Estonia Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Estonia generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Estonia Visas, Work Permits and Migration

As with other countries, Estonia’s rules and regulations apply to individuals wanting employment, and companies onboarding staff from abroad, creating paperwork, and processes to be undertaken. Citizens from the European Union, European Economic Area and Switzerland can enter the country without visas. They can stay, look for employment and settle with their families. Many other nationals are also visa-exempt and can travel to Estonia for up to 90 days in any 180 periods.

In late 2022, Estonia as with the rest of the European Union commences a new system allowing them to monitor the comings and goings of visa-exempt travellers, entering and leaving the Schengen Zone; the European Travel Information and Authorization System (ETIAS).

Those not visa-exempt must apply for a Schengen Visa to holiday, visit friends and family, for certain business reasons and some brief work-related activities. Otherwise, those looking for work for more than three months, need a D Visa or a Temporary Residence Permit for Employment.

Many companies expanding into new territory look towards a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to set up their business, recruit staff and operate payroll to save time and money … and that includes acquiring immigration and work documentation. Here are some guidelines to assist you.

What Types of Work Visas and Permits for Estonia are there?

European Union (EU) and European Economic Area (EEA) nationals do not require a visa or residence permit to visit, stay and work in the country. Although travel documents are not checked when passing through the open borders, citizens may be asked to show documentation that allows them to travel visa-free i.e., a passport or national ID card. For longer than three months, they must register their address at their local government office, which gives them the right of residence.  They must also apply for an Estonia ID card. Individuals must have their European Health Insurance Card (EHIC) with them and private health insurance for the initial three months.

Types of Visas for Third Country Nationals (TCNs):

  1. Transit. For individuals needing to change transport e.g., at an airport.
  2. C Schengen. Allows visits to friends, family, a holiday or some business-related work (not full-time employment) for 90 days in a six-month period.
  3. D Long Stay. Single or multiple entries. For up to one year, extendable.
  4. Digital Nomad. Allows foreigners who live in and ‘work remotely’ from Estonia, for companies or their own company registered in another country.
  5. Start-Up. Allows foreign entrepreneurs to stay for 12 months (renewable for six months) to launch their Start-up; must be appraised by the Ministry of Interior’s expert committee and an application submitted for the appraisal.
  6. E-Residency. In 2014, Estonia was the first country to offer this service. Individuals can set up a business and open a bank account, sign contracts etc. and operate it from abroad without having to go to Estonia – all done digitally. This is not an entry visa or residence permit.

Estonia also has the Tourist Visa, Business Visa, Student Visa, Family Visa and Medical Visa – requiring various documents concerning the reason for travel.

Third Country Nationals (TCNs)

Foreigners arriving to live, and work are covered by the Alien Act, regarding their legal obligations and rights. To work, the first step is that the employee must be registered with the Police and Border Guard Board (PBGB) and to stay there legally, they must have the relevant documentation e.g., visa or residence permit, or be visa exempt.

There are two routes into the labour market for TCNs, either through:

  1. Registration of Employment and the D Visa to enter and stay for employment of less than one year
  2. Applying for a Temporary Residence Permit (TRP) which is done at the embassy or similar abroad and then sent to the PBGB for processing and registering the employment for more than one year.

The first is quicker and there are ‘annual quotas’ on the TRP which may hold things up!

Estonia Tax Laws

Our experience at Bradford Jacobs is essential for international companies expanding their operations into the Republic of Estonia, a developing and go-ahead economy in the Baltic States that plays an increasingly impressive role among European nations despite a population of just 1.3 million.

Estonia’s personal and corporate tax rates are among Europe’s most competitive, but challenges must be met to guarantee a smooth transition.

Bradford Jacobs’ dedicated specialists remove the burden of worrying about any complications while you focus on building your business in a new territory.

Overview of Taxes in Estonia

* Estonia is in the Eurozone and uses the euro as its currency

Personal Income Tax (PIT): There is a flat proportional rate of 20%.

Social Insurance Taxes: Employers contribute a total of 33%, 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 pay unemployment contributions of 0.8%, with employees paying 1.6% of their salaries.

Corporate Income Tax (CIT): The standard rate is 20%. All undistributed, reinvested profits are tax-exempt.

Value Added Tax (VAT): The headline rate is 20%. Categories such as books, periodicals, hotel accommodation and some pharmaceuticals have a 9% tax. Zero-rate applies to such exported goods and services, health care, insurance, and some financial services.

