# Hiring employees in Estonia: contracts, registration and foreign staff

What an Estonian OÜ must do before its first employee starts: the written contract, fixed terms and probation, the employment register, the minimum wage and the employer cost, family members, board members, non-EU staff and interns.

Law as of 30 Sept 2026. General information, not advice for your situation.

An Estonian company becomes an employer through two steps: the first entry in the employment register and the first monthly TSD return. There is no separate "employer registration". This guide covers what a small OÜ must do around a hire: the contract, the register, the pay and the taxes, and the special cases of relatives, board members, foreign staff and interns.

**In short**

- Sign a written employment contract with the items of the Employment Contracts Act, and give the pay or pay range to applicants before the interview.
- Register the start of work in the employment register no later than the moment the person starts.
- Pay at least the minimum wage: 946 euros a month for full time from 01.04.2026. The employer adds 33 percent social tax and 0.8 percent unemployment insurance.
- Social tax is due on at least 886 euros a month in 2026 for each employee, even part time, unless an exception applies.
- A probation period of four months applies by law unless the contract shortens or excludes it.
- A non-EU citizen needs a legal basis to work before the first day.

## Before the first employee starts

Choose the right contract, sign it in writing, and register the start of work before the person starts. Already when you recruit, give the pay of the position or its range in writing before the interview, and do not ask what the applicant earns or earned ([Employment Contracts Act § 11](https://www.riigiteataja.ee/en/akt/510072026004)). That rule applies since 13.07.2026.

A practical checklist for the first hire:

1. **Qualify the relationship.** Work under the direction and control of the company for pay is an employment contract. A board member's mandate is not, and a truly independent contractor is not ([Employment Contracts Act § 1](https://www.riigiteataja.ee/en/akt/510072026004)).
2. **Sign the contract** with at least the items of § 5(1) of the Act (see the next section). If you do not give the terms before the start, give them within 7 calendar days ([Employment Contracts Act § 5(3)](https://www.riigiteataja.ee/en/akt/510072026004)).
3. **Register the start** in the employment register in e-MTA no later than the moment the employee starts ([Taxation Act § 25²(3)](https://www.riigiteataja.ee/en/akt/511082026003)).
4. **Set up occupational health and safety.** The Labour Inspectorate expects a working environment specialist, notified within 10 days of the appointment, a written risk assessment and action plan, an instruction before the employee starts, first aid arrangements and, where the risk assessment requires it, a medical examination within four months of the start ([Labour Inspectorate: where to begin](https://www.tooelu.ee/en/78/where-begin)).
5. **Collect payroll data.** The employee's written application if the company is to apply the basic exemption ([Income Tax Act § 42](https://www.riigiteataja.ee/en/akt/508052026001)), the bank account, and the funded pension rate of 2, 4 or 6 percent ([Funded Pensions Act § 9](https://www.riigiteataja.ee/en/akt/510062025006)).
6. **Plan payroll.** Pay at least once a month ([Employment Contracts Act § 33(1)](https://www.riigiteataja.ee/en/akt/510072026004)). Declare the withheld taxes and the social tax on the TSD and pay them by the 10th of the following month ([Income Tax Act § 40](https://www.riigiteataja.ee/en/akt/508052026001), [Social Tax Act § 9](https://www.riigiteataja.ee/en/akt/525052026001)).
7. **Non-EU citizens** need a legal basis to work before the first day (see [non-EU citizens](https://oscaraccountant.com/en/guides/hiring-employees#non-eu-citizens)).

Keep the contract and the information you gave for the life of the contract and ten years after it ends ([Employment Contracts Act § 5(5)](https://www.riigiteataja.ee/en/akt/510072026004)).

Common mistakes: a job advertisement with no pay or pay range; a "trial" of a few days before the contract and the register entry; registering the start after the fact.

## The employment contract

Conclude the contract in writing, with a handwritten or a qualified digital signature. An oral contract is still valid, but the risk falls on the employer ([Employment Contracts Act § 4](https://www.riigiteataja.ee/en/akt/510072026004)):

- A fixed term, a non-compete, confidentiality, remote work or temporary agency work that is not given in writing is presumed not agreed ([§ 6(9)](https://www.riigiteataja.ee/en/akt/510072026004)).
- A pay rate that cannot be proven is replaced by the usual pay for similar work ([§ 29(2)](https://www.riigiteataja.ee/en/akt/510072026004)).
- Failing to give the employee the data of § 5(1) is a misdemeanour, with a fine of up to 32,000 euros for a company ([§ 117](https://www.riigiteataja.ee/en/akt/510072026004)).

