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.

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.

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.

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.

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.

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.