Estonia Individual Tax – Single, Married

The tax year runs from January 1 until December 31. Married couples can file separately or jointly, with returns submitted by April 30 of the following year and due taxes paid by October 1 to the Tax and Customs Board. Individuals are taxed on salaries, business earnings and other remunerations as ‘active’ income. For example, capital gains, rents and royalties are taxed as ‘passive’ income. Tax residents are those with permanent residence in Estonia or those exceeding 183 days in the country in any 12 months. Once 183 days are reached, they are considered tax residents from the start of the 183 days.

* Estonia is a member of the European Union and uses the euro (€) as its currency.

Personal Income Tax (PIT): A flat rate of 20% applies to income.

Up to €6,000 (US$6,500) is tax-free, with the amount decreasing according to income. Tax-free income of €500 (US$540) per month reduces by €500 until for an income of €2,100 (US$2,275) per month; there is no allowance.

Social Insurance Taxes: Employees contribute 1.6% of their salaries to the unemployment fund, which is withheld by their employer and remitted to the authorities

Estonia Entity Set Up

Establishing a subsidiary overseas involves risks and uncertainties. Setting up a business in a foreign country can be costly and there is no guarantee that the time, effort, and financial outlay will bring any success.

Foreign companies have the option of opening a legal entity in Estonia, with the most popular choice being a private limited company, known as an osaühing, or OÜ, and operating under the Companies Act, regulated by the Commercial Code. It is the favoured choice both for Estonian and foreign companies.

Estonia has a forward-looking, innovative, and modern market-led economy, with an open-minded attitude towards foreign investment. The Republic of Estonia may be on the Baltic coastline on the northeast fringe of Europe, but it has become increasingly involved with the major European institutions.

How to set up an Estonian Subsidiary

Setting up a subsidiary in Estonia? International companies making the move of opening a legal entity in order to hire staff and run payroll, usually choose a subsidiary private limited company, known as an osaühing, or OÜ, which operates under the Commercial Code. Necessary procedures to set up the subsidiary include:

  • Selecting a unique name for the company after checking availability on the e-Business Register
  • Providing a legally registered Estonian address, or else locating one through the e-Residency Marketplace
  • Registering the company through the Company Registration Portal
  • Filing the parent company’s Articles of Association and Certificate of Registration
  • Drafting subsidiary’s Articles of Association
  • Paying the fee of €265 (US$288) through the registration portal along with depositing any share capital, although this can be delayed to later
  • Confirming from the registration portal that the application has been accepted
  • Registering employees on the Employment Register via the Tax and Customs Board’s website
  • Obtaining necessary licenses depending on the area of business activities, by checking with the Register of Economic Activities
  • Registering for Value Added Tax (VAT) with the Tax and Customs Board, if required by business operations and revenue

Note: Estonians holding an ID card, or an e-Residency card can establish a private limited company online. This also applies to an increasing number of ID cards from fellow European Union member states.

Benefits of setting up a Subsidiary in Estonia

Foreign companies opening a private limited company subsidiary in Estonia enjoy a number of benefits from its operation under the Commercial Code and the Income Tax Act. The subsidiary has a separate legal identity from the parent company and is treated the same as a local company. In general, the parent company’s liability is restricted to the share capital invested in the subsidiary; neither is it responsible for any debts of the subsidiary.

The subsidiary provides the parent company with the potential for further expansion throughout the ‘free market’ European Union and into the Baltic and other eastern European nations.

Estonia is an increasingly attractive target for Foreign Direct Investment per capita among eastern and central European nations, particularly from European Union (EU) nations and the US and averaged €244 million (US$264) per year over the 20 years up to 2021.

Other benefits for a subsidiary:

  • Easier to obtain potential benefits and incentives and enter into contracts with other Estonian or EU companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by European economies.

Estonia Market

The Republic of Estonia is playing an increasingly impressive role in the European economy. The relatively small nation of 1.3 million may be tucked in the northeast corner of the continent, but its membership in key global institutions underlines its drive into the economic mainstream.

Estonia has been in the European Union since 2004, the Schengen Area since 2007 and became a member of the Eurozone in 2011. In addition, Estonia has membership in the United Nations, World Bank and World Trade Organization, International Monetary Fund, the North Atlantic Treaty Organization and the Organization for Economic Co-operation and Development,

Estonia has a varied range of exports – including refined petroleum, wood and paper products, metals and chemicals – which contributed to a Gross Domestic Product of US$36.4 billion in 2021. Estonia is outside the world’s top 50 economies. However, a per capita GDP of over US$27,000 places the population comfortably in the top 40.

Estonia has a forward-looking, innovative and modern market-led economy, with an open-minded attitude towards Foreign Direct Investment. In the 20 years up to 2021, FDI in Estonia averaged over US$260 million per year.

