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Minimum wage in Estonia
Payroll in Estonia
Statutory benefits in Estonia
Other employee benefits in Estonia
Compliant, seamless payroll and benefits in Estonia and beyond
Payroll and benefits in Estonia
Payroll and benefits are essential considerations when hiring in any country — and Estonia is no exception. Employers need to understand how payroll works, what taxes and social contributions apply, and what kind of benefits they’re required to provide under Estonian law.
In this section, we’ll take you through everything you need to know about payroll and employee benefits in Estonia. We’ll explain the country’s minimum wage rules, outline statutory benefits like paid leave and public healthcare, and look at how payroll taxes are calculated and reported. We will also explore some of the additional perks that employers in Estonia often offer to attract and retain top talent.
Minimum wage in Estonia
Estonia has a minimum wage to guarantee workers at least a certain standard of living. It was first introduced in 1996 and has been periodically updated since then in line with the rising cost of living. Read on to find out what else employers should know about the minimum wage in Estonia.
Minimum wage in Estonia in 2025
As of 1 January 2025, the gross monthly minimum wage in Estonia is EUR 886, and the gross hourly minimum wage is EUR 5.31. This is an increase of EUR 66 or 8% on the monthly minimum wage in 2024. The change was agreed by a collective agreement between the Estonian Trade Union Confederation (EAKL) and the Estonian Employers’ Confederation (ETK) in November 2024.
Who does the minimum wage in Estonia apply to?
Unlike some other countries, Estonia does not have a specific lower minimum wage for young workers. All employees, including minors, are entitled to the national minimum wage of either EUR 886 per month or EUR 5.31 per hour.
Minimum wage in Estonia per day, week, and year
The minimum wage in Estonia is given as a monthly and hourly figure in euros. For an employee working the standard 40 hours per week, which amounts to:
- EUR 41 per day.
- EUR 204 per week.
- EUR 10,632 per year.
Minimum wage in Estonia after tax
The minimum wage in Estonia is presented as a gross figure, before taxes and any other payroll charges have been deducted. That means that actual take-home pay for an employee earning the minimum wage in Estonia would be less than EUR 866 per month.
Planned changes to the minimum wage in Estonia
In 2023, Estonian social partners signed a goodwill agreement setting a target of increasing the minimum wage by 50% by 2027. The minimum wage in Estonia will likely continue to increase each year until this target is achieved.
Payroll in Estonia
When it comes to payroll, each country has its own legal requirements, norms, and expectations — which employers need to be aware of. For example, payroll in Estonia is generally monthly. Payments must be made on the same day each month, no later than the last working day of the month. The tax year in Estonia is the same as the calendar year, and the currency is the euro (EUR).
Payroll taxes in Estonia
Calculating income tax in Estonia is much easier than in other European countries, because it is charged at a flat rate of 22% (increased from 20% in 2025). However, there is also an annual tax exemption of EUR 8,400. As of 2024, this tax-free allowance applies to all employees, regardless of income level. Estonian residents must pay income tax on their worldwide income, while non-residents only pay local tax on income derived from sources in Estonia.
Tax withholding and reporting in Estonia
Employers in Estonia are responsible for withholding income tax at source and remitting it to the tax authorities on a monthly basis. They must file a monthly tax return containing information on both corporate income and withheld payroll tax. This must be filed online by the 10th of the month following the payroll run.
Social security contributions in Estonia
In Estonia, social security contributions are mainly paid by the employer, who must pay:
- 33% social tax.
- 0.8% unemployment insurance.
Social tax goes towards state pensions (20%) and the public health system (13%). Employers must pay a monthly minimum social tax for each employee, even if the employee earns no income in a given month.
Employees, on the other hand, only have to pay 1.6% unemployment insurance and 2% mandatory funded pension (for those born after 1983). Employers in Estonia must withhold the employee’s mandatory contributions and pay them together with their own contributions by the 10th of the month following the payroll run.
13th salary in Estonia
Unlike in some other European countries, the 13th salary is not mandatory in Estonia. However, performance bonuses are common. If a 13th salary (or a bonus) is mentioned in the employment contract, employees have a legal right to claim it.
