Payroll and Benefits Guide Estonia
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
20.00%
|
Pension
|
|
13.00%
|
Health Insurance
|
|
0.80%
|
Unemployment Insurance
|
| * There is usually a minimum obligation for the social tax to be paid 270.60 EUR monthly, even if there were no salary payments to employee. | |
| 33.80% |
Total Employment Cost |
| Employee Payroll Contributions | |
|
1.60%
|
Unemployment Insurance
|
|
2.00%
|
Compulsory Pension for those born after December 31, 1982.
Workers has the possibility to increase the contribution up to 6%.
|
| 1.6% – 3.6% |
Total Employee Cost |
| Employee Income Tax | |
|
22%
* The tax-free minimum of which no deduction of income tax takes place is up to 654 EUR in a month but decreases depending on the total income amount. When the annual gross income exceeds 25,200 EUR or 2100 EUR per month, the exemption is zero. |
Flat Rate |
Employer taxes
Employee taxes
Minimum Wage
General
In Estonia, the national minimum wage is 886 EUR per month.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle is generally monthly and payments in Estonia must be made on the same day of the month and no later than the last working day of the month.
13th Salary
In Estonia, a 13th-month salary is not mandatory. However, bonuses are common and often paid annually.
Working Hours
General
The standard work week in Estonia consists of 40 hours a week, typically 8 hours per day for a five-day work week.
Overtime
- Maximum Ordinary Hours (ECA Section 43): The standard work limit is 8 hours per day and 40 hours per week.3 Overtime (ületunnitöö) is any work performed beyond this agreed working time.
- Consent: Overtime work must generally be agreed upon by both the employer and the employee.5 The employer can only require overtime in exceptional cases due to unforeseeable circumstances (e.g., to prevent damage).
- Absolute Maximum Work Time (ECA Section 46): Total working time, including overtime, is strictly capped to protect employee health. The maximum limits are calculated on average over a four-month calculation period:
- General Limit: Average working time must not exceed 48 hours per week.
- Agreed Limit (Additional Overtime): With a verifiable agreement with the employee, the average can be extended to 52 hours per week. This agreement must not be unreasonably detrimental to the employee’s health, and the employee can terminate it with two weeks’ notice.
- Daily Maximum: Due to the mandatory 11 consecutive hours of daily rest, the maximum total working time, including overtime, generally cannot exceed 13 hours per shift.
- Exemptions: Minors, pregnant women, and employees entitled to maternity leave cannot be required to work overtime.
Mandatory Overtime Compensation Rates
Overtime must be compensated by either a monetary premium or equivalent paid time off in lieu (vaba aeg), as agreed upon between the parties.
| Day/Condition | Minimum Compensation Rate (Statutory) | Total Pay Rate | Notes |
| Standard Overtime (Working Days) | 1.5 times the employee’s regular hourly wage. | 150% | This is the minimum rate if compensated in money. |
| Public Holiday Work | 2 times the employee’s regular hourly wage. | 200% | Work performed on a public holiday must be compensated at a minimum of double the wage, or with additional paid time off by agreement. |
Compensation Method:
-
Monetary: The minimum overtime rate is 150% of the regular wage.
-
Time Off in Lieu (TOIL): The employer and employee may agree that overtime will be compensated by paid time off equal to the overtime hours worked (e.g., 1 hour of overtime = 1 hour of paid leave).14 If compensated this way, the 150% premium is waived.
Other Mandatory Premiums (ECA Section 45)
These premiums are separate from standard overtime pay and are mandated by law:
-
Night Work: Work performed at night (defined as 10:00 PM to 6:00 AM) must be compensated at a minimum of 1.25 times (125%) the regular wage, unless the employment contract already includes remuneration for working at night (this exception does not apply to employees paid the minimum wage).15
Leave
Annual Leave (vacation)
According to Section 55 of the Employment Contracts Act, an employee’s annual paid leave is 28 calendar days, unless the employee and the employer have agreed on a longer annual leave or unless otherwise provided by law. For example, government officials are entitled to 35 days of annual leave, and academic and research staff receives 56 days of paid leave.
PTO carryover
In Estonia, unused statutory annual leave can be carried over into the next year by mutual agreement between the employer and employee.
- Both Simplika and YBS, support carry over allowed by law for one year.
Public Holidays
Public holidays that fall on the weekend are usually lost.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 24 February 2026 | Tuesday | Independence Day | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 5 April 2026 | Sunday | Easter Sunday | Standard holiday |
| 1 May 2026 | Friday | Spring Day (May Day) | Standard holiday |
| 24 May 2026 | Sunday | Whit Sunday (Pentecost) | Standard holiday |
| 23 June 2026 | Tuesday | Victory Day | Standard holiday |
| 24 June 2026 | Wednesday | Midsummer Day (St. John’s Day) | Standard holiday |
| 20 August 2026 | Thursday | Day of Restoration of Independence | Standard holiday |
| 24 December 2026 | Thursday | Christmas Eve | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Boxing Day | Standard holiday |
Sick Days
Employees in Estonia are entitled to up to 182 calendar days per year. Day 1 to 3 is unpaid leave, day 4 to 8 is paid by the employer, and day 9 to 182 is paid by health insurance at 70% pay.
The current sick leave compensation scheme where employees receive payment from the second day of sickness is extended to June 30th, 2023.
Maternity Leave
Pregnant employees are entitled to 140 calendar days of maternity leave in Estonia, which can start at the earliest 70 calendar days before the due date and has a minimum of 30 days.
Maternity leave is compensated at one 100% of average earnings calculated based on employment in the previous calendar year with no upper limit on payments. The minimum wage of 654 EUR per month is paid to mothers who had not worked in the last calendar year but then worked before the child’s birth.
