined paid cap	Parental benefit rate	Post-2022 reform; non-transferable portions apply
Child leave	10 days per child under 14 per year	Paid	Additional 12 days for parents of disabled child
Paternity leave	30 days	100% of average salary	Covered by Health Insurance Fund

Annual Leave

Employees in Estonia are entitled to a minimum of 28 calendar days of paid annual leave per year. Public holidays are not counted against this entitlement and are granted in addition to annual leave days.

Sick Leave

Days 1 to 3 of illness are unpaid. The employer pays 70% of salary from day 4 to day 8. From day 9 onward, the Health Insurance Fund covers the benefit.

Maternity and Paternity Leave

Maternity leave covers 100 calendar days, with up to 70 days before birth and 30 days after. The Health Insurance Fund funds the benefit in full.

Post-2022, parents share 475 days of parental leave. Combined with maternity leave, the total paid parental benefit cap is 575 days. Each parent of a child under 14 receives 10 additional days of child leave per year, plus 12 extra days if the child has a disability.

Public Holidays

Estonia observes 12 public holidays per year. The working day before New Year's Day, Independence Day (24 February), Victory Day (23 June), and Christmas Eve (24 December) is shortened by 3 hours.

Payroll, Tax and Statutory Contributions in Estonia

Estonia's income tax rate is 22% from 2025, up from 20%. Payroll systems not updated to reflect this change will under-withhold income tax, triggering penalties from the Estonian Tax and Customs Board (MTA). Employers must audit payroll configurations before each payroll run.

The basic exemption from 2026 is EUR 700 per month (EUR 8,400 per year), applied as a flat amount with no income taper. From 2025, employees can elect a funded pension (II pillar) contribution rate of 2%, 4%, or 6%. Employers must check the Funded Pension Registry in December, April, and August to apply the correct rate. Health promotion expenses up to EUR 400 per employee per year are tax-free from 2025. For a full breakdown of total employment costs, see employer of record cost.

Gloroots runs payroll in Estonia under its local entity, applying the correct 22% rate, II pillar elections, and exemption thresholds automatically. All MTA filings are executed on schedule.

Tax slabs

Income bracket	Rate
All taxable income	22% (from 2025)
Basic exemption (from 2026)	EUR 700/month flat (EUR 8,400/year)

Employer and employee contributions

Contribution	Employer rate	Employee rate
Social tax	33%	0%
Unemployment insurance	0.8%	1.6%
Funded pension (II pillar)	4%	2%, 4%, or 6% (employee elects from 2025)

Work Visas and Permits in Estonia

EU, EEA, and Swiss nationals work in Estonia without a permit. Non-EU nationals require a short-term work permit or a temporary residence permit for employment, depending on the intended duration of stay.

Only an Estonian legal entity can act as an official sponsor for foreign workers. Gloroots' Estonian entity sponsors non-EU hires directly, manages applications with the Police and Border Guard Board, and ensures salary thresholds and contract terms meet legal requirements. Client companies do not need their own entity to employ international talent in Estonia.

Visa types

Visa type	Purpose	Validity
Short-term work permit	Employment up to 12 months within a 15-month period	Up to 12 months
Temporary residence permit for employment	Employment beyond 12 months	Up to 2 years, renewable
EU Blue Card	Highly qualified non-EU professionals	Up to 2 years, renewable
Startup visa / residence permit	Startup founders and employees in the tech sector	Startup visa: up to 365 days; startup temporary residence permit: up to 5 years, renewable
Intra-company transfer (ICT) permit	Relocating employees from a foreign branch	Up to 3 years for managers and specialists

Equity and ESOP Consulting in Estonia

Equity compensation is common in Estonia's tech and startup sector, which has one of Europe's highest unicorn densities per capita.

Stock options and ESOPs are subject to income tax at 22% upon exercise from 2025. Qualifying startup options may benefit from deferred taxation under Estonia's startup visa framework. EOR payroll must reflect vesting events correctly to avoid under-reporting income to the MTA. Gloroots tracks vesting schedules and applies the correct tax treatment at each exercise event.

Misclassification Risk in Estonia

Estonian law applies a substance-over-form test. Misclassified contractors trigger back taxes, social contributions, and fines for the employer.

Criteria for misclassification

• The worker operates under the employer's control and follows a set schedule.
• The worker uses company-provided equipment and tools for daily tasks.
• The worker is integrated into the company's core operations and reporting lines.
• The worker receives regular payments structured like a salary, not project invoices.
• The worker cannot subcontract the work or send a substitute.

Penalties for misclassification

• Retroactive social tax at 33% of salary applies to all reclassified periods.
• Income tax adjustments, interest charges, and MTA penalties are assessed retroactively.
• Retroactive leave entitlements and statutory benefits must be paid to the worker.
• Fines for failure to register the worker as an employee can reach EUR 32,000.

Gloroots employs workers as statutory employees from day one, removing misclassification risk entirely.

Hiring, Onboarding, Termination and Offboarding in Estonia

Hiring in Estonia requires a written employment contract, pre-start registration with the Estonian Tax and Customs Board (MTA), and enrollment in social funds before the employee's first day. Employers must confirm pension pillar elections and ensure payroll is configured to the correct contribution rates.

