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Employment contracts in Estonia: an employer's guide to terms, probation and minimum wage
The mandatory terms of an Estonian employment contract, the probation period, fixed-term limits, how it differs from an authorisation agreement or a contract for services, the minimum wage, and the employment register deadline — with citations to Riigi Teataja.
The simplest way to avoid a dispute over what you agreed is to write every mandatory term straight into the employment contract itself, before work starts. The contract is valid even as an oral agreement or simply by the employee starting work (Employment Contracts Act § 4(2)), but without a written document you have no proof of exactly what was agreed.
TL;DR
- Write all 14 mandatory terms into the employment contract’s own written document before work starts — or you have seven calendar days from when the employee starts to hand the rest over in writing.
- Probation defaults to four months from the day work starts, and by agreement you can only shorten it, never extend it.
- Register every new employee in the employment register no later than the moment they start work, not within a few days after.
- The minimum wage for full-time work is EUR 946 a month, or EUR 5.67 an hour.
- Keep the contract documents, and proof you handed them over, for the employment relationship plus ten years after it ends.
What must be in the written employment contract?
The written employment contract must cover at least 14 groups of terms (Employment Contracts Act § 5(1)).
| # | Term |
|---|---|
| 1 | Employer’s and employee’s name, personal ID or registry code, and residence or business address |
| 2 | The date the contract was signed and the date work starts |
| 3 | A description of the duties |
| 4 | Job title, where it carries legal significance |
| 5 | Agreed pay, how it is calculated and paid, the payday, and the taxes the employer withholds and pays |
| 6 | Training and other benefits the employer provides, where agreed |
| 7 | Working hours |
| 8 | Place of work |
| 9 | Duration of annual leave, and a reference to any other paid time off the employer provides |
| 10 | A reference to the form of notice, the duty to give reasons, and notice periods |
| 11 | A reference to the employer’s internal work rules |
| 12 | A reference to any applicable collective bargaining agreement |
| 13 | A reference to overtime and how it is compensated |
| 14 | Length of the probation period |
If you agree the contract is fixed-term, two more mandatory items apply: the contract’s duration and the reason it is fixed-term (Employment Contracts Act § 6(2)).
The written-form requirement does not apply if the contract runs for no more than two weeks (Employment Contracts Act § 4(5)). It also does not apply where the employee’s agreed and actual working hours average under three hours a week over four consecutive weeks (Employment Contracts Act § 5(6)).
The newest change took effect on 13 July 2026 and deserves its own attention. If you have not given the employee all the terms before they start work, you now have exactly seven calendar days from the day they start to hand the rest over in writing (Employment Contracts Act § 5(3)). That replaced the previous rule, under which you could hand over the terms within two weeks of the employee asking. The old rule no longer applies, and missing the deadline is a misdemeanour. The same change also brought a pay-transparency package: before a job interview you must disclose the position’s pay or pay range in writing and may not ask a candidate what they currently earn (Employment Contracts Act § 11(2¹)–(2²)). During employment, you may not stop an employee disclosing their own pay (Employment Contracts Act § 28(2).14). Since the package has only been in force a few months, check your contract template and hiring process against it.
Keep the documents, and proof they were handed over, for the whole employment relationship and for ten years after it ends (Employment Contracts Act § 5(5)).
Next: check that your contract template carries all 14 items plus the new pay-transparency lines, and add a seven-day reminder to your process for when signing lags behind the start date.
How long can the probation period be?
The probation period defaults to four months, counted from the day work starts (Employment Contracts Act § 10¹(1)).
| Situation | Probation period |
|---|---|
| Standard indefinite contract | Up to 4 months (default) |
| By agreement | May be shortened or dropped entirely — never extended |
| Fixed-term contract of up to 8 months | Up to half the contract’s duration |
| Incapacity for work or time off during probation | That time is excluded from the probation count |
| Successive renewal of a fixed-term contract for similar work | No new probation period applies |
By agreement you can only shorten the probation period or drop it entirely, never extend it (Employment Contracts Act § 10¹(2)). For a fixed-term contract of up to eight months, probation cannot exceed half the contract’s duration (Employment Contracts Act § 10¹(3)).