The health insurance contributions fund the payment of maternity pay at a rate of 100% of the employee’s average earnings based on the previous year’s earnings. The minimum wage is paid to mothers who had not worked during the previous calendar year but worked before the child’s birth.
Childcare allowance will no longer be granted to children born after 31, August 2019, however, the payment of child allowance and other family allowances will continue.
Paternity Leave
Fathers are entitled to 10 working days of paternity leave taken within two months of the due date. After the birth, the father is entitled to 2 months’ paternity leave. Pay is based on the average wage of the employee. The father is entitled to 100% of their regular wages, however, this is capped at three times the minimum wage.
Parental Leave
With effect from 1st April 2022, parents will be able to take up to two months of parental leave at the same time and they will both receive parental benefits at this time. Parents of premature babies and multiple births will be given an exception and the total duration of the payment of parental benefits will not be reduced by more than 30 days. This will ensure that these families can stay at home with their children in any case until the children reach 18 months of age. A parent can also claim parental benefit until the child is three years old.
Childcare leave will be granted to both parents separately and on a per-child basis, which will solve the issue of using childcare leave in blended families.
Both parents will have their individual right for the leave and benefit and can both separately claim paid parental leave of 10 days per child until the end of the calendar year in which the child reaches 14 years of age. In conjunction with this, the parental leave benefit will be increased to half of the average wages of the parent.
Other Leave
Depending on the collective agreement/employment contract terms, an employee may be allowed additional leave types approved between the employer and employee for the following:
- Adopter’s leave: a person who adopts a child under the age of 10 is entitled to paid leave based on the employee’s average salary.
- Childcare leave: a mother or father can take paid leave (pay is equal to the minimum wage) and varies based on the age of the child:
- Up to 2 children under the age of 14 – 3 days of leave
- 3+ children under the age of 14- 6 days of leave
- For parents with a disabled child- the mother or father can take off an additional day of work each month until the child reaches the age of 18. This leave is also compensated based on the minimum wage.
- Study leave: an employee has the right to 30 days of study leave as prescribed in the Adult Education Act. Twenty of the 30 days are compensated at the rate of the employee’s average salary.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The Employer can end the employment contract on an exceptional basis which includes when there is misconduct (a warning must have been given first and the employee must get a chance to explain his actions), due to decrease in the work volume, reorganisation of work or other cessation of work (lay-offs).
Termination requires notice and a written explanation for the termination.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Wages must be paid at least once a month, on an agreed date. | On termination, the employer must pay all earned wages and unused holiday compensation “on the day the employment contract ends”. | Payment is typically via bank transfer to the employee’s account; cash is also permitted by agreement. |
Notice Period
The notice period is stipulated by the service length the employee has worked within a single organization as follows:
- Termination during probation period – 15 days notice
- Less than one year service – 15 days’ notice
- 1-5 years of service – 30 days’ notice
- 5-10 years of service – 60 days’ notice
- 10+ years of service – 90 days’ notice
It is also permitted to to give payment in lieu of notice.
In case of employee resignation, 30 days’ notice must be given.
Severance Pay
In cases of termination of the employment contract due to redundancy, the employer must pay compensation of one month’s salary payment (calculated on the employee’s average wage across the previous six months).
Employees with employment service of between 5 to 10 years are entitled to an additional one month’s salary from the unemployment insurance fund (Töötukassa); if the employees’ service is 10 years or more, the employee is entitled to an additional 1 month’s salary from the Unemployment Insurance Fund.
Probation Period
Probation periods cannot be more than 4 months.
Immigration
Business visitors to Estonia typically use a Schengen C Visa unless they are visa exempt based on their nationality or a treaty. The Schengen Area limits stay to 90 days in 180 days. The visa can be obtained at their nearest Estonian consular post or a Schengen member state consular post representing Estonia.
The main work authorization category is the Residence Permit for Employment, suitable for foreign workers with skills not locally available. Estonia also offers a short-term employment program for work activities for up to 12 months and a digital nomad visa for remote work for up to 12 months.
VAT
General
The standard rate of VAT in Estonia is 24% (effective from July 2025 as a temporary security tax, valid until the end of 2028).
Stay up to date on payroll & employment law changes
Version History
Questions & Answers
See how Papaya can help you automate your global payroll or EoR whilst staying 100% compliant with local labor laws
Payroll and Benefits Guide
in Estonia
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 24 February 2026 | Tuesday | Independence Day | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 5 April 2026 | Sunday | Easter Sunday | Standard holiday |
| 1 May 2026 | Friday | Spring Day (May Day) | Standard holiday |
| 24 May 2026 | Sunday | Whit Sunday (Pentecost) | Standard holiday |
| 23 June 2026 | Tuesday | Victory Day | Standard holiday |
| 24 June 2026 | Wednesday | Midsummer Day (St. John’s Day) | Standard holiday |
| 20 August 2026 | Thursday | Day of Restoration of Independence | Standard holiday |
| 24 December 2026 | Thursday | Christmas Eve | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Boxing Day | Standard holiday |
What benefits are expected that are not part of what they receive by law?
Hi Elor, thank you for your question. In Estonia, it is not common for an Estonian company to give non-mandatory benefits, you will usually find that this is generally offered by international companies dealing in the tech or financial industries. Benefits include more paid leave, car allowance, gym memberships, and private health insurance.
Hi are employees permitted to carry over leave from one leave year tot he next? And are there any further rules around this?
Vacation must be taken within one calendar year (from January 1st until December 31st). There is no carryover of unused leave. However, if the employee has not taken advantage of unused holidays upon the termination of employment or service, the employer must pay the employee monetary compensation for the unemployed holidays, up to a maximum of four years.