The written document contains at least ([§ 5(1)](https://www.riigiteataja.ee/en/akt/510072026004)): the names, codes and addresses of both parties; the date of signing and the start date; the duties; the job title where it has a legal effect; the pay, how it is calculated, the payday and the taxes paid and withheld; agreed training and benefits; working time; the place of work; the annual leave (at least 28 calendar days) and a reference to other paid leave; a reference to the termination rules; a reference to the work rules and to any collective agreement; a reference to the overtime rules; and the length of the probation period.

Extra items are needed in special cases, for example the term and reason of a fixed-term contract, remote work, or work abroad for more than a month ([§ 6](https://www.riigiteataja.ee/en/akt/510072026004)). Give the terms before the start or within 7 calendar days, and give any change in writing no later than the day it takes effect ([§ 5(3)-(4)](https://www.riigiteataja.ee/en/akt/510072026004)). A term that is worse for the employee than the law is void unless the law allows it ([§ 2](https://www.riigiteataja.ee/en/akt/510072026004)), so a contract cannot waive the minimum wage or shorten annual leave.

If the contract states no hours, full time of 40 hours a week is presumed ([§ 43(1)](https://www.riigiteataja.ee/en/akt/510072026004)). State part-time hours expressly.

## Fixed-term contracts

An employment contract is presumed open-ended. A fixed term of up to five years is allowed only when the temporary nature of the work justifies it, for example a seasonal peak, or to replace an absent employee for the time of the absence ([Employment Contracts Act § 9](https://www.riigiteataja.ee/en/akt/510072026004)). "We want to test the person" is not a valid reason: the probation period exists for that.

The contract becomes open-ended in three cases:

- The fixed term was not lawful: the contract is open-ended from the start ([§ 80(2)](https://www.riigiteataja.ee/en/akt/510072026004)).
- More than two consecutive fixed-term contracts, or more than one extension, for similar work within five years. Contracts are consecutive when the gap between them is two months or less ([§ 10(1)](https://www.riigiteataja.ee/en/akt/510072026004)).
- The employee keeps working after the term ends and the employer does not object within five working days. The contract is then open-ended for the future ([§ 80(3)](https://www.riigiteataja.ee/en/akt/510072026004)).

A fixed-term contract cannot be ended early by ordinary notice. If the employer ends it early for economic reasons, it pays the wages the employee would have earned until the end of the term ([§ 100(3)](https://www.riigiteataja.ee/en/akt/510072026004)). That makes a long fixed term expensive to exit.

## Probation period

A probation period of four months applies by law from the first working day. The contract may shorten or exclude it, but not make it longer. For a fixed-term contract of up to eight months, probation is at most half of the term ([Employment Contracts Act § 10¹](https://www.riigiteataja.ee/en/akt/510072026004)). Days when the employee could not work, such as sick leave and holiday, extend the period. An extension or a consecutive fixed-term contract for similar work has no new probation.

During probation either party can end the contract with at least 15 calendar days' notice ([§ 86(1)](https://www.riigiteataja.ee/en/akt/510072026004), [§ 96](https://www.riigiteataja.ee/en/akt/510072026004)):

- The notice must be in a form that can be reproduced in writing. E-mail is enough; an oral notice is void ([§ 95](https://www.riigiteataja.ee/en/akt/510072026004)).
- The employer gives its reason in the same form ([§ 95(2)](https://www.riigiteataja.ee/en/akt/510072026004)), and the reason may not conflict with the purpose of probation ([§ 86(4)](https://www.riigiteataja.ee/en/akt/510072026004)). A missing reason does not void the notice, but the employee can claim damages ([§ 95(3)](https://www.riigiteataja.ee/en/akt/510072026004)). Pregnancy, a sick leave as such, or a business downturn are not valid reasons.
- Shorter notice is still effective, but the other party may claim the average daily pay for each working day of notice that is missing ([§ 100(5)](https://www.riigiteataja.ee/en/akt/510072026004)).

Register the end of work in the employment register within ten days ([Taxation Act § 25²(4)](https://www.riigiteataja.ee/en/akt/511082026003)).

## Employment register

Register the start of work no later than the moment the person starts working. Register the end of work, and a suspension such as parental leave, within ten days ([Taxation Act § 25²](https://www.riigiteataja.ee/en/akt/511082026003)). Employees, board members and people working under a service contract (unless they are sole proprietors) are all registered. A late or missing entry can bring coercive payments of up to 3,300 euros in total ([§ 25⁸](https://www.riigiteataja.ee/en/akt/511082026003)).

