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Estonia

Comprehensive Guide to Hiring Employees in Estonia

Estonia lies on the coast of the Baltic Sea and offers a good climate and a competitive market. With an approximate population of 1.35 million, the country provides skillful young professionals willing to work in new start-ups. The hiring process in Estonia needs planning, and employers must follow the country’s employment laws, labor laws, payroll processes, and social security benefits. 

Several overseas businesses have flourished in the past years, and Estonia, a member of the European Union, has catered to a rise in the global economy. Learn more about how to hire an employee in Estonia in this article. 

Things to Know Before Hiring in Estonia 

Before entering the hiring field, explore recruitment and selection in Estonia and build a dynamic workforce. Expand your business sectors with the set of hiring rules listed below. 

Working Hours and Overtime 

Post recruitment and selection in Estonia, the standard working hours are eight hours a day, five days per week in Estonia, and the duration of one shift should be at most 12 hours. Taking the lunch and prayer breaks into consideration, the working schedule of an employee can be 48 hours per seven days. 

Work during national holidays is considered overtime and is compensated by providing a paid leave to the employee or paying two times the wages. A weekly work period exceeding 40 hours is overtime. The employee and the employer both agree to work the overtime period, and the employer provides overtime allowances. According to rules and policies of the government, an employer must provide an additional 50% of the employee’s hourly wage rate as the overtime allowance. 

Holidays 

According to the processes of labor laws in Estonia, the country comprises a set of 28 days of national holidays for all employees, which should be kept in mind when an employer hires employees in Estonia. Some of the national holidays are :

New Year’s Day 

January 1st, 2023 

Independence Day 

February, 24th, 2023 

Good Friday 

April 7th, 2023

Easter

April 9th, 2023 

Labor Day 

May 1, 2023

Spring Day 

May 1, 2023 

Whitsun 

May 28, 2023

Victory Day

June 23, 2023 

Jaan Day 

June 23 and 24

Estonian Restoration of Republic 

20 August, 2023

Christmas Eve 

Dec 24, 2023 

Christmas Day 

Dec 25, 2023

2nd Day of Christmas 

Dec 26, 2023

Vacation

Before starting the hiring process in Estonia, one must know that all employees, including state officials and local government officials, and teachers, are entitled to 28 days of annual leave per calendar year. The employees also get unpaid leave for a certain period per the company’s agreement rules and policies. The citizens of Estonia tend to take leaves during Christmas and in June, July, and August. 

Maternity and Paternity leave 

Estonia provides maternity and paternity leave and gives child care and development importance. Employees should apply for the benefits before they leave to get paid maternity and paternity benefits.

Maternity leaves are payable, provided to every working woman, and paid by the state. A woman in Estonia receives 140 days of pregnancy leave. They can take this leave 70 days before the due date. The fathers working in overseas business sectors and enterprises also get paternity leave for ten days before the expected delivery date of the child and after childbirth. 

After 140 days, the father and the mother can take an additional leave of 435 days on request to raise the child for up to 3 years. According to rules and policies of hiring in Estonia, the leave is granted to either of the parents and encompasses the birth and care of the newborn baby. 

Sickness Leave 

According to the labor policies and post the hiring process in Estonia, the company needs to provide 182 calendar days of sick leave to the employees, and in a year, the leave may extend up to 250 days. In the country, employees receive sick leave with a health insurance card and a recognized doctor’s certificate. In case of injury and quarantine, the sickness benefits are excused in the first three days. 

The company’s employer pays the wage from the 4th to the 8th day of sickness, and the Health Insurance Fund provides the wages from the 9th day. According to government policies, the gross remuneration is 70% of the employee’s average salary, and the leave is granted according to 30 calendar days and the person’s conditions. 

Education Leave

According to the labor laws in Estonia, working students can get a paid leave of 30 days in a calendar year for general education or specialized studies. They are guaranteed 20 days of compensation leave for the time off taken. 

Adoption leave

The employer must know how to hire people in Estonia and follow the country’s labor laws. Furthermore, after concluding the hiring process in Estonia, an employer must provide the parents with a paid adoption leave to complete the adoption process and care of the child.

The Cost of Hiring an Employee in Estonia 

Recruitment and selection in Estonia embody recruitment fees, job postings, and other expenses. According to the Estonian Constitution and the Conventions of the International Labor Organization, employers must provide their employees basic pay, housing allowances, bonus, overtime allowances, medical insurance, social security benefits, and relocation allowances. As per reports of 2023, the minimum salary in Tallinn is €725 per month. 

The processes of recruitment and selection in Estonia also focus on different stages and expenses, including: 

Recruitment and Training 

The recruitment fees in Estonia encompass job advertisements, interview coordination, contract development, and other administrative roles. After the hiring process, the company delves into the background checks of the individual’s records and bears training expenditure for the individuals. This training program aids in developing the candidates’ minds and caters to new job roles. 