Termination requires written notice with documented grounds. Notice periods range from 15 days for employees with under one year of service to 90 days for those with ten or more years. Employees initiating ordinary termination must give a minimum of 30 days notice. Extraordinary termination by the employee, on grounds of employer breach or health reasons, requires no notice period.

Redundancy payments are split between the employer and the Unemployment Insurance Fund. The employer pays one month of average salary. The Unemployment Insurance Fund pays an additional one month for employees with five to ten years of service, and two months for those with ten or more years.

Offboarding covers settlement of accrued salary and unused leave, issuance of termination documents, deregistration with MTA and relevant funds, and return of company assets. Each phase must be completed in sequence to close the employment record correctly.

Onboarding

Before day one

• Confirm employment contract is signed with all mandatory clauses included.
• Register the employee with MTA before the start date.
• Enroll in social funds including the Health Insurance Fund and Unemployment Insurance Fund.
• Confirm the employee's II pillar pension election: 2%, 4%, or 6%.

Day one

• Provide health and safety induction per Estonian Occupational Health and Safety Act requirements.
• Issue company policy documentation including working hours and overtime rules.
• Deliver equipment: laptop, access credentials, and any role-specific tools.
• Confirm payroll details and bank account information with the employee.

First week

• Complete any role-specific compliance training required by the employer or sector.
• Confirm working hours arrangement and overtime consent in writing.
• Introduce the leave tracking system and explain annual leave accrual rules.

Beyond

• Schedule probation review before the four-month mark to meet statutory limits.
• Confirm whether any collective agreement applies to the role or sector.
• Review II pillar contribution rate during the December, April, or August registry check window.

Termination

Employers must provide written notice with documented grounds. Notice periods run from 15 days for employees with under one year of service to 90 days for those with ten or more years. Employees initiating ordinary termination must give at least 30 days notice. Extraordinary termination by the employee, on grounds of employer breach or health, requires no notice.

On redundancy, the employer pays one month of average salary. The Unemployment Insurance Fund pays an additional one month for five to ten years of service, and two months for ten or more years.

Offboarding

Settlement

• Calculate accrued salary up to and including the last working day.
• Pay out all unused annual leave at the employee's current rate of pay.
• Calculate severance based on tenure per the Employment Contracts Act.
• Confirm eligibility for the Unemployment Insurance Fund additional redundancy payment.

Documents

• Issue written termination confirmation stating grounds and effective date.
• Provide the final payslip in both Estonian and English.
• Issue an employment reference letter if the employee requests one.

Deregistration

• Notify MTA of the termination date and end the employment record.
• End contributions to the Unemployment Insurance Fund and pension funds.
• Confirm deregistration with the Health Insurance Fund.

Asset return

• Collect all company devices, access cards, and physical equipment.
• Revoke system access and software credentials on or before the last day.
• Complete data handover and confirm no company data remains on personal devices.

What's New: Recent Regulatory Changes in Estonia

Effective January 1, 2025, Estonia's flat income tax rate rose from 20% to 22% under an amendment to the Income Tax Act. This directly increases employee net pay deductions and raises employer withholding obligations across all payroll runs.

• Income tax rate is 22% from January 1, 2025. Payroll systems must be updated or MTA penalties apply.
• Basic exemption simplifies to EUR 700 per month flat from 2026, removing the income-tapered calculation.
• Minimum wage increases to EUR 946 per month from April 1, 2026, up from EUR 886 per month.
• II pillar contribution rate flexibility applies from 2025: employees may elect 2%, 4%, or 6%.
• Health promotion expense exemption increases to EUR 400 per employee per year from 2025.

Employers should review payroll configurations quarterly. Assign a payroll compliance owner to check MTA updates in January, April, August, and December each year. The next scheduled II pillar rate review point is August 2026.

Costs and Financial Planning for Hiring in Estonia

Total employment cost in Estonia typically runs 35–40% above gross salary, driven by mandatory employer contributions including 33% social tax and 0.8% unemployment insurance.

Two costs are frequently underestimated. First, severance accruals grow with tenure: the employer pays one month's salary directly, while the Unemployment Insurance Fund pays up to two additional months for employees with longer service records. Second, Estonian law requires a three-hour reduction in the working day on the eve of public holidays, affecting four days per year and reducing productive output in ways that are rarely budgeted in advance.

For companies evaluating build-versus-buy, the table below compares running a direct entity against using Gloroots as your EOR services provider. Gloroots pricing ranges from USD 199–599 per employee per month, depending on headcount and service scope. See full details on the pricing page.

Cost Element	Direct Entity	Gloroots EOR
Setup costs	EUR 2,500 share capital plus legal and registration fees	No upfront costs
Social tax (employer)	33% of gross salary, filed monthly with MTA	Included and managed by Gloroots
Unemployment insurance (employer)	0.8% of gross salary	Included and managed by Gloroots
Severance accruals	Employer tracks and funds directly	Gloroots manages accruals and coordinates with Unemployment Insurance Fund
Pre-holiday hour reductions	Employer must track and adjust payroll	Gloroots applies reductions automatically
EOR fee	Not applicable	USD 199–599 per employee per month
Ongoing admin	Monthly MTA filings, annual reports, local accountants	Handled by Gloroots

Common Challenges and How Gloroots Solves Them in Estonia

Practical compliance in Estonia in 2025 centers on three pressure points: the income tax rate increase to 22%, the complexity introduced by the post-2022 parental leave reform, and strict pre-employment registration deadlines with the Tax and Customs Board (MTA).