Read the full answer: [the employment register (TÖR)](https://oscaraccountant.com/en/guides/hiring-employees/employment-register).

## Minimum wage and employer cost

From 01.04.2026 the minimum wage is 946 euros a month for full time and 5.67 euros an hour ([Government regulation no 36 of 23.03.2026](https://www.riigiteataja.ee/akt/124032026005)). Pay below it is not allowed ([Employment Contracts Act § 29(6)](https://www.riigiteataja.ee/en/akt/510072026004)). On top of the gross salary, the employer pays 33 percent social tax ([Social Tax Act § 7](https://www.riigiteataja.ee/en/akt/525052026001)) and 0.8 percent unemployment insurance. A full-time minimum wage costs the employer 1,265.75 euros a month.

Social tax is due on at least 886 euros a month in 2026 for each employee, even part time, unless an exception applies ([Social Tax Act § 2](https://www.riigiteataja.ee/en/akt/525052026001)).

Read the full answer with a worked example: [the minimum wage and the employer cost](https://oscaraccountant.com/en/guides/hiring-employees/minimum-wage). To compute any salary, use the [salary calculator](https://oscaraccountant.com/en/tools/salary-calculator).

## Family members

An OÜ may employ a spouse, a parent or a child. The relationship must be a real employment: actual work under the company's direction, a written contract, registration before the start, at least the minimum wage and the full labour taxes ([Employment Contracts Act § 1](https://www.riigiteataja.ee/en/akt/510072026004)).

A minor child comes with extra limits. Every child under 18 needs the consent of the legal representative and may not do work that harms health, development or schooling ([§ 7](https://www.riigiteataja.ee/en/akt/510072026004), [§ 8](https://www.riigiteataja.ee/en/akt/510072026004)). A child under 15, or one still subject to compulsory schooling, may in addition do only light work and has a shortened working time ([§ 43(4)](https://www.riigiteataja.ee/en/akt/510072026004)). For a child of 7 to 12, make the register entry at least five working days before the start, unless the Labour Inspectorate consented earlier ([§ 8(3)](https://www.riigiteataja.ee/en/akt/510072026004)).

A contract signed only to obtain health insurance, with no real work, is a sham. A sham transaction is void ([General Part of the Civil Code Act § 89](https://www.riigiteataja.ee/en/akt/523012025003)), and for tax it is disregarded and the hidden transaction is taxed by its real content ([Taxation Act § 83](https://www.riigiteataja.ee/en/akt/511082026003)). If sickness benefit was paid without basis because the employer gave wrong data, the Health Insurance Fund can claim it back from the employer ([Health Insurance Act § 62(4)](https://www.riigiteataja.ee/en/akt/522042026001)). Keep evidence that the work is real: duties, timesheets, outputs.

An employee's health insurance starts 14 days after the registered start date and ends two months after the registered end date ([Health Insurance Act § 6](https://www.riigiteataja.ee/en/akt/522042026001)).

## Board members and shareholders

A shareholder can be an ordinary employee. A board member cannot have an employment contract for the board duties, because the contract of a member of a management body is outside the Employment Contracts Act ([§ 1(5)](https://www.riigiteataja.ee/en/akt/510072026004)). A board member may have a separate employment contract for clearly different work, for example as a developer, with each role registered separately in the employment register ([Taxation Act § 25¹(4)](https://www.riigiteataja.ee/en/akt/511082026003)).

The differences between a salary and a board fee:

|                                                     | Salary under an employment contract                                                       | Board member fee                                                                                                                            |
| --------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- |
| Income tax 22 percent, social tax 33 percent        | Yes                                                                                       | Yes                                                                                                                                         |
| Unemployment insurance (1.6 and 0.8 percent)        | Yes                                                                                       | No ([Unemployment Insurance Act § 3(2)](https://www.riigiteataja.ee/en/akt/531052026001))                                                   |
| Minimum wage                                        | Yes ([Employment Contracts Act § 29(6)](https://www.riigiteataja.ee/en/akt/510072026004)) | No                                                                                                                                          |
| Minimum social tax base (886 euros a month in 2026) | Yes, with exceptions                                                                      | No. Reaching it is only the condition for health insurance ([Health Insurance Act § 5(2)](https://www.riigiteataja.ee/en/akt/522042026001)) |

When a sector licence requires the company to have an employee, a sole board member usually does not count, for the same reason ([Employment Contracts Act § 1(5)](https://www.riigiteataja.ee/en/akt/510072026004)). The employee then needs a real employment contract, at least the minimum wage for the agreed hours ([§ 29(6)](https://www.riigiteataja.ee/en/akt/510072026004)), and the minimum social tax base even when part time, unless an exception applies ([Social Tax Act § 2](https://www.riigiteataja.ee/en/akt/525052026001)).

