Labour relations in Estonia

Relationship between employer and employee is mainly regulated by the Employment Contracts Act (in Estonian, it is called Töölepinguseadus). Work relations are also regulated with the Law of Obligations Act (Võlaõigusseadus), the Individual Labour Dispute Resolution Act (Individuaalse töövaidluse lahendamise seadus), and the Occupational Health and Safety Act (Töötervishoiu ja tööohutuse seadus).

All laws can be found from Riigi Teataja website (both in Estonian and in English).

The supervision over employers is done by Labour Inspectorate. See more from their website.

To find employees, employers list job advertisements on their own website, use job-seeking sites (for example https://www.cvkeskus.ee/ and https://www.cv.ee/english/), search on LinkedIn or even use some apps such as MeetFrank. For more experienced and senior positions, headhunters are often used.

Even though Estonian labour laws are quite liberal, the principle of protection is applied towards the employee who is considered the weaker party. This means that as a rule, agreements which include disadvantageous clauses towards employees, compared to what is set forth in legislation, are likely considered void.

Some general useful information about employment can be found from the webpage of the Ministry of Social Affairs.

An Employment Agreement must be concluded in written form. Among other things, the employment contract must specify the employee’s working hours, salary, the method for calculation of the salary and procedures for paying the salary.

It is presumed that a full-time employee works 40 hours during a 7-days period, 8 hours per day. Certain flexible options exist for applying summarized working time calculation within a specified period up to 4 months. Overtime is normally permitted upon an agreement between the parties, however, certain limits must be observed.

An employee is entitled to annual paid leave in the amount of at least 28 calendar days.

The employer’s obligation is to calculate and withhold all payroll taxes monthly. The social security payment in Estonia is solely the responsibility of an employer.

This article is part of a Business Guide

This article is a part of larger set of guidelines that e-Residency project team has requested for you and that has been compiled in cooperation with AS PwC. Download the full version of the Business Guide

Articles in the Knowledge Base and the Business Guide are intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. This information should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. 

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