Each of these requires active configuration, not a one-time setup. The table below maps each challenge to how Gloroots addresses it.

Challenge	Gloroots Solution
2025 income tax rate change to 22%	Gloroots updates payroll configurations automatically to reflect the new rate, removing the risk of under-withholding
Post-2022 parental leave reform complexity	Gloroots tracks the 475-day shared parental benefit period and the 575-day total cap per child, ensuring correct benefit coordination
Pre-employment MTA registration deadline	Gloroots registers employees with MTA before their first working day, meeting the statutory deadline
II pillar pension rate election changes	Gloroots checks the Funded Pension Registry in December, April, and August to apply any employee rate elections to payroll
Misclassification fine up to EUR 32,000	Gloroots employs workers as statutory employees under its own Estonian entity, eliminating contractor misclassification exposure

Why Gloroots Is a Strong EOR Partner in Estonia

Gloroots is best suited for companies hiring between one and fifty employees in Estonia without a local entity, including those with workers already informally engaged who need to transition to compliant employment.

On country-specific compliance, Gloroots has updated its payroll engine for the 2025 income tax change to 22%, manages obligations under the post-2022 parental leave reform, and handles II pillar pension rate elections at each registry check window in December, April, and August.

Gloroots' Estonian legal entity acts as the official sponsor for non-EU work visa applications. Client companies do not need their own registered entity to bring international talent into Estonia.

For companies testing the Estonian market before committing to entity setup, Gloroots requires no minimum headcount. A single hire is supported on the same terms as a team of fifty.

Buyers should compare Gloroots' pricing and entity ownership model against partner-network providers before committing, particularly if visa sponsorship or long-tenure severance management is a priority. Partner-network EOR providers may not hold a direct Estonian entity, which affects sponsorship eligibility. See how Gloroots compares among the best employer of record options and review employer of record cost benchmarks before deciding.

Conclusion

Estonia's income tax rate rose to 22% in 2025 and the minimum wage increases to EUR 946 per month from April 2026. Payroll configurations set before 2025 are likely non-compliant on both counts.

Companies hiring in Estonia should audit their current payroll setup against the updated rates, review parental leave obligations under the post-2022 reform, and confirm their employment model before the next MTA filing cycle. Companies expanding across the EU may also want to review employer of record Poland as a comparable market.

Frequently Asked Questions About Employer of Record in Estonia

Is it legal to use an Employer of Record in Estonia?

Yes. EOR arrangements are fully legal under the Estonian Employment Contracts Act. The EOR becomes the statutory employer of record, holding all employment obligations including payroll, tax filings, and statutory benefits. The client company directs the employee's day-to-day work under a separate services agreement.

How much does an EOR in Estonia cost?

EOR fees with Gloroots range from USD 199–599 per employee per month, depending on headcount and service scope. Total employer cost, including the 33% social tax and 0.8% unemployment insurance contribution, runs 35–40% above gross salary. For a full breakdown, see the employer of record cost guide.

How quickly can I hire an employee in Estonia through an EOR?

Hiring through Gloroots typically takes 2–5 business days from signed agreement to employee start date. Setting up a direct entity in Estonia, by contrast, requires 4–6 weeks for incorporation and operational registrations before a single hire can be made compliantly.

What benefits do employees receive under an EOR in Estonia?

EOR employees in Estonia receive all statutory entitlements. These include 28 calendar days of annual leave, employer-paid sick leave from day 4 through day 8 at 70% of salary, 100 days of maternity leave, 30 days of paternity leave, 475 days of shared parental leave under the post-2022 reform, and II pillar pension contributions. The Health Insurance Fund covers sick leave from day 9 onward.

What is the difference between an EOR and a PEO in Estonia?

An EOR does not require the client to hold an Estonian legal entity. The EOR holds full employer liability and employs the worker directly under its own entity. A PEO operates as a co-employment model and requires the client to have its own registered Estonian OÜ. For companies without a local entity, only an EOR arrangement is viable.

Can an EOR sponsor work visas in Estonia?

Yes, provided the EOR holds its own Estonian legal entity. Only registered Estonian entities can act as official sponsors for non-EU nationals. Gloroots sponsors visa applications directly through its Estonian entity. Processing times for temporary residence permits and EU Blue Cards range from 1–3 months depending on permit type and applicant nationality.

Do employees hired through an EOR in Estonia receive the same rights as directly employed workers?

Yes. EOR employees receive all statutory entitlements under Estonian law. This includes correct sick leave treatment (employer-paid from days 4–8), the updated minimum wage of EUR 946 per month from April 2026, and full parental leave entitlements under the post-2022 reform including the 475-day shared benefit period and the 575-day cap per child.