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Hire and manage employees in Estonia

As your Employer of Record (EOR) in Estonia, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
Last updated:
February 4, 2026
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Quick facts

Estonia, a small country in Northern Europe, has a highly digitalized economy and is considered one of the most advanced digital societies in the world. The country's economic growth is driven by information technology, financial services, and manufacturing. Estonia is known for its favorable business environment and ease of doing business, making it an attractive location for startups and international companies.

Employment Contracts

In Estonia, employment contracts must be written and concluded before the employee starts work. Most contracts are for an indefinite period, but fixed-term contracts are allowed for specific situations, such as seasonal or temporary work. Fixed-term contracts must clearly state the end date or the conditions that will terminate the contract. The maximum duration for fixed-term contracts is 5 years.

Probation Period

The probation period in Estonia usually lasts 3 to 4 months. Fixed-term contracts, however, must justify the temporary nature of the work. If the employment contract is for a fixed term, the probation period cannot exceed the duration of the contract itself.

Working Hours

A standard workday in Estonia is 8 hours, and a workweek is 40 hours spread over 5 days. The maximum shift length is 12 hours. Overtime is permitted but requires a written agreement between the employer and employee. Overtime work or work on holidays must be compensated at no less than 100% of the employee’s hourly or daily wage.

Vacation Days

Employees are entitled to at least 4 calendar weeks of paid annual leave, excluding public holidays. Employers and employees may agree to split the leave, but one portion must be at least 2 uninterrupted calendar weeks. Cash compensation for unused vacation is only allowed upon termination of employment.

Sick Leave

Employees are entitled to up to 182 days of paid sick leave in case of illness, with a maximum of 250 days per year. During sick leave, employees receive 70% of their gross wage, based on their previous year’s salary. The employer covers sick pay from the 4th to the 8th day, and the state takes over starting from the 9th day.

Wages and Salary Payment

Wages in Estonia are paid at least once a month, and it is the employer’s responsibility to calculate and withhold payroll taxes. In 2022, the national minimum wage was set at €654 per month. All payments must be made to the employee’s bank account.

Public Holidays

Estonia observes 12 public holidays, including:

  • January 1: New Year’s Day
  • February 24: Independence Day
  • March/April: Good Friday, Easter Sunday, and Easter Monday
  • May 1: Labour Day
  • June: Whit Sunday and Whit Monday
  • December 24-26: Christmas
  • December 31: New Year's Eve

Employer Taxes

Employers in Estonia are required to contribute the following:

  • Public Pension Insurance: 20%
  • Public Health Insurance: 13%
  • Unemployment Insurance Contribution: 0.8%

Employee Taxes

Estonia has a proportional income tax system:

  • Personal income tax: 20% for everyone.
  • Unemployment Insurance: 1.6%

Notice Period

Employees can resign at any time by providing 30 days' written notice. If the employer terminates the contract without adhering to the notice period, they must compensate the employee for the reduced notice period in cash.

Termination and Severance Pay

Termination of employment can occur due to mutual agreement, fixed-term expiration, redundancy, or the employee’s death. When terminating an employment contract, the employer must pay the employee for all earned wages and any unused vacation. In the case of redundancy, the employee is entitled to a severance payment equal to one month’s salary. Employers who fail to provide the required notice must compensate for the shortened period.

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What is International EOR and PEO?

International EOR (Employer of Record) and PEO (Professional Employer Organization) are services that enable businesses to compliantly hire, manage, and pay employees in foreign countries without the need for establishing a legal entity. EOR acts as the legal employer while PEO co-employs workers, handling administrative tasks such as payroll, taxes, and benefits.

Does Acvian handle time record submissions?

Acvian does not handle time record submissions directly. It is the client’s responsibility to track and submit employee work hours. However, Acvian can offer guidance and best practices to ensure efficient time tracking and compliance with local labor laws.

How can employees view their payroll details?

Employees can view their payroll details through the monthly payslips they receive and also via our Acvian platform. These payslips contain information on earnings, deductions, taxes, and net pay, giving employees a clear overview of their monthly payroll. Please note that in some countries, employers are restricted from viewing payslips due to data protection regulations, and only employees can share their payslips. For more details on these regulations, please contact our specialists.

How Acvian handles payroll disputes?

Acvian addresses payroll disputes promptly, working closely with both the client and the employee to investigate and resolve any issues.

Does Acvian require advanced monthly payments of salaries and service?

Yes, Acvian requires advanced monthly payments for salaries and service to ensure timely and accurate payroll processing.