You can’t lengthen probation by agreement — only the clock pausing does that. If your employee could not work because of incapacity for work, related adapted work, or time off, that period doesn’t count toward probation (Employment Contracts Act § 10¹(4), amended 15 May 2024). During probation either side can end the contract with at least 15 calendar days’ notice, much shorter than the standard notice period (Employment Contracts Act § 96).
Next: write the probation period into your contract template as a share of that specific contract’s length, not a flat four months. On a short fixed-term contract, four months is simply too long.
When can you use a fixed-term contract?
You can use a fixed-term contract only for a good reason (a temporary rise in workload or seasonal work, for example) and for no more than five years (Employment Contracts Act § 9(1)).
You can also use a fixed-term contract to cover another employee’s absence (Employment Contracts Act § 9(2)). The default assumption is that an employment contract is indefinite. A fixed term is the exception, and it needs a reason.
The limit on successive contracts is strict. If more than two successive fixed-term contracts have been made for similar work, or if one contract has been renewed more than once within five years, the contract counts as indefinite from the start (Employment Contracts Act § 10(1)). Contracts count as successive if no more than two months pass between one ending and the next starting. A longer gap breaks the chain. For agency work, this limit is counted separately for each user undertaking (Employment Contracts Act § 10(2)).
Next: count the chain of fixed-term contracts you have given the same person for similar work. Three or more, and the contract is probably already indefinite regardless of what the paper says.
Employment contract, authorisation agreement, or contract for services: how do you tell them apart?
Subordination decides it: if a person does the work under your direction and control, as a fixed process, the law presumes an employment contract regardless of what the document is called (Employment Contracts Act § 1(2)).
| Criterion | Employment contract | Authorisation agreement | Contract for services |
|---|---|---|---|
| Legal basis | Employment Contracts Act | (Law of Obligations Act §§ 619–634) | (Law of Obligations Act §§ 635–657) |
| Nature of the work | A process under the employer’s direction and control | Providing a service as agreed | Producing, altering, or achieving a result |
| Subordination | Yes | No | No |
| Duty to perform personally | Yes (Employment Contracts Act § 15(3)) | Presumed (Law of Obligations Act § 622) | Not presumed (Law of Obligations Act § 635(3)) |
| Minimum wage, overtime, annual leave | Yes | No | No |
| Health insurance | Yes | Only if the declared social tax reaches the monthly minimum | Same conditional rule |
| Dispute forum | Labour dispute committee or court | Court | Court |
An authorisation agreement (käsundusleping) (Law of Obligations Act § 619) and a contract for services (töövõtuleping) (Law of Obligations Act § 635) suit independent, outcome-based work. But where the Employment Contracts Act does not cover everything an employment contract needs, the rules for an authorisation agreement fill the gap by default (Employment Contracts Act § 1(3)). That makes the authorisation agreement a gap-filler for employment contracts, not a separate track. You fall outside the Employment Contracts Act only where the person is genuinely independent in choosing how, when and where the work gets done (Employment Contracts Act § 1(4)).
The Labour Inspectorate’s own comparison puts this distinction in plain terms (ti.ee, “Types of contracts and a sample employment contract”). Someone working under an authorisation agreement or a contract for services only gets health insurance once the social tax declared for them reaches the monthly minimum, EUR 292.38 a month in 2026 (886 × 33%). Cover starts the day after the deadline for the monthly income and social tax return (TSD).
Getting this wrong is expensive. If a relationship structured as an authorisation agreement or a contract for services shows subordination and personal process work, the Labour Inspectorate can treat it as an employment relationship from the start. You then owe back pay at the minimum wage, annual leave pay, social tax, and a fine for missing contract terms on top (Employment Contracts Act § 117).
Next: look honestly at every authorisation agreement or contract for services you use. Does the person work under your direction? If so, put an employment contract in place before an inspection does it for you.
How much is the minimum wage?
