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October 23, 2023
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3 mins
With a notable freedom score of 80.0, Estonia proudly holds the 7th position in the global ranking of freest economies. Benefiting from its membership in the European Union, Estonia's economy thrives on trade. This strategic advantage has fostered robust economic connections with key partners like Finland, Sweden, and Germany. Additionally, Estonia's growth story is enriched by its flourishing telecommunications and electronics sectors, further propelling its ongoing progress and prosperity.
Employees in Estonia are characterized as highly skilled, making the country’s labor market a promising opportunity for global businesses. Additionally, labor laws and rules are easy and straightforward.
While the primary language employed in employment contracts is Estonian, it's possible for the contract to be drafted in a foreign language if mutually agreed upon by both parties.
In Estonia, employees undergo a probationary period lasting between 1 to 4 months.
Annual Leave 28 days
Sick Leave 30 days
Maternity Leave 140 days
In Estonia, employees receive their payment on a monthly basis.
As of 2023, the minimum gross hourly wage is 4.30 EUR, while the minimum monthly wage is set at 725 EUR.
In Estonia, the standard weekly working hours total 48 hours. Overtime should not surpass 8 hours within a 7-day timeframe. The accumulation of overtime can be offset by work on other days, unless employers opt to provide monetary compensation for the extra hours. In such cases, overtime is remunerated at a rate of 1.5 times the regular wages.
In Estonia, providing a 13th-month pay is not obligatory.
Estonia provides an array of advantages to its employees. Here are some of them:
Estonia applies a uniform 20% tax rate to all income-related acquisitions.
The established value-added tax (VAT) rate in the country is 20%. Nonetheless, specific items like books, periodicals, medicines, medical equipment, accommodations, sanitary products, and toiletries can qualify for a reduced rate of 9%.
Termination procedures in Estonia encompass three approaches:
The notice period for probationary employees is determined by the agreement between the employee and employer, while non-probationary employees are typically subjected to notice periods ranging from 15 to 90 days.
In cases of contract termination due to redundancy, the employer is required to provide compensation equivalent to one month's average wage based on the employee's last six months' salary. Furthermore, for employment terms spanning between 5 and 10 years, an extra one month's pay is mandated.
As an EU member, Estonia falls within the European Union (EU). Foreign workers from EU countries are not required to obtain a visa for entry. However, if they plan to work and reside in Estonia for over three months, they are required to apply for a residence permit at the Population Register of Estonia and obtain an Estonian ID card.
For non-EU citizens aiming to work and reside in the country for more than three months, they must undergo the process of obtaining a Schengen D-visa along with a residence permit.
Furthermore, Estonia introduced a Digital Nomad visa on August 1, 2020, to incentivize remote workers to visit and work within the nation. This visa facilitates legal employment in Estonia for foreigners, even when their employers or businesses are registered abroad.
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