How to hire and pay EMPLOYEES IN


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Before hiring


Before hiring employees in Estonia, there are a few important things you’ll need to know. In Estonia, all employees pay an income tax of 20% no matter their salary bracket. Employees also pay 3.6% of their salary into social security. 

Employers should also know that notice periods in Estonia depend on an employee’s tenure with the company, or what has otherwise been outlined in their employment contract.

We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in Estonia below.

At a Glance









(based on region;
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of gross salary

13th / 14th SALARY


Good to know

  • Estonia's new Digital Nomad Visa enables remote workers living in Estonia to work for their foreign employer or their own company registered abroad. 
  • Any unused holiday entitlements are transferred to the next calendar year, and expire within one year from the end of the calendar year for which the holiday entitlement has been calculated. Unused, non-expired entitlements can also be cashed out upon termination of an employment contract.
  • Non-compete agreements in Estonia cannot last more than a year from the termination of the employee's contract. In return, the employee is entitled to a reasonable monthly compensation, the amount of which should be evaluated on a case-by-case basis depending on the extent of the restrictions.

Employment in


Working hours and overtime

Employees in Estonia work eight hours per day, 40 hours per week. After working for six hours, employees are entitled to a 30-minute break. Typical business hours are 9:00am to 6:00pm Monday to Friday, with an hour-long lunch break. 

Employment contracts
Probationary period

The probationary period in Estonia is no longer than four months.

Notice period

For resignations, employers are required to give notice of 14 days to one month, depending on their employment contracts.

When it comes to dismissals, the notice period is determined by the length of the employee's service. The breakdown is as follows:

  • Less than one year: 15 days of notice
  • One to five years of employment: 30 days of notice
  • Five to 10 years: 60 days of notice
  • 10+ years: 90 days of notice
IP protection and non-compete agreements

Non-compete agreements must be clear and reasonable in scope. They can’t last more than one year from the termination of an employee's contract. Employers must pay the employee a reasonable monthly compensation in return for adhering to the agreement, the amount of which should be evaluated on a case-by-case basis depending on the extent of the restrictions.

Calculate costs to hire internationally


View a list of recognized public holidays in Estonia here.

View a list of recognized public holidays in Estonia here.

Employer tax

Employers in Estonia pay 33.8% in social contributions. This includes:

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

Individual tax

Employees in Estonia pay 20% income tax no matter their salary bracket. Employees also pay 3.6% in social security contributions.

Termination of employment

In Estonia, employers can choose to dismiss an employee by paying them compensation in lieu of notice.

Employees being made redundant are entitled to one month's average salary of their previous six months' wages as severance pay. Employees who have worked between five and 10 years are entitled to an additional month’s salary as severance pay. Employees who have worked for over 10 years are entitled to an additional two months’ salary.

Start hiring employees in


Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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