Other payroll requirements in Estonia
Employers in Estonia must register all employees with the Estonian Employment Register. Employees must be given a detailed payslip after each payroll run, which can be in either paper or digital form. Finally, employers must keep detailed records of payroll and taxes.
Statutory benefits in Estonia
Employees in Estonia are entitled to various statutory benefits under the Employment Contracts Act and other legislation. Some of these, like the mandatory funded pension, are paid for through employee and employer payroll contributions. Others, like annual leave, must be provided by the employer directly. Read on for what you need to know about statutory benefits in Estonia.
State pensions in Estonia
The Estonian pension system is made up of three pillars:
- State pension: Funded by the state.
- Mandatory funded pension: Funded by employer and employee contributions.
- Supplementary pensions: Voluntary for employees.
The second-pillar pension (mandatory funded pension) is voluntary for those born before 1983, and mandatory for those born in 1983 or later.
State-funded healthcare in Estonia
All employees in Estonia are entitled to public healthcare after 14 days of commencing work and up to two months after termination, as long as their details are registered in the Employment Register. This is funded by monthly social tax contributions made by employers.
Annual leave in Estonia
Employees in Estonia are entitled to at least 28 calendar days of annual leave each year under the Employment Contracts Act. Minors and employees with reduced work capacity are entitled to at least 35 days of leave. Employers can also choose to offer additional leave to improve their employer value proposition.
Other leave in Estonia
Maternity, paternity, parental and sick leave are also important employee benefits in Estonia, which are guaranteed under the Employment Contracts Act. Maternity, paternity, and parental leave are paid through the Health Insurance Fund. Again, employers are free to expand these entitlements by providing more generous leave in their individual employment contracts or company policies.
Unemployment insurance in Estonia
Both employers and employees in Estonia are required to contribute to unemployment insurance: employers pay 0.8% of payroll, and employees contribute 1.6%. These contributions mean employees are eligible for unemployment benefits in cases of layoffs or insolvency.
Business travel allowance in Estonia
Employees who need to travel for work in Estonia have the right to a minimum daily allowance of EUR 22.37. If meals are provided, this amount can be reduced by up to 70%. This allowance covers local travel and cannot be replaced by wage deductions.
Other employee benefits in Estonia
In addition to the mandatory benefits guaranteed to Estonian employees by law, employers in Estonia are free to provide additional benefits and perks as part of their offering to employees. This can help employers to more easily attract and retain talent and improve employee engagement. Read on for some of the most common additional employee benefits in Estonia.
Supplementary private pensions in Estonia
As mentioned above, employers can set up supplementary private pensions to provide employees with additional income when they retire. Both employers and employees generally make contributions to supplementary pensions, and employee contributions are usually tax-deductible up to a certain annual limit.
Private healthcare in Estonia
Many companies in Estonia choose to offer their employees private health insurance to supplement the state healthcare entitlement. This may give employees a wider choice of healthcare providers and allow them to access treatment more quickly. Some plans may include things like dental and vision, and employees’ family members may also be covered.
Additional paid time off in Estonia
Many Estonian employers offer extra vacation days beyond the statutory 28 as a perk. For example, some organisations shut down entirely for holidays like Christmas or during the summer (this is more common in the public sector).
Cash bonuses in Estonia
While not legally required, performance bonuses or 13th‑month salaries are popular incentives, particularly in tech and finance companies. They are often agreed upon contractually or through collective agreements.
Flexible working arrangements in Estonia
Flexible working is widely embraced in Estonia, with many employers offering remote work options, flexible hours, and hybrid models. This is especially common for information roles that primarily require a laptop and phone.
Wellness benefits in Estonia
Employee health is increasingly prioritised, with companies commonly offering gym or sports club memberships, wellness stipends, and personalised accident insurance, typically qualifying for up to €400 in tax‑free employee benefits per year.
Compliant, seamless payroll and benefits in Estonia and beyond
Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.
Thankfully, we know what we’re doing. When you work with CXC to engage workers in Estonia, we’ll handle everything from tax withholding to employee bonuses on your behalf.
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