With Marzuna’s Estonia EOR (Employer of Record) service, you may grow your company into Estonia without having to set up a corporation. With the help of its automated and uniform global HR platform, you can handle your remote team’s payroll, benefits, and other compliance-related tasks more quickly and efficiently. With a clever worldwide network, it facilitates the process of expanding internationally more efficiently. Speak with Marzuna specialists right now to find out more.
Situated on the eastern shore of the Baltic Sea, Estonia is the northernmost nation of the Baltic states, which also include Latvia and Lithuania. It is the most enterprising nation in Europe, according to the World Economic Forum, making it a desirable destination for foreign direct investments (FDI). Among the principal sectors in this region are trading, tourism, and information technology. It is frequently referred to as the Silicon Valley of Europe because of its rapidly expanding economy.
It’s now simpler than ever to assemble a reliable global workforce anywhere in the world. By using a worldwide EOR solution, you can concentrate on the development and expansion of your business by relieving yourself of the difficult and time-consuming administrative tasks like payroll, taxes, and compliance. Reducing compliance concerns has an additional advantage at the same time.
The statutory rights and entitlements of Estonian workers are listed below.
| Entitlements | Explanation | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Standard Working Hours in a Week | There are forty regular working hours in a week, or eight hours a day on average. The worker can choose to work part-time if it suits them better. Depending on the business, weekends are often days of rest. | ||||||||||||||||||||||||
| Overtime Eligibility | An employee is entitled to compensation equal to at least 1.5 times their average salary, or an additional rest period, if they work overtime—that is, beyond their regularly scheduled working hours or on their mutually agreed-upon rest days—and are not given a substitute day off. Both the employer and the employee must agree on this. | ||||||||||||||||||||||||
| Paid Public Holidays in Estonia | Here is a list of compulsory paid leaves in Estonia –
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| Bonuses | Usually, the company and employee agree a bonus. Although not required, bonuses are typical in Estonia. The worker receives pay on a yearly basis. | ||||||||||||||||||||||||
| Annual Leave Entitlement | An employee is entitled to a minimum of 28 paid leaves off from work annually, including working days. | ||||||||||||||||||||||||
| Maternity Leave | Maternity leave for female employees is entitled to 140 days. In some circumstances and in the event of medical difficulties, it may be extended to 154 days. Applying for it is possible 30 to 70 days prior to the deadline. Male workers are entitled to ten days of paid paternity leave, which they can use both two months prior to and two months following the birth of their child.
When an employee adopts a kid under the age of ten, they are entitled to 70 days of leave. The leave is paid for by the state. |
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| Childcare Leaves | In Estonia, parents are entitled to yearly leaves for childcare. If they have one or two children under the age of fourteen, they are eligible for three working days; if they have three or more children under the age of fourteen, or if they have at least one kid under the age of three, they are eligible for six working days. | ||||||||||||||||||||||||
| Medical Leaves | An employee in Estonia is entitled to eighteen2 days of paid sick leave. From the fourth to the eighth day of sick leave, employers pay the employee; after that, the state covers the leaves. An employee’s entitlement to paid sick leave is 70% of the average wage from the prior year. | ||||||||||||||||||||||||
| Employee Protection and Anti-discrimination Rights | It is illegal to discriminate against someone based on their nationality, sex, creed, caste, religion, status, money, or political or personal beliefs. |
The employment landscape in Estonia reflects a robust employment rate of 68.1% in 2021. In this Baltic nation, the predominant mode of employment is through formal employment contracts, with independent employee contracts being a relatively rare occurrence. Companies in Estonia bear the responsibility of ensuring that their workforce is legally eligible to work within the country’s borders.
Employers in Estonia enjoy flexibility when it comes to hiring, as they can opt for contract workers or full-time employees based on the specific requirements of the job roles, project scope, and responsibilities involved. Contract positions are typically open-ended and focus on project-specific work, with individuals hired for a defined project duration. These contractors are expected to deliver on the project’s objectives within the stipulated timeframe. Alternatively, fixed-term contracts may be utilized, typically for a specific duration, often around two years, or until the designated task is accomplished.
In contrast, full-time employees are engaged to work on ongoing projects, transitioning between various roles as needed. Their responsibilities extend beyond a single project, making them a more permanent part of the company’s workforce. Unlike contract workers, who receive a fixed sum for each project, full-time employees receive monthly salaries.
