What is an employer of record?
An employer of record (EOR) is a third-party partner that hires and pays talent on behalf of another company. While businesses manage day-to-day work, the EOR handles employment responsibilities—including onboarding and offboarding, payroll and taxes, benefits administration, and compliance with labor laws.
With Velocity Global’s Employer of Record (EOR) solution, companies can onboard talent quickly and operate in Estonia without setting up a local legal entity. That helps businesses scale faster—with less risk and more confidence.
Employment Guide to Hiring in Estonia
Explore the topics below to learn everything you need to know about hiring employees in Estonia.
Hiring in Estonia: Key employment insights
Employment contracts
Employment agreements must be in writing and outline job responsibilities, salary, working hours, vacation policies, and notice periods. The Estonian Employment Contracts Act governs these agreements.
Probationary periods
Employers may set a probationary period of up to four months. During this period, either party may terminate the agreement by providing 15 calendar days' notice.
Working hours
A standard workweek is 40 hours over five days. Overtime is allowed but must be compensated. According to the Employment Contracts Act, the total average workweek cannot exceed 48 hours over four months.
How an EOR helps with hiring
Velocity Global’s local experts make hiring in Estonia frictionless. We:
- Draft compliant bilingual contracts
- Align start dates with legal requirements
- Guide onboarding through our Global Work Platform™
That way, businesses can focus on building great teams, not navigating paperwork.
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Payroll in Estonia
Payroll cycles
Employees are typically paid monthly on the last working day of the month. Velocity Global ensures payroll is timely, accurate, and fully compliant.
Minimum wage
As of 2025, Estonia’s minimum wage is €820 per month (Eurostat). Salaries vary by role and location, with Tallinn offering higher compensation, particularly in the tech and finance sectors.
Bonuses
While not required, performance bonuses are common and often outlined in employment agreements.
How an EOR simplifies payroll
Velocity Global manages payroll calculations, euro-based salary disbursements, and local tax withholdings through a single platform. We also handle monthly reporting to tax authorities—so nothing is overlooked.
Taxes in Estonia
Income tax and employer contributions
Estonia applies a flat 20% income tax. Employers also contribute 33% for social tax, which funds healthcare and pensions (Estonian Tax and Customs Board).
Tax deadlines
Income tax and social contributions must be filed and paid monthly by the 10th of the following month.
Healthcare and pensions
Public healthcare is available to all workers through Estonia’s Health Insurance Fund. Employers automatically enroll supported employees when they contribute to the social tax.
How an EOR ensures tax compliance
Velocity Global calculates and remits income tax and employer contributions on your behalf. We stay on top of monthly filings, so companies never fall behind.
Calculate payroll contributions in Estonia
Leave Entitlements in Estonia
Annual leave
Employees receive 28 calendar days of paid annual leave. Unused leave can be carried over for up to one year.
Parental leave
Estonia offers:
- 100 days of maternity leave
- 30 days of paternity leave
- Up to 435 days of shared parental leave, funded by the government (Estonian Social Insurance Board)
Sick leave
Paid sick leave begins on the fourth day of illness. Employers cover days 4–8; the government covers the rest.
Public holidays
Estonia observes 12 national holidays. These are paid days off for full-time employees.
How an employer of record supports paid time off
Velocity Global’s platform tracks accruals, manages leave balances, and automates compliance with holiday schedules—so employees and employers stay aligned.
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Employee benefits in Estonia
Statutory benefits
All full-time workers receive universal health coverage, paid time off, unemployment insurance, and pension contributions via mandatory employer contributions.
Supplemental benefits
Top employers often offer extras like:
- Private health plans
- Home office or internet stipends
- Mental wellness programs
- Learning and development tools
How an EOR manages benefits
Velocity Global provides access to Global Benefits—tailored supplemental insurance and perks that help attract and retain talent. We handle the admin, from enrollment to renewals.
Terminations and offboarding
Notice periods
Notice depends on tenure, ranging from 15 to 90 calendar days. Employers are required to provide written notice per the Employment Contracts Act.
Severance pay
If terminated without cause, employees may receive severance equal to one to three months’ average wages.
How an EOR manages exits
Velocity Global handles compliant terminations, final pay, and required documentation—supporting both employers and talent during transitions.
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Can companies hire in Estonia without an entity?
Yes. With an Estonia EOR, companies can legally employ talent without establishing a local branch.
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How fast can talent be onboarded in Estonia?
Most employees are ready to work within a few business days through our Global Work Platform™.
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Is remote work common in Estonia?
Yes. Estonia is a digital leader and home to the e-Residency program, making remote work mainstream.
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What languages are used in contracts?
Most contracts are provided in both Estonian and English.
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Does Velocity Global support equity grants in Estonia?
Yes. Our <a href="https://velocityglobal.com/global-equity/">Global Equity Program</a> enables compliant equity awards in Estonia and 30+ countries.