Can Acvian provide consultations regarding a labor and tax legislation?

Yes, Acvian can provide consultations regarding labor and tax legislation. Our team of experts is well-versed in local regulations and can offer guidance to help your business maintain compliance, reduce risk, and navigate the complexities of international employment and taxation laws.

Which benefits does Acvian provide?

Acvian provides a diverse range of benefits, including but not limited to:

  • Health insurance
  • Car leasing
  • Gym allowance
  • Per diem compensation
  • Maternity leave

We can customize and offer many kinds of benefits requested by the client, ensuring that your employees receive the support and perks that align with your company culture and local regulations.

Can Acvian provide private health insurance?

Acvian can provide private health insurance options as part of its comprehensive employee benefits package.

What would the monthly/yearly costs for the employee be?

The monthly/yearly costs for an ‘average’ package vary depending on the specific plan and location. See our estimated price packages here. Acvian’s team can provide detailed cost breakdowns based on your requirements.

Can Acvian help with entity set up?

While Acvian doesn’t directly provide entity set-up services, we can introduce you to local lawyers who specialize in this area to assist you with your needs. See also, when it's better to set the entity or use the EOR.

Offboarding: how it is handled?

Offboarding is managed by Acvian in a structured and compliant manner. We coordinate with your business to ensure all necessary documentation, exit interviews, and final payments are completed. Acvian also ensures adherence to local labor laws and regulations, including providing any required notice periods and managing the termination process.

When does business need it?

Businesses typically need EOR and PEO services when they:

  • Expand into new international markets.
  • Hire remote employees in foreign countries.
  • Seek to streamline global workforce management.
  • Aim to ensure compliance with local labor laws and regulations.
  • Want to reduce the time and cost of establishing legal entities abroad.

Is Acvian compliant with GDPR?

Yes, Acvian is fully compliant with GDPR regulations. We collect and process personal data in accordance with the law, ensuring that data is used only for general, allowed purposes such as marketing and other legitimate business activities.

Do you provide employment agreements?

Yes, Acvian provides both permanent and fixed-term employment contracts, with the possibility of extension. After the second extension, the contract becomes indefinite.

How do employees view their payroll?

Employees can view their payroll details through the monthly payslips they receive and also via the Acvian platform.

Where can Acvian supply EOR services?

Acvian can supply EOR services in over 180 countries, encompassing almost all European nations, the United States, and Canada, providing extensive coverage to support your business’s global expansion and workforce management needs. See our coverage here.

How does payroll work under EOR?

Under EOR, Acvian manages the payroll process by:

  • Acting as the legal employer of your foreign workforce.
  • Handling salary calculations, deductions, and disbursements.
  • Ensuring compliance with local tax and labor laws.
  • Managing payroll taxes, social contributions, and benefits.
  • Providing timely and accurate payroll processing for your employees.

Explore the details here.

Can you provide support for expatriate EOR workers?

Yes, Acvian provides comprehensive support for expatriate EOR workers, including:

  • Visa and work permit assistance.
  • Relocation and housing support.
  • Local registration and compliance.
  • Payroll and tax management.
  • Coordination of benefits and insurance coverage.

Explore in details here.

What are the details of expats support?

Expats support from Acvian encompasses a range of services designed to facilitate a smooth transition for employees working abroad. Key aspects include:

  • Assistance with visa and work permit applications, renewals, and compliance.
  • Support for relocation, including housing, schooling, and local registration.
  • Guidance on local tax regulations and filings.
  • Coordination of locally compliant benefits and insurance coverage.
  • Ongoing support for any changes or issues that may arise during the expatriate assignment.

What happens after onboarding?

After onboarding, Acvian maintains an ongoing relationship with your business and employees, ensuring smooth payroll processing, managing tax and regulatory compliance, handling benefits administration, and providing support for any changes or issues that may arise in the employment lifecycle. This allows you to focus on your core business operations while Acvian manages your international workforce.

How many days will it take for our personnel to be onboarded?

The onboarding process typically takes between 2 to 4 weeks, depending on the country and complexity of the employee’s situation. However, Acvian strives to expedite this process, ensuring a smooth and efficient transition for your personnel. See our story of the urgent employment project.

Does Acvian provide in-country support for employee inquiries or assistance requests?

Yes, Acvian provides in-country or regional support for employee inquiries and assistance requests. We have dedicated managers in the countries where we support your employees, ensuring prompt and knowledgeable assistance tailored to local regulations and practices.

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