These are among the attractions for foreign companies looking to make the enterprising move into Estonia’s economy. They have the option of opening a private limited liability company as an osaühing, or OÜ, operating under the Companies Act, regulated by the Commercial Code.

Expanding into Estonia

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and residence permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions.

Estonia generally welcomes foreign investment. But there are always issues surrounding compliance with the relevant legislation. In Estonia, this revolves around the Employment Contracts Act and other statutes – plus European Union Directives also come into play.

There are other issues, too. Where will you find manufacturers, offices and distributors?

There is a simple and effective alternative – partnering with a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs. This way companies can plot a time-efficient and cost-effective path to locating and employing staff in Estonia. Here we set out some of the necessary steps.

Estonia Business Facts

  • Capital – Tallinn
  • Population – 1.32 million
  • Regions – North, South, East, West and Tallinn region
  • Official languages – Estonian
  • Economy – 36.4 billion US dollars, outside the world’s top 50
  • Leading sectors by GDP – 62.69% service industry, 22.65% manufacturing, 2.17% agriculture, plus public administration, defence industries, education services, health and social work services
  • Main exports include – Machinery and equipment, phone devices, wood, paper, textiles, furniture, metals and chemical products, shale tar oil
  • Main imports include – Refined petroleum, vehicles, medicines, broadcasting equipment
  • Main trading partners – European Union members, primarily Finland, Germany, Latvia plus non-EU Russia and China
  • Government – Parliamentary republic, unitary state
  • Currency – Euro

Advantages and Challenges of the Estonian Market

Advantages of expanding into the Estonian market include:

  • Taxation: Comparatively low rates for personal and corporate liability. Organization for Economic Cooperation and Development ranked Estonia No. 1 globally for tax competitiveness in 2021
  • Trading: Membership of the European Union (EU) and the Eurozone simplifies business interaction
  • Energy:  Self-sufficient due to oil shale reserves
  • Growth: Development of high-value-added areas such as Information Technology and electronics
  • Attitude:  Open and innovation-based outlook attracts international corporations such as Ericsson and ABB, while the R&D for Skype was completed in Estonia

Challenges to expanding into the Estonian market include:

  • Risks:  Relatively small economy susceptible to outside influences
  • Labour:  Declining population and workforce leading to a skills shortage in some sectors
  • Logistics: Restricted land links with the rest of the EU
  • Politics:  Potential tensions between Estonians and ethnic Russians in the east region, who make up 25% of the population

Limited Company / Subsidiary or Branch in Estonia?

Foreign companies establishing a legal entity in Estonia usually choose a private limited liability company, known locally as an osaühing, or OÜ and operating under the Companies Act, regulated by the Commercial Code. This is the ideal format for Small and Medium Enterprises (SMEs) and start-ups as a means to establish a foothold in the economy.

The private limited company has a minimum share capital of €2,500 (US$2,700), and a management board who are not necessarily shareholders. The shareholders are liable only to the level of their contribution in shares and the parent company is free from responsibilities for the subsidiary’s debts or liabilities. The parent company owns the majority of the share capital.

Another option for foreign companies is to open a branch, known as an Eesti filial, but this is not a separate legal entity under the Commercial Code and the parent company remains liable for its debts and any legal issues.

Estonia Contracts

International companies targeting Global Expansion by hiring employees in Estonia have the option of opening a legal entity, with the most popular choice being a private limited company, known as an osaühing, or OÜ and operating under the Commercial Code. Their employees will be covered by the Employment Contracts Act, the Law of Obligations Act and a host of supplementary legislation covering all aspects of entitlements, benefits, and compensation.

These issues are a major consideration during the stages of hiring, onboarding, and drawing up contracts with your new staff.

Employment Contracts in Estonia

There is no mandatory requirement for contracts to be in writing, but if an individual work for another person, or a company, for remuneration it is considered that a contract is an implant.

  • Open-ended Employment Contracts:  This is the standard contract in Estonia, for full-time, permanent employment. There is no time limit or stipulated end date, and it is terminated by the due process between employer and employee.
  • Fixed-term Employment Contracts: Employers must demonstrate the need for a fixed-term contract, due to such as seasonal work, a short-term increase in workload, temporarily replacing a member of staff, or being tied to a specific project. Successive fixed-term contracts, where there are less than two months between them, are limited to a total of five years, after which they become permanent.
  • Probation Period Employment Contracts:  For a probationary period to be effective it must be stipulated in the employment contract, otherwise the employment is deemed to have no probationary period. Trial periods are restricted to a maximum of four months and the employer can terminate the trial within the four months by giving 15 days’ notice. In a fixed-term contract, the probation cannot exceed half of the contract up to the maximum of four months.
  • Collective Bargaining Agreements: Around 30% of workers in Estonia are covered by collective agreements, which can operate at the national, industry or company levels. Unusually, employees’ work councils can sign collective agreements with their employer where there is no union presence in the company. Agreements typically last for one or two years and cover pay, working conditions, health and safety, provisions for redundancies etc. All collective agreements have to be registered with the Ministry of Social Affairs.

