Estonia PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Estonia to companies willing to enter the Estonian market or hire local/emigrant employees in this country.

Traditional approach requires establishing a subsidiary in Estonia.  However our solution allows you to start the operations in Estonia within days therefore save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Estonia fast facts

Population, million: 1,326,535
Land area: 45,227 km²
Capital: Tallinn
Local currency: Euro (EUR)

GDP per capita:$ 17500.00
GDP in currency:$ 25 billion

Estonia is a small country with 1.3 million inhabitants.
It has become easier to hire workers from abroad:
• If there are no employees with the required qualifications in Estonia, the employer can hire 1 or 2 foreigners.
• An employer can hire temporary workers through recruiting agencies.
• A visa program for startups has been created, which simplifies the enrollment of abroad workers.

Hiring, Negotiating and Doing Business in Estonia

Necessity of written employment contract

An employment agreement must be in writing form.

Different forms of engagement: employment, contracting, work with private entrepreneur

Most workers in Estonia are engaged under employment agreements, and independent contractor status is rarely used. Companies are responsible for ensuring that employees are eligible to work in Estonia. EU citizens have the right to work in Estonia if they are granted the right to a residence permit. Temporary residents must have a work permit. Hiring employees without proper authorization can result in civil and criminal penalties.

Estonia Employment Contract

Types of employment agreements

Employment contracts can be:

• unlimited;
• fixed-term,
• temporary,
• etc.

Estonia working hours

40 hours per week.

Overtime

The hirer must pay 1.5 more wages for overtime work.

Vacation leave in Estonia

28 days.

Estonia Maternity Leave

Maternity leave must be 140 days.
The father is allowed 10 days’ leave before and after childbirth.

Estonian Severance Laws

According to the ECA, an employer may terminate an employment contract (referred to in the law as “termination in extraordinary circumstances”) only for a valid reason provided for in this Act and in accordance with statutory requirements for prior notice (Article 87 ECA).
The employer must notify the employee of the dismissal from 5 to 90 calendar days (depending on the length of service).

Estonia Tax

The income tax is hold by the paying entity at a rate of 20% or at a lower rate of 10% for some types of income, monthly. Since 2019, 7% of income tax is withheld from dividend payment to an individual.
Taxes to be withheld by an employer when paying wages:
Old-age pension saving contributions (only for inhabitants of Estonia) – 2% of gross salary, unemployment tax on employee’s salary (only applicable for rinhabitants of Estonia) – from 0.5% to 2.8% of gross salary and income tax 20% of gross salary.
Taxes that must be paid by the hirer in connection with the payment of wages to the worker:
Contributions to compulsory unemployment insurance (from 0.25% to 1.4% of gross salary) and social tax (33% of gross salary and occurs in the case of the payroll and is subject to transfer by the enterprise to the Fund). These taxes are paid by the hirer in addition to the payment of wages.

Health Insurance Benefits in Estonia

Health insurance is paid through social tax.

Additional Benefits in Estonia

Annual bonuses can be negotiated as part of the salary package.

General market practice benefits/additional allowances

The law does not regulate bonuses and fringe benefits.

Estonia Holidays

Public holidays:

• New Year’s Day
• Independence Day, anniversary of the Republic of Estonia
• Good Friday
• Easter Sunday
• Spring Day
• Pentecost
• Victory Day
• Midsummer Day
• Day of Restoration of Independence
• Christmas Eve
• Christmas Day
• Boxing Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.