Business Guide

Labor Legislation

The most important statutes and rules regulating the activities in the labour market are the Constitution of Estonia, Conventions of International Organization of Labour, Employment Contracts Act, Collective Agreements Act, Trade Unions Act and several enactments of the Government and Ministries of Estonia.

work contract is required to include some specific terms, in the absence of which the contract is defective.

The following terms are mandatory:

  • the identities of the parties (name, personal identification code or registration number, residence or seat);
  • the date of entry into the employment contract and commencement of work by the employee;
  • a description of duties;
  • the official title if this brings about legal consequences;
  • the agreed pay payable for the work (wages), including: other benefits, if agreed upon;
    • wages payable based on the economic performance and transactions;
    • the manner of calculation;
    • the procedure for payment and the time of falling due of wages (pay day);
    • taxes and payments payable and withheld by the employer;
  • the time when the employee performs the agreed duties (working time);
  • the place of performance of work;
  • the duration of holidays;
  • a reference to, or the terms of, advance notification of cancellation of the employment contract;
  • the rules of work organisation approved by the employer;
  • a reference to a collective agreement, if a collective agreement is applicable to the employee.

A contract is expired on the following grounds:

  • by agreement of the parties;
  • end of the contract period;
  • the initiative of the employee;
  • the initiative of the employer;
  • demands on third parties and conditions not depending on the parties involved.

The notice of a contract termination by either party should be presented in writing, unless agreed otherwise.

Additional information

Working time and vocation

Length of a working week 5 days
Length of a working day 8 hours
General vocation 28 calendar days
Age of retirement 63 years

The standard working schedule in Estonia is eight hours a day, five days per week. The duration of one shift may not exceed 12 hours.

Overtime is allowed by mutual agreement. The working schedule together with overtime shall not exceed on average 48 hours per seven days over a calculation period of four months, unless a different calculation period has been provided by law. Employer and employee may agree on a longer working schedule than 48 hours if the working schedule does not exceed, on average, 52 hours per seven days over a calculation period of four months and the agreement is not unfair to the employee. An employee may cancel the agreement at any time, giving two weeks’ advance notice thereof.

The duration of the annual vacation is 28 days, an extended vacation is granted in case of some professions, such as state officials and local government officials, teachers, academic, pedagogical and scientific staff and others. National holidays and public holidays are not included in the vacation duration calculations. An employee may be granted unpaid leave at his or her request for a period of time established by agreement of the parties.

Maternity leave – A woman is granted 140 days pregnancy and maternity leave, which may commence at least 70 days before the estimated birth date of the child. The maternity benefit is paid by the state.

Parental leave – A mother or a father shall be granted parental leave at her or his request for raising a child of up to 3 years of age. The parental benefit is paid by the state. Together the maternity benefit and the parental benefit are paid for a period of 575 days.

Sickness – in case of sickness, the employee can be given up to 182 calendar days of paid sick leave (max 250 days per year). The gross wage during this period is 70% of his or her last years` average salary. The employer pays the wage from the 4th to 8thday of sickness and the state starting the 9th day.

Additional information


The average wage in Estonia in 2014 was EUR 1005. The monthly minimum wage for full-time work is EUR 390. The wages must be paid at least once a month.

Payment for overtime – additional remuneration per hour of overtime paid to an employee shall not be less than 50% of the rate of the hourly wage. Work during holidays may be compensated either by offering time off or by extra remuneration of at least 50% of the wage rate. Work on public holidays is required to be compensated at a double rate.

Finding workforce

Potential sources of finding suitable staff:

  • Estonian Unemployment Insurance Fund offers free of charge services to employers by looking for workers who meet the criteria they submit;
  • private recruitment companies can help in finding necessary specialists;
  • one can advertise in national and local papers. Estonian Newspaper Association unites all the biggest newspapers in Estonia;
  • careers services of main universities are one possibility to find employees.


Additional information

Health insurance

Estonian health insurance relies on the principle of solidarity. The Health Insurance Fund covers the costs of health services required by the person in case of illness, regardless of the amount of social tax paid for the person concerned. The Fund uses the social tax paid for by the working population, also for covering the cost of health services provided to persons who have no income regarding work activities.

Employers are required by the law to pay social tax for all persons employed, whereby the rate of this tax is 33% of the taxable amount, and of which 20% is allocated for pension insurance and 13% for health insurance.

The purpose of health insurance in Estonia is to:

  • cover the costs of health services provided to insured persons;
  • prevent and cure diseases;
  • finance the purchase of medicinal products and medicinal technical aids;
  • provide the benefits for temporary incapacity for work and other benefits.

Health insurance is organised by the Estonian Health Insurance Fund and its four local departments. The Estonian Health Insurance Fund is the only organisation in Estonia dealing with compulsory health insurance.

Additional information

Social security system

Social security system of Estonia comprises of seven schemes:

  • Health insurance
  • Unemployment insurance
  • State unemployment allowances
  • State family benefits
  • Social benefits for disabled people
  • State funeral benefits
  • Pension insurance

Pension insurance, health insurance and unemployment insurance are contributory schemes, while the other schemes are non-contributory.

Social benefits for disabled people and funeral benefits can be classified as universal, covering principally all residents.

Unemployment insurance is 2,4% of the wage. The employer pays 0,8% of the wage and deduction from employees’ wage is 1,6%.

Unemployment benefit – those who are out of work are eligible to receive an unemployment benefit provided they have registered themselves with the Unemployment Office.


Additional information