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Holiday entitlements that remain unused are carried over to the following calendar year and expire within one year from the conclusion of the calendar year in which they were initially accrued. In the event of an employment contract termination, any remaining, non-expired entitlements can also be converted into cash.
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Estonia is widely recognized for its cutting-edge digital infrastructure and e-Government services, creating a highly efficient and paperless business environment that simplifies administrative tasks and compliance for companies. Often referred to as “the Silicon Valley of Europe,” Estonia nurtures a thriving startup ecosystem with a favorable environment for entrepreneurship, including a wealth of support programs, incubators, and access to venture capital.
The country is proud to possess a highly educated and proficient workforce, particularly in IT, technology, engineering, and finance. Furthermore, the widespread fluency in English among Estonians greatly facilitates international business interactions.
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The minimum wage in Estonia is set at 725 EUR per month or 4.30 EUR per hour.
Standard Working Hours
The standard working hours for employees are 8 hours per day and 40 hours per week. After working for 6 hours, employees have the right to take a 30-minute break. The typical business hours are from 9:00 am to 6:00 pm, Monday to Friday, with a one-hour lunch break.
Any work exceeding the standard weekly working hours in Estonia is considered overtime and is governed by employment contracts or collective agreements. When employees are asked to work overtime or during holidays, there are no limits on the number of hours allowed, except in the case of minors, where restrictions apply.
In Estonia, the payroll cycle occurs on a monthly basis, and payments are required to be paid no later than the last working day of that month.
Paid time off
Employees in Estonia are entitled to 28 days annual leave. Unused holiday entitlements are carried over to the following calendar year and remain valid until one year after the end of the respective calendar year in which they were accrued.
Additionally, if an employment contract is terminated, any unused and still valid holiday entitlements can be converted into cash and paid out to the employee.
Employees have the right to a maximum of 182 calendar days of sick leave per year. The first 3 days of sick leave are unpaid, days four to eight are paid by the employer, and days nine to 182 are covered by health insurance, with compensation at 70% of the employee’s regular pay.
Female employees are entitled to 140 days of maternity leave in Estonia, which can start at the earliest 70 days before the due date and has a minimum of 30 days.
Employees are also entitled to paternity leave of 30 calendar days that can be taken within 2 months before the expected due date, and up to 2 months after the child’s birth. Social security covers the Paternity leave and they are entitled to 100% of their salary.
Termination of Employment
Employers have the option to terminate an employee’s contract by providing compensation instead of notice. In cases of redundancy, employees are eligible for severance pay equivalent to one month’s average salary, calculated based on their earnings from the preceding 6 months.
Additionally, employees with a work service between 5 and 10 years receive an extra month’s salary as severance pay. For those who have worked for over 10 years, they are entitled to an additional 2 months’ salary as severance pay.
Regarding resignations, employers are obligated to provide notice ranging from 14 days to 1 month, depending on the terms specified in the employment contracts.
For dismissals, the notice period is determined by the duration of the employee’s service. For less than 1 year of service 15 days of notice is required. However, from one to 5 years of employment, 30 days of notice is required. This increases to 60 days notice for employment of 10 years or more.
The probationary period in Estonia is no longer than 4 months.
Estonia has different visa requirements based on nationality and purpose of visit. Citizens of the European Union (EU), European Economic Area (EEA), and certain other countries do not require a visa for short stays. However, non-EU/EEA citizens usually need a visa for short visits. For longer stays, like work or study, a residence permit is generally required.
The primary work authorization category in Estonia is the Residence Permit for Employment, designed for foreign workers possessing skills that are not readily available locally. Estonia also offers a short-term employment program catering to work activities for a duration of up to 12 months, and a digital nomad visa, which enables remote work for a maximum period of 12 months.
The standard rate of VAT in Estonia is 20.00%.