When crafting an employee contract, it’s imperative to include comprehensive details about the employee, including their salary, personal information, benefits, agreed-upon terms and conditions, and termination clauses. The contract should also specify the company’s particulars, such as registration details, workplace location, working hours, company policies, and expectations. Additionally, the employee’s job role, title, and notice period should be explicitly mentioned. Employers are obligated to maintain a record of these contracts for a minimum of 10 years following their expiration.
For businesses expanding or initiating operations in Estonia, Marzuna’s Estonia Employer of Record (EOR) services can provide invaluable support. We assist growing businesses in creating, managing, and overseeing contracts, as well as facilitating the onboarding process for both contractors and full-time employees while ensuring strict adherence to local laws and regulations. Connect with us to explore how we can help your enterprise thrive in the Estonian job market.
In your quest to find the ideal workforce for your Estonian operations, a series of strategic steps must be followed. Here’s an insightful guide to streamline the process:
Before embarking on your hiring journey, it’s essential to decide whether you want to manage the process independently, collaborate with a recruitment agency, or opt for an Employer of Record (EOR) to oversee the entire process. Marzuna, our EOR services, can expertly handle this process without the need for you to be physically present in the country. Explore how Marzuna can facilitate your business expansion in Estonia and enable you to hire a remote workforce seamlessly.
In Estonia, the probationary period typically spans 3-4 months. Upon its conclusion, the employee enters into a new contract, which is typically fixed in nature.
Both the employee and employer have the liberty to terminate the contract at any time through mutual agreement. This should be outlined in the contract, specifying mutually agreed-upon notice periods, compensation, and other relevant terms.
Employers can terminate an employment contract but must provide prior notice, the duration of which depends on the employee’s length of service:
In cases where an employer does not provide notice, they are obliged to compensate the employee monetarily for the specified notice period.
Employees have two termination options: ordinary termination and extraordinary termination.
In the case of ordinary termination, the employee can resign without specifying a reason, but when dealing with a fixed-term agreement, a reason must be provided. A minimum of 30 days’ notice to the employer is required.
Extraordinary termination comes into play when the employee has a valid reason, such as health issues, unmet expectations, or employer policy violations. Grounds for extraordinary termination also encompass delayed salary payments, mistreatment, harassment, or work conditions adversely affecting the employee’s health. In such cases, notice periods are not required, and the employee can be relieved of their responsibilities immediately.
Expanding a business is a drawn-out process that requires careful preparation, particularly when doing it internationally. Although it is difficult and may take many months to finish, you may expedite the growth process by selecting the EOR path when recruiting staff in Estonia. Marzuna’s Employer of Record Estonia (EOR) solutions help expedite and simplify business development into Estonia. Our extensive worldwide reach and an advanced technological HR platform guarantee adherence to regional labor regulations by handling employment obligations such monthly payroll, work permits, employment agreements, and employee taxes in Estonia. Set up a demo with Marzuna right now.
Primarily there are only three types of visas for Estonia:
| Visa Category (Non-EU citizens) | Explanation |
|---|---|
| Schengen Visa (short-term) | With a short-term Schengen visa, sometimes called a C-type visa, you can spend up to 90 days in any Schengen nation within a six-month period.
Other Schengen nations, including but not limited to Switzerland, Italy, Germany, France, Belgium, Netherlands, Spain, Latvia, Portugal, Finland, Iceland, Denmark, and Austria, can be visited by holders of a Schengen visa in addition to Estonia. Poland, Lithuania, Luxembourg, Czech Republic, Sweden, Norway, and Malta. Furthermore, there are no time limits on when you can enter or exit the Schengen region. |
| Criteria to getting Schengen Visa (short-term) | Documents required for employees applying for a short term visa other than the basic documents are:
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| National Visa (long-term) | The national type visa, often referred to as the D-visa, enables you to stay in Estonia for 91 days to 180 days over the course of six months.
Seasonal employees, temporary employees, volunteers, researchers on guest visas, and students are among the groups for which the Visa D is frequently granted. |
| Criteria to Get National Visa |
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| Transit Visa | A transit visa is entirely distinct from the other visas that have been discussed. You can enter the nation with a transit visa, but only for a short period of time.