The minimum wage is not set by the Act itself but by government decree (Employment Contracts Act § 29(5)), based on an agreement between the central employer and employee federations (Employment Contracts Act § 29(5¹)).
| Decree | Rate | In force | Source |
|---|---|---|---|
| Government decree of 23 March 2026, No. 36 | EUR 5.67/hour, EUR 946/month (full-time) | From 1 April 2026, current | (RT I, 24.03.2026, 5) |
| Government decree of 19 December 2024, No. 87 | EUR 5.31/hour, EUR 886/month | 1 Jan 2025 – 31 Mar 2026, expired | (RT I, 21.12.2024, 26) |
Paying less than this is prohibited (Employment Contracts Act § 29(6)).
Do not confuse the minimum wage with the social tax monthly rate. You’ll see the social tax monthly rate lag behind: the state budget act fixes it to the minimum wage in force the previous 1 July. It stayed at EUR 886 in 2026 even as the current minimum wage rose to EUR 946. The two figures are not the same measure.
Next: check whether your payroll system is using the current EUR 946 minimum wage, not the old EUR 886 figure. The 1 April changeover often slips by unnoticed.
When must you pay wages, and what does a payslip have to show?
Wages must be paid at least once a month, unless you have agreed a shorter interval (Employment Contracts Act § 33(1)).
If payday falls on a public holiday or a rest day, wages count as paid on the preceding working day, not the following one (Employment Contracts Act § 33(2)). Wages are paid into the employee’s bank account, unless you have agreed otherwise (Employment Contracts Act § 33(4)).
You don’t have to issue an automatic monthly payslip — only give the employee, on request, the figures for wages calculated, paid and due (Employment Contracts Act § 28(2).12). You may not disclose an employee’s pay data to a third party without consent or a legal basis (Employment Contracts Act § 28(2).13). But since 13 July 2026, you may not stop the employee disclosing their own pay (Employment Contracts Act § 28(2).14). A wage claim expires three years after it falls due (Employment Contracts Act § 29(9)).
Next: add a step to your payroll process that automatically shifts payday to the preceding working day when it lands on a public holiday. Done by hand, that step gets skipped easily.
When must you register an employee in the employment register?
Registration in the employment register (töötamise register) must be done no later than the moment the employee starts work, not within a few days afterwards (Taxation Act § 25²(3)). That is the most common first-day mistake, because many employers wrongly assume they have a few days to catch up.
The employment register feeds the Estonian Tax and Customs Board, the Labour Inspectorate, the Unemployment Insurance Fund, the Health Insurance Fund, the Social Insurance Board and the Police and Border Guard Board all at once (Taxation Act § 25¹). The party required to register is the “person enabling the work”: the employer or an intermediary (Taxation Act § 25²(1)–(2)).
| Action | Deadline | Data required |
|---|---|---|
| Registering the start of work | No later than the moment work starts | Full data, or quick registration |
| Quick registration (phone/SMS) | No later than the moment work starts | Personal ID code, date, employer code |
| Completing full data after quick registration | Within 7 calendar days | Name, job title, type of work, address |
| Suspending or ending the employment relationship | Within 10 days | Date and grounds for suspension/ending |
The full data set covers the employee’s name and personal ID code, the employer’s registry or personal code and name, the date work starts, and the type of employment relationship (Taxation Act § 25⁴(1)). For certain third-country nationals, it also covers the job title and workplace address. For quick registration, the personal ID code, the date and the employer code are enough to start; you add the rest within seven calendar days (Taxation Act § 25⁴(3)).
Next: register every new employee before their first day at work, not sometime in the first week. This one habit avoids the most common first-day fine.
How much does an employee cost beyond gross pay?