See also [founder remuneration](https://oscaraccountant.com/en/guides/founder-remuneration).

## Non-EU citizens

EU, EEA and Swiss citizens need no permit. A non-EU citizen needs a legal basis to work before the first day ([Aliens Act § 104](https://www.riigiteataja.ee/en/akt/501092026001)). e-Residency gives no right to live or work in Estonia.

- **Already in Estonia on a residence permit.** As a rule the person may work, unless the permit restricts it ([§ 259](https://www.riigiteataja.ee/en/akt/501092026001)). A residence permit for employment fixes the employer and the job. A new employer must have the change of employer registered by the Police and Border Guard Board before the person starts ([§ 184¹](https://www.riigiteataja.ee/en/akt/501092026001), [§ 185](https://www.riigiteataja.ee/en/akt/501092026001)).
- **Short-term employment.** The employer registers it with the Police and Border Guard Board before work starts, for up to 365 days within 455 days ([§ 106](https://www.riigiteataja.ee/en/akt/501092026001)). As a rule the person may start only from the day of the decision to register ([§ 107¹](https://www.riigiteataja.ee/en/akt/501092026001); [Police and Border Guard Board guidance](https://www.politsei.ee/en/instructions/working-in-estonia/registration-of-short-term-employment)).
- **Residence permit for employment.** The employer must be in the Business Register with real activity in Estonia for at least six months, and the job as a rule needs a permit of the Unemployment Insurance Fund ([§ 176](https://www.riigiteataja.ee/en/akt/501092026001), [§ 177](https://www.riigiteataja.ee/en/akt/501092026001)). Most such permits count toward the annual immigration quota ([§ 113-115](https://www.riigiteataja.ee/en/akt/501092026001)).

**Pay floor.** The general floor is the latest annual average gross monthly wage published by Statistics Estonia (2,092 euros for 2025, [Statistics Estonia](https://www.stat.ee/en/find-statistics/statistics-theme/work-life/wages-and-salaries-and-labour-costs/average-monthly-gross-wages-and-salaries)), and 1.5 times that for a top specialist ([§ 107](https://www.riigiteataja.ee/en/akt/501092026001), [§ 178](https://www.riigiteataja.ee/en/akt/501092026001)). There are exceptions, for example for a start-up in the defined sense of the Act and for graduates of Estonian higher education ([§ 181](https://www.riigiteataja.ee/en/akt/501092026001)). The figure is updated each year: confirm it with the [Police and Border Guard Board](https://www.politsei.ee/en/instructions/residence-permit-for-employment/for-employers).

The employer must check the legal basis before the start, keep copies of the proof for ten years after the work ends, and notify the Police and Border Guard Board when the work starts, does not start, ends early or its conditions in the permit change, except for data already entered in the employment register ([§ 285](https://www.riigiteataja.ee/en/akt/501092026001), [§ 286](https://www.riigiteataja.ee/en/akt/501092026001)). A breach can cost a company a fine of up to 100,000 euros ([§ 300-302](https://www.riigiteataja.ee/en/akt/501092026001)).

## Interns and trainees

Only an official internship can be unpaid: a placement sent by a school as part of the curriculum, or work practice arranged by the Unemployment Insurance Fund. Estonian law has no private traineeship contract. When a person does work that is normally done for pay, an employment contract is presumed, even without paper ([Employment Contracts Act § 1(2)](https://www.riigiteataja.ee/en/akt/510072026004), [§ 4(2)](https://www.riigiteataja.ee/en/akt/510072026004)). The minimum wage, the register entry and the TSD then follow.

The minimum social tax base does not apply to most interns: a pupil in basic or general secondary education, a student in formal vocational education, or a higher-education student who is an Estonian permanent resident (not a doctoral student who receives the doctoral allowance) pays social tax only on the pay actually paid ([Social Tax Act § 2(4)](https://www.riigiteataja.ee/en/akt/525052026001), [Health Insurance Act § 5(4)](https://www.riigiteataja.ee/en/akt/522042026001)).

A non-EU student who already studies in Estonia may work if it does not hinder the studies ([Aliens Act § 175](https://www.riigiteataja.ee/en/akt/501092026001)). For a student or recent graduate coming from abroad, the employer can register a traineeship as short-term employment, with no average-wage floor ([§ 106(15)](https://www.riigiteataja.ee/en/akt/501092026001), [§ 107](https://www.riigiteataja.ee/en/akt/501092026001)).