It indicates that it is only valid for a few days at most. The transit visa is issued with the intention of improving convenience and travel experience. |
| Criteria to Get Transit Visa |
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| National Visa (long-term) | You do not need a visa to enter Estonia if you are a citizen of the EU, the EEA (Iceland, Liechtenstein, and Norway), or Switzerland.
You can register as an Estonian resident in the Population Register of Estonia during the first three months of your visit if you plan to live or work in Estonia for around three months. |
| Can Marzuna Sponsor Work Permit in Estonia? | Yes |
| Processing time | 2-4 weeks |
| Work Permit Process |
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| Work Permit Validity | 6 months (single/multiple entries). |
| Work Permit Process for Different Countries | The work permit process is broadly divided into EU and non-EU segments. |
| Where is the Application Processed | The application would be processed in the employees home country |
| When Can Employee Travel to Estonia | Once the employee’s Schengen visa has been authorized by the Estonian embassy located in their home country, they are free to go to Estonia.
This letter contains the employee’s pre-approved single-entry visa, giving the employer six months to arrange for the employee’s arrival in Estonia and the issuance of the necessary permissions. |
| What’s the Cost of Business Visa | EUR 100 |
| Duration of Business Visa Processing | 2 weeks |
| Switch Business Visa to Work Permit | No |
| Can Spouses Work on Dependent Visas? | No |
| Termination of Work Permit | Ten days prior to the temporary residence permit’s validity period ending, the decision to renew or not to extend it is made. The Service Office listed on the application form is where the residency card is issued. |
Setting up payroll in Estonia involves several essential considerations. The initial step for your company is to decide whether you want to hire local or foreign nationals. Opting for a local entity necessitates employee recruitment and the establishment of a payroll system. If you already have an established entity, Marzuna can assist in ensuring full compliance with Estonian laws. For those without an existing entity, Marzuna offers a comprehensive service designed to get your business up and running swiftly, while meticulously adhering to all relevant legislation.
Once your entity is established, the next critical step is setting up the payroll. Companies aiming for a long-term presence in Estonia may choose to establish an internal payroll system. The payroll cycle in Estonia operates on a monthly basis, and it’s vital to be aware that the standard VAT rate in the country is 20%. This knowledge empowers businesses to effectively navigate the intricacies of payroll setup in Estonia.
| Tax Type | Rate |
|---|---|
| Pension | 20% |
| Unemployment Insurance | 0.8% |
| Health Insurance | 13% |
| Tax Type | Rate |
|---|---|
| Compulsory Pension for those born after 31st Dec, 1982 | 2% |
| Unemployment Insurance | 16% |
Expanding your business into Estonia involves several critical steps, and Marzuna can serve as your invaluable global outsourcing partner to simplify the process and ensure seamless operations within the country.
Before diving into the establishment of a subsidiary, careful consideration and evaluation of various factors are essential. To begin, you must decide on the location for your subsidiary, as different cities and areas may have distinct laws that impact subsidiary fees. Next, you’ll need to determine the most suitable type of subsidiary structure that aligns with your business objectives. Estonia’s legal framework offers options such as a private limited company, general partnership, commercial association, or limited partnership. Opting for a private limited company offers flexibility for conducting your operations in the country.
Here are the key steps involved in setting up a subsidiary in Estonia as a private limited company (LLC):
Establishing a subsidiary can be a time-consuming and intricate process. It involves adjusting to a new operating environment and comprehending Estonian laws, which may span several months to complete.
Marzuna can be your trusted partner, simplifying the process by handling comprehensive payroll setup, legal compliance, and taxation. Reach out to our experts for expert guidance on setting up a subsidiary in Estonia and streamline your expansion efforts in this vibrant business landscape.
The economy of Estonia is robust, expanding quickly, and relatively open; it is a hotbed of innovation. It’s a business haven and one of the most business-friendly nations with flat taxation, a steady budget, and very welcoming investment laws for foreign nationals. While Estonia has instituted a yearly cap on non-EU nationals, startups and senior staff are exempt from this. Its workforce is well educated, its laws are basic, and its recruiting procedure is uncomplicated. The World Economic Forum named it as the best country in Europe for business. It has really made the globe more accessible. Speak with our Marzuna specialists to learn more.