Three mandatory taxes and contributions come on top of gross pay, which you either pay or withhold.
| Tax/contribution | Rate | Payer | Source |
|---|---|---|---|
| Social tax | 33% of the taxable amount | Employer | (Social Tax Act § 7(1)) |
| Social tax monthly rate (minimum monthly liability EUR 292.38) | EUR 886/month | Employer | (Social Tax Act § 21); EMTA |
| Unemployment insurance contribution | 1.6% employee, 0.8% employer | Both | EMTA |
| Mandatory funded pension (Pillar II) | Employee 2%, 4% or 6%; the state adds 4% from social tax | Employer withholds the employee’s share; the state’s share comes from social tax | EMTA |
The social tax monthly rate is a separate figure from the minimum wage and stays at EUR 886 even once the current minimum wage has risen to EUR 946. The state budget act fixes the monthly rate to the minimum wage in force on the previous 1 July. Unemployment insurance contribution rates are locked until the end of 2028. The state’s 4% pension contribution does not apply to everyone: only to employees who participate in Pillar II.
Next: calculate the full cost of every new hire as gross pay plus 33% social tax plus 0.8% unemployment insurance contribution, not gross pay alone. Otherwise your budget is systematically too optimistic.
What can a collective bargaining agreement set out?
Employer and employee associations can use a collective bargaining agreement to set pay terms, working conditions, and working- and rest-time terms (Collective Agreements Act § 6). It can also cover terms for changing or ending the contract, redundancy terms, occupational health and safety, and several other matters. A collective bargaining agreement at the level of the central federations can also set a wage floor and a mechanism for raising it over time.
Since 22 November 2021, a collective bargaining agreement’s pay and working- and rest-time terms can be extended to employers and employees in the same sector who are not party to it (Collective Agreements Act § 42). Extension requires a union or federation on the employee side whose members make up at least 15% of the sector’s workforce, or number at least 500. It also requires a federation on the employer side whose members employ at least 40% of the sector’s relevant workforce.
Next: check whether an extended collective bargaining agreement applies in your sector before assuming no agreement touches your business.
How can you change an employment contract?
An employment contract can only be changed by agreement between both parties. The Act has no mechanism for a one-sided change (Employment Contracts Act § 12). That applies to changing pay, working hours and duties alike.
If you change the terms by agreement, update the written document too. The same duty that applies to giving the original terms applies when they change.
Next: document every change of terms in writing at the moment the agreement is made, not from memory afterwards.
What happens if you fail to hand over the terms?
If you fail to give the employee the § 5(1) terms, that is a misdemeanour, and the Labour Inspectorate can impose a fine for it (Employment Contracts Act § 117(1)).
| Offender | Maximum fine |
|---|---|
| Natural person (employer, board member, or authorised representative) | Up to 300 fine units, or up to EUR 2,400 |
| Legal person | Up to EUR 32,000 |
The fine unit has been EUR 8 since 1 January 2025 (Penal Code § 47(1)), double the previous EUR 4. The Labour Inspectorate handles these misdemeanours out of court, and its oversight explicitly covers compliance with § 5, subsections 1–4 (Employment Contracts Act § 115(1)).
Next: if you find a current employee without a proper written statement of terms, fix it immediately. The fine risk disappears once you correct the gap, but the proof risk in a dispute does not.
How does Taito.ai help?
Taito.ai sets up each employee’s written employment contract and keeps it maintained automatically, so the terms that applied, and from what date, are always on record.
Read the overview of Estonian employment law.
Sources
This guide cites the Employment Contracts Act, the Law of Obligations Act, the Taxation Act and the Social Tax Act. Estonian statutes often number sections with a superscript, for example § 10¹ or § 25². These are separate sections, not typos — § 10¹ is not the same section as § 101 — and this article always writes them with the superscript.
The consolidated text of the Employment Contracts Act in force at the time of writing runs from 13 July 2026 to 30 September 2026 (the consolidated Employment Contracts Act text). That version carries the newest change: on 13 July 2026 new pay-transparency duties took effect, and the deadline for handing over contract terms changed. More on both below.
- Employment Contracts Act
- Law of Obligations Act
- Government regulation setting the minimum wage
- Taxation Act
- Social Tax Act
- Collective Agreements Act
- Penal Code
- Estonian Tax and Customs Board
- Labour Inspectorate
Disclaimer
Taito.ai does not provide legal, tax or accounting advice. This article is general information about the law as it stood on the date above, not advice on your situation, and it is not a substitute for it. Rates and thresholds change. Check with a qualified adviser before acting on anything here.
