Hire in Estonia

Estonia PEO &

Employer of Record

Hire & manage teams remotely in Estonia without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Business Language

Estonian, English

Salary Currency

Euro

Capital city

Tallinn

Time zone

UTC +2

EOR in Estonia

Hire Employees in Estonia

NNRoad provides professional employment organization (PEO) & employer of record (EOR) services in Estonia to ensure that your business complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.

Fast Hiring

Start working with your remote employees in a week.

Foreigner Visas

NNRoad assists with overseas foreign hires visa needs.

Platform

Access your payroll reports on our portal.

Employer of Record in Estonia

Employer of Record (EOR) services are for companies who do not have a legal entity in Estonia, but who want to hire localy. Employment and full liability are outsourced to NNRoad.

1. Candidate Selection

Select the candidates you want to hire in Estonia.

2. Employee Onboarding

We sign a local labor contract with your employees based in Estonia.

3. Compliance & Payroll

We manage monthly payroll, mandatory benefits & all HR compliance in Estonia.

EOR service includes:

Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).

All mandatory employer (and employee) contributions filed and paid for your EOR employees.

Payroll recording, reporting and administration.

Distribution of salaries to employees through direct deposit into their bank accounts.

Calculation, reporting, filing and processing of EOR employee’s individual income tax due.

Collecting and processing your employee’s invoices for business related expenses.

Guiding and organizing your expat employee’s work visa application too guarantee their successful onboarding.

Standalone Payroll & PEO in Estonia

Professional Employment Organization (PEO) services are for companies who have a legal entity in Estonia, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.

Employee Income Taxes:

Individual income tax rates in Estonia are based on progressive tax brackets.

In Estonia, the income tax system is administrative, meaning employers are responsible for calculating and withholding income tax from employees’ salaries before payment. This makes tax compliance straightforward for employees, as they do not need to declare their income to the government themselves.

Tax Brackets:

Sample Calculation

Employer Contribution

Employers in Estonia are required to contribute to social security, which includes pension and health insurance. The total employer contribution rate is approximately 33% of the gross salary, which encompasses social tax (20%), unemployment insurance (0.8%), and funded pension contribution (2% if the employee participates).

Employee Contribution

Employees in Estonia contribute 1.6% of their gross salary towards unemployment insurance and 2% towards their funded pension (if opted in). These contributions are mandatory and are automatically deducted by the employer.

Social Security

Social security in Estonia is primarily funded by the employer through a social tax of 33%, which includes contributions to health and pension funds essential for the welfare of employees.

Pension Fund

Pension contributions in Estonia include a 2% employee contribution (if opted in) and a 20% social tax contribution by the employer, which is directed towards the state pension fund.

Healthcare Insurance

Healthcare contributions are included in the 33% social tax paid by employers, providing employees with comprehensive health coverage.

Working Hours Per Week

The standard working hours in Estonia are 40 hours per week, typically spread over five days from Monday to Friday.

Overtime

Overtime in Estonia is compensated at a rate of no less than 150% of the regular hourly rate, according to the Employment Contracts Act.

Legal grounds for termination in Estonia include poor performance, misconduct, and mutual agreement. Employers must adhere to the Employment Contracts Act, which outlines these conditions. Estonian Employment Contracts Act

Severance

Severance payments in Estonia depend on the length of employment, typically ranging from one to three months’ salary.

Notice Period

For employers, the notice period ranges from 15 days to three months, depending on the length of service. For employees, the notice period varies from 15 days to one month.

Employment Contract

Estonian labor contracts must specify the job description, salary, working hours, notice periods, and termination conditions, ensuring clear and mutual understanding of employment terms.

Probation Period

The maximum legal probation period in Estonia is four months, allowing both parties to evaluate the employment relationship.

Annual Leave

Employees in Estonia are entitled to at least 28 calendar days of paid annual leave.

Sick Leave

Sick leave in Estonia is compensated from the fourth day of illness, with the employer paying for the first three days and the Health Insurance Fund covering from the fourth day onward.

Maternity Leave

Maternity leave in Estonia is 140 days of paid leave, fully funded by the Health Insurance Fund.

Paternity Leave

Paternity leave in Estonia grants fathers 30 calendar days of paid leave, also funded by the Health Insurance Fund.

Public Holidays

01 January – New Year’s Day
24 February – Independence Day
01 May – Spring Day
24 June – Victory Day
25 December – Christmas Day

Resources

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