Employment contracts Estonia

What should an employment contract in Estonia include?

The following are the general elements of employment contracts per Estonian labor laws:

• Personal information of both parties, including names, addresses, and contact details.
• Description of the job position, including responsibilities, duties, and rights.
• Details about salaries, wages, and benefits entitlements.
• Hours and days of the week when the employee is expected to work.
• Policies regarding termination of employment, including notice periods and applicable severance pay.
• Confidential disclosure clauses to safeguard the employer’s interests. 

It’s of great importance for both parties to read, understand, and agree to the terms of the agreement before signing.

What types of employment contracts exist in Estonia?

There are a few major categories of employment contracts in Estonia:

1. Employee contracts

Employee contracts can be divided into two categories:

• Indefinite employment contracts – Indefinite or permanent employment contracts provide job security and stability as they are used to regulate long-term employment. Indefinite employment contracts should define key terms such as salaries or wages, benefits, working hours, notice periods, and conditions under which the employment can be terminated.
• Fixed-term employment contracts – As opposed to permanent employment agreements, fixed-term employment contracts have predetermined start and end dates. These contracts are typically used for temporary work arrangements and are automatically terminated after the expiration. Besides being temporary, fixed-term contracts also define the key terms and conditions of employment.

2. Temporary agency employment contracts

Temporary agency contracts are established when an employee is hired through a temporary work agency and assigned to work for a third-party employer. Under these contracts, temporary agencies provide local employment status and handle payroll, taxes, and other administrative tasks, while the company gets access to a skilled workforce without establishing permanent employment relationships. 

3. Service agreements

Service agreements are used to regulate temporary or project-based arrangements between independent contractors and companies or clients. Under these agreements, the contractor is obligated to provide services, expertise, or specific types of tasks or projects, while the employer is obligated to pay the fee for the services without submitting taxes or other benefits for the employee.

How to hire employees in Estonia? 

Employers in Estonia must be familiar with employee entitlements regarding minimum wages, benefits, and other applicable labor laws. 

Also, in order to hire workers from the country, employers must fulfill legal requirements such as having an established legal entity, a tax identification number, and local bank accounts for financial purposes.

In a situation like this, it’s advisable to rely on the services of global recruitment companies like Native Teams. Through our Employer of Record services, we will handle your payroll, taxes, benefits, and HR administration while staying in adherence with local employment laws.