Salary and employee benefits 

The employers must adhere to the rules of recruitment and selection in Estonia and focus on the vital components including salary and employee benefits. The employer bears various other expenses and makes an agreement with the employees for the welfare of the company and the employees.

Contribution Type

Employer Rate 

Employee Rate 

Pension

20.00%

  •  

Health Insurance

13.00%

  •  

Unemployment Insurance

0.80%

1.60%

What Does a Company Need to Hire Employees in Estonia 

The government of Estonia establishes several legal requirements, and before exploring the hiring process in Estonia, the business organizations must have a legal entity. The following are the prerequisites to establishing a subsidiary:

  • A local office and legal address of the company 
  • A bank account in Estonia
  • Social security benefits 
  • Health insurance benefits

Apart from the basic requirements, several other factors are required to hire employees in Estonia, including: 

  • Establishing a legal entity: A business enterprise should establish its legal entity in the country, encompassing banking, accounting, and payroll services. It is mandatory for every company before they start recruitment and selection in Estonia. A company can also choose a PEO or EOR to handle and resolve various issues. 
  • Legal Documents: To expand the business ventures and conduct recruitment and selection in Estonia,  the employer needs to keep various essential documents, including registration documents of the company, e-residency details, and tax registration copies. The company should also hire a translator to interpret and work with the country’s official language. 
  • Permits: The employer sometimes may require various legal and local permits by the government or the locals, depending on the location and type of the business. 
  • Employment contract: The employer should provide the employees with a hard copy of the employment contract after concluding recruitment and selection in Estonia. It must embody the employees’ job designation and responsibilities, salary, working hours, and termination conditions as per the country’s labor laws. 

Various options for Hiring Employees in Estonia 

There are various ways in which an employer can conduct recruitment and selection in Estonia, and some of the options include the following: 

  • An internal hiring process: While conducting recruitment and selection in Estonia, the employer must focus on building a strong workforce and can recruit skilled professionals internally with the help of internal hiring processes. Though this method is expensive and time-consuming, the internal hiring process provides complete control of the company in the hands of the employer. 
  • Using an Employer of Record: Employers can collaborate with an Employer of Record (EOR) like Multiplier, who can manage recruitment and selection in Estonia. Without establishing a subsidiary, EORs are beneficial as they can handle payroll processes, social security benefits, and compliant agreements.  

The Steps to Hiring in Estonia 

A company should follow many stages and steps for flawless recruitment and selection in Estonia. Some of the steps are listed below. 

  • Identify the hiring need and advertise: The first step to hiring staff in Estonia is understanding job designation and needs. Employers must chalk out the specific requirements and create job descriptions and roles. To hire employees, the companies must provide advertisements and market the job openings in various referrals and social platforms. 
  • Screening: To hire staff in Estonia, the companies must review all the resumes uniformly and evaluate the candidates’ skills according to the job requirements and designation. 
  • Conduct Interviews: During recruitment and selection in Estonia, the companies must focus on interview rounds. Shortlisted candidates appear for physical or video call interviews, which cater to providing the perfect candidates. Sometimes, the recruiters even take standardized tests or online examinations to verify the skills and abilities of the candidates. 
  • Background Checks: During the hiring process in Estonia, extensive background checks are crucial and aid in disqualifying candidates with false educational records and past criminal reports. 
  • Take the Final Decision and Create an Employment Contract: The final step for recruitment and selection in Estonia consists of evaluating past job experiences, educational qualifications, abilities, and recommendations and creating an Employment contract for the new company employee. 

Let Multiplier be Your EOR Platform in Estonia

You must set up a subsidiary if you want to hire employees in Estonia and manage your business overseas. To understand the country’s regulations and labor laws, you can hire an Employer of Records (EOR) who will make it easier. Hiring an EOR platform will aid in managing payroll processes, severance pay, and legal agreements. Collaborate with Multiplier to get seamless and the best EOR solutions.

Multiplier is a one-stop destination for EOR activities and handles administrative requirements, taxation issues, legal employment contracts, and HR-related activities in more than 150+ countries. Professionals of our team will assist you in hiring the best candidates and cater to the international affairs of a business.

Frequently Asked Questions

According to the monthly data and statistical records, the average salary in Estonia is €1150 per month in 2023.

A company can conduct recruitment and selection in Estonia to hire foreign employees after evaluating the candidate’s skills, educational qualifications, experience, and past criminal records. Employers should focus on background checks while hiring candidates, and the aspirants must provide personal details to the company.

International employees willing to work in Estonia must take a long-term residence permit to shift and work there. After acquiring the permits, non-residents can appear for a recruitment and selection in Estonia.

Need help hiring in Estonia?

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