Employee Benefits in Estonia

Employee Benefits

Minimum standards of pay and working conditions in Estonia come under the Employment Contracts Act, which was due to incorporate amendments from the European Union’s Directive 2019/1152 by August 2022. Amendments to contracts include:

• Must include details of amounts being deducted from salaries for tax and social insurance contributions
• Give details of collective agreements concerning overtime compensation

Set the length of any probation period, other than the maximum statutory four-month period, and any training programs run by the company

What Compensation Laws exist in Estonia?

Estonia’s employment legislation governing compensation laws is covered by the Employment Contracts Act, which was due to incorporate amendments from the European Union’s Directive 2019/1152 by August 2022. Amendments to contracts include:

• Must include details of amounts being deducted from salaries for tax and social insurance contributions
• Give details of collective agreements concerning overtime compensation
• Set the length of any probation period, other than the maximum statutory four-month period, and any training programs run by the company

Supplementary legislation includes such as the Health Insurance Act, the Family Benefits Act, Gender Equality Act and Equal Treatment Act.

In Estonia, it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties or facing sanctions for ignoring these obligations.

• Maternity Leave:  Women covered by the Health Insurance Fund receive 140 days of leave at full pay. Leave includes between 30 and 70 days taken before the child’s predicted birth date
• Sick Leave: Benefit begins after the third day of illness up to a maximum of 182 days’ leave, with days four to eight paid by the employer and the remainder from the Health Insurance Fund. The benefit is 70% of average wages paid by the employer over the previous six months, and 70% of average social tax contributions over the calendar year from the Fund
• Minimum Wages: The Estonian Trade Union Confederation (EAKL) and the Employers Confederation agreed on an increase to the national minimum from January 2022 to €654 (US$711) per month, which is €7,848 (US$8,531) a year based on 12 payments. The hourly minimum is €3.86 (US$4.20)
• Probation Periods: Where in place, trial periods must be covered by the employment contract. The statutory maximum period is four months, which the employer can terminate with 15 days’ notice. Probation periods cannot exceed half of a fixed-term contract, up to the maximum of four months
• Working Hours and Breaks:  The standard working week comprises five eight-hour days. Lunch breaks should be between 30 and 60 minutes. A single shift cannot exceed 12 hours
• Overtime:  Unless different limits apply in law, overtime generally should not exceed 48 hours averaged over a four-month period. Employees can agree to a total of 52 hours averaged over four months
• Notice Periods:  Statutory notice periods apply after employers advise employees, they intend to terminate their employment. Less than one year’s service – 15 calendar days; one to five years – at least 30 calendar days; five to 10 years – at least 60 calendar days; 10 years or above – at least 90 calendar days
• Termination, Severance, Redundancies:  Contracts can be mutually terminated where parties agree on all relevant terms, otherwise an employer must have cause to terminate. Employees can terminate an open-ended contract with a minimum of 30 days’ notice, but not a fixed-term contract unless a replacement has been found. Contracts terminated through redundancy entitle the employee to one month’s salary, with an extra month for working between five and 10 years and two extra months for working more than 10 years
• Paid Vacations: The statutory minimum is 28 calendar days – not including national or public holidays – while employees with at least six months’ service have their entitlement calculated pro rata. State and local government officials, teachers, academics and scientific staff can have extra vacation days

Social Security in Estonia

The framework of social security in Estonia is based on residency, not nationality. It comprises funds for pension insurance, health insurance and unemployment insurance administered by the Ministry of Social Affairs. Employers pay a total of 33% on employment and business income, 20% of which goes to public pension funds and 13% to public health insurance. The percentage paid is usually based on salaries, directors’ fees, and service fees and is paid monthly on tax return Form TSD.

Employers also pay unemployment insurance contributions of 0.8%. Employees contribute 1.6% through payroll withheld by the employer.

In the case of the mandatory funded pension, an employee pays a monthly 2% of their gross salary to the pension fund they have selected and the state adds 4% out of the current social tax that is paid by the employee.

Estonian healthcare includes consultations and check-ups; outpatient and inpatient tests and procedures; hospital and nursing care; medications, pre-natal and post-natal care. Healthcare providers are allowed to make minimal charges of up to €5 for consultations and €2.5 per day for hospital care for up to 10 days.