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.

Estonia Top Talent

Locating and then recruiting top talent in an overseas territory is a significant commitment for companies who have set their sights on international expansion – and one that can face many obstacles.

The relatively small – and shrinking – population of around 1.3 million makes for a highly competitive employment market. The European Center for the Development of Vocational Training predicted that the most significant growth areas of the Estonian employment market would be research and development. Specialist skills will be in demand from suitably qualified individuals. Programmers, chefs, teaching professionals, production managers, services managers and admin professionals will also be sought after. Additionally, there is a projected shortfall in software developers, a key sector of Estonia’s economy, with Europe’s highest percentage of start-ups per capita.

Where to begin? This is where Bradford Jacobs’ global experience is vital for taking the smartest recruitment route into Estonia.

The Recruitment Process in Estonia

Estonia’s population of just 1.3 million includes a small, well-educated, highly skilled, literate and motivated workforce operating in a relatively tight but well-developed employment market. As a result, the recruitment process can be frustrating if the right talent is not targeted.

There is a projected shortfall in software developers, a key sector of Estonia’s economy, with among Europe’s highest percentage of start-ups per capita. Programmers are also in demand, along with teaching professionals, production, and services managers, while admin professionals will also be sought after.

Recruitment is the first stage of making your company operational and competitive in Estonia. There are many complications in moving staff into the country and the complexities of obtaining work visas and permits. To avoid these issues, knowing where to locate the finest candidates for your company’s expansion plans is vital. Don’t wait! Contact Bradford Jacobs for the solutions.

Once recruited, companies must consider the implications of handling payroll for their staff and deal with the revenue and social insurance authorities. Foreign companies generally establish subsidiaries to undertake these tasks and follow strict registration procedures. Requirements include:

  • Employees of all nationalities must be registered in the Employment Register and with the Estonian Tax and Customs Board, either through the e-Tax Board or at a Tax and Customs Board Office.
  • To register, employees must have an Estonian ID card before starting work; if registering by initially using their date of birth, they must obtain an ID card within five days. At the latest, employees must be registered at the beginning of employment.
  • Information for the Employment Register must include Employee’s ID details; employer’s details and registry code; date of starting work and, if relevant, end date.
  • Registering employees with the Tax and Customs Board. Employers supply non-tax resident data on TSD Annex 2, and for tax residents on TSD Annex 1.
  • Individuals change tax residency by submitting Form R.
  • Employees are automatically registered for the Health Insurance Fund and the Social Insurance Board once they have been entered into the Employment Register.

Note: Employees from EU/EEA nations will be exempt from social insurance contributions if they produce an A1 Certificate from their home country’s social insurance organization.

Legal Checks on Employees in Estonia

References: Employers need the applicant’s permission before asking for references from previous employers, although this is not usual.

Medical and Criminal History:  These can be requested by the employer only if strictly relevant to the role.

Privacy:  Any data gathered by employers must not contravene the Personal Data Protection Act, the Public Information Act, the Electronic Communications Act, the Cybersecurity Act or the European Union’s General Data Protection Regulation.

Basic Facts on Hiring in Estonia

Employment law in Estonia is generally governed by the Employment Contracts Act, which applies basic requirements for hiring employees. These include:

  • There is no mandatory requirement for contracts to be in writing, though generally, they are in place if employment exceeds 14 days. Any oral agreement is not invalidated in the absence of a written version
  • The contract should be given to the employee before work commences
  • Contracts can be for a fixed or unspecified term
  • Contracts must include Identities and full details of all parties; start date of employment and in the case of a fixed-term contract, the end date; job description and location; terms of employment such as salary, working hours, paid vacations; notice periods and termination/ severance terms, whether collective agreements apply
  • Any probation period, up to a maximum of four months
  • Employers and employees are free to negotiate the terms of their agreement, but cannot diminish any statutory minimums

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.