General information, not advice for your situation. The law as in force on 30.09.2026.

## More on this topic

- [The employment register (TÖR): who to register, by when, and what if you are late](https://oscaraccountant.com/en/guides/hiring-employees/employment-register): An Estonian company registers each employee, board member and service provider in the employment register (töötamise register, TÖR) no later than the start of work, and the end within ten days. Who is registered, what data, how to correct an entry, and the penalties.
- [Minimum wage in Estonia in 2026, and what a salary costs the employer](https://oscaraccountant.com/en/guides/hiring-employees/minimum-wage): The Estonian minimum wage is 946 euros a month and 5.67 euros an hour from 01.04.2026. What the employer pays on top, the minimum social tax, what the employee keeps, and a worked example.

## Let Oscar do the work

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## Sources

- [Employment Contracts Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/510072026004)
- [Taxation Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/511082026003)
- [Social Tax Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/525052026001)
- [Income Tax Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/508052026001)
- [Unemployment Insurance Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/531052026001)
- [Funded Pensions Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/510062025006)
- [Health Insurance Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/522042026001)
- [Aliens Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/501092026001)
- [General Part of the Civil Code Act (English translation, Riigi Teataja)](https://www.riigiteataja.ee/en/akt/523012025003)
- [Government regulation no 36 of 23.03.2026 on the minimum wage (Riigi Teataja)](https://www.riigiteataja.ee/akt/124032026005)
- [Tax and Customs Board: employment register](https://www.emta.ee/en/business-client/registration-business/employment-register)
- [Labour Inspectorate: where to begin with occupational health and safety](https://www.tooelu.ee/en/78/where-begin)
- [Police and Border Guard Board: residence permit for employment, for employers](https://www.politsei.ee/en/instructions/residence-permit-for-employment/for-employers)
- [Police and Border Guard Board: registration of short-term employment](https://www.politsei.ee/en/instructions/working-in-estonia/registration-of-short-term-employment)
- [Statistics Estonia: average monthly gross wages and salaries](https://www.stat.ee/en/find-statistics/statistics-theme/work-life/wages-and-salaries-and-labour-costs/average-monthly-gross-wages-and-salaries)

## Related pages

- [Minimum wage in Estonia in 2026, and what a salary costs the employer](https://oscaraccountant.com/en/guides/hiring-employees/minimum-wage): The Estonian minimum wage is 946 euros a month and 5.67 euros an hour from 01.04.2026. What the employer pays on top, the minimum social tax, what the employee keeps, and a worked example.
- [The employment register (TÖR): who to register, by when, and what if you are late](https://oscaraccountant.com/en/guides/hiring-employees/employment-register): An Estonian company registers each employee, board member and service provider in the employment register (töötamise register, TÖR) no later than the start of work, and the end within ten days. Who is registered, what data, how to correct an entry, and the penalties.
- [Holiday, sick pay, working time and ending employment in Estonia](https://oscaraccountant.com/en/guides/termination-leave-working-time): The rules an Estonian employer meets once staff are on the payroll: annual holiday and holiday pay, sick pay, working time and overtime, and the end of a contract by redundancy, for a reason linked to the employee or by agreement, with notice, compensation, the final pay and the employment register.
- [Contractors, freelancers and staff abroad: a guide for Estonian companies](https://oscaraccountant.com/en/guides/contractors-and-cross-border-workers): When an Estonian OÜ can pay a contractor instead of an employee, what it withholds for freelancers abroad, how the A1 certificate works, and the tax of an FIE invoice.
- [Paying yourself as the founder of an Estonian OÜ: board fee, salary and social tax](https://oscaraccountant.com/en/guides/founder-remuneration): How the owner-manager of an Estonian OÜ is paid: the board member fee, a salary, the minimum social tax, health insurance, the basic exemption and the TSD.
- [Estonian salary calculator](https://oscaraccountant.com/en/tools/salary-calculator): Work out the net pay and the employer's total cost of an Estonian salary or board member fee, with income tax, the basic exemption, social tax, unemployment insurance and the funded pension.
- [Social tax (sotsiaalmaks)](https://oscaraccountant.com/en/glossary/social-tax): What sotsiaalmaks is: the 33 percent tax an Estonian employer pays on top of pay, the 2026 minimum base of 886 euros, and how it funds health insurance and pension.
- [TSD (income and social tax return)](https://oscaraccountant.com/en/glossary/tsd): What the TSD is: the monthly Estonian return for income tax, social tax, unemployment insurance and the funded pension, due on the 10th of the next month.

Reviewed on 10 Oct 2026. Law as of 30 Sept 2026. General information, not advice for your situation.

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