To be able to operate, registration requirements include:

  • A unique name for the company after checking availability on the e-Business Register and a legally registered Estonian address
  • Registration of the company through the Company Registration Portal and paying a fee of €265 (US$288) through the registration portal along with any share capital, although this can be deferred to later
  • Confirmation from the registration portal that the application has been accepted
  • Registration of employees on the Employment Register via the website of the Tax and Customs Board
  • Required licenses depending on the area of business activities, checked with the Register of Economic Activities
  • Registration for Value Added Tax (VAT) if necessary, with the Tax and Customs Board

Note: Estonians holding an ID card, or an e-Residency card can establish a private limited company online. This also applies to an increasing number of ID cards from fellow European Union member states.

Work Culture in Estonia

To succeed in business in Estonia, it is vital for both employers and employees to have a strong understanding of the business culture.

As a global PEO (Professional Employment Organisation) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Estonian work culture, we want to support your Global Expansion plans. Therefore, we will address all the aspects of the work culture in Estonia to start your expansion well-informed.

Work Culture

The Republic of Estonia may be among Europe’s smaller nations – with a population of just over 1.3 million – but it displays a go-getting attitude to international trade and is a front runner in digital innovation.

Estonia is the northernmost of it Baltic state neighbours, Lithuania and Latvia. It is an attractive land of lakes, forests, rivers and islands – 1,500 of them – while the Old Town in the capital, Tallinn, is the best-preserved medieval city in northern Europe. These are the attractions that can tempt incoming job seekers … alongside the economic and commercial benefits.

The modern, market-based economy had a Gross Domestic Product of US$36.4 billion in 2021, but outside the world’s top 50. However, GDP per capita was US$27,100 by the end of 2021, putting the nation comfortably inside the top 40.

Estonia’s location is in the northeast corner of the continent, but its membership in European institutions has given the nation an increasingly central role. Estonia has been in the European Union since 2004, the Schengen Area since 2007 and a member of the Eurozone since 2011. Additionally, Estonia is a member of the International Monetary Fund, the North Atlantic Treaty Organization, the Organization for Economic Co-operation and Development, the United Nations, the World Bank and the World Trade Organization.

The work culture and business etiquette can require new arrivals to adjust. Estonia also has a mix of eastern European cultures. 2022 demographics showed the declining population was 69% Estonian, 25% Russian, with the balance predominantly Ukrainian, Belarussian and Finnish.

Ready for the challenge? Now is the time to get down to business. So here are a few tips on taking the best steps and clearing those cultural barriers.

  • Language:  At the business end of the scale, many Estonians are multi-lingual with a grasp of English, Russian, Finnish, German and Swedish. English speakers will get by – but hosts will be impressed with those who take the trouble to learn some words and phrases
  • Punctuality: Be on time – Estonians expect appointments to be kept and have the same attitude to deadlines
  • Business Attitudes:  Estonians have a strong work ethic and will assume others have the same approach. Initially rather ‘stiff’, as the relationship develops so the hosts will relax and enjoy more informality
  • Negotiations: Expect counterparts to be ultra-direct and foreigners should be direct and precise with questions and observations. Generalised questions may not get a response
  • Greetings:  Firm handshake, eye contact. Respect personal space
  • Business Cards:  Exchanged as part of the greetings process, but without any particular protocol
  • Dress Code: Smart, tidy and formal is safest – always with good quality footwear. Dark suits for men and women are always a good choice
  • Gift Giving:  Small, thoughtful gifts from the home country are acceptable; bunches of flowers should always have an odd number
  • Out of Hours:  Lunches and dinners are a chance to become informal and display a social side, away from the conference room where the attitude will have focused on business

Estonia’s Minimum Wage

The national minimum is €654 (US$711) per month, equating to €7,848 (US$8,531) per year based on 12 monthly payments, as agreed by the Estonian Trade Union Confederation (EAKL) and the Employers’ Confederation for 2022. The hourly rate is €3.86 (US$4.20).

The national minimum applies to most private companies in Australia that are regulated by the Fair Work Act, (2009) and whose employees are covered by the National Employment Relations System.

Part-time employees are paid the same rate, adjusted pro rata for the hours they work. Casual workers are paid ‘casual loading’ above the minimum rate as they are not entitled to benefits such as sick leave or paid vacations.

Probation Periods in Estonia

Trial periods cannot exceed four months and the employer can terminate the probation by giving 15 days’ notice. In a fixed-term contract, the probation cannot exceed half of the contract up to the maximum of four months. Probation periods must be in the contract.

Working Hours in Estonia

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 in Estonia

Overtime cannot exceed 48 hours per seven days averaged over four months unless a different period is applied by law. Employees can agree to a total of 52 hours averaged over four months.

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