When you hire abroad, you have to make a decision: Should you hire talent as employees, or as contractors? Both have their advantages and disadvantages. Below, we’ll give you the information you need to make a decision.
If you want to successfully hire in
Estonia
, you have two options:
Laws about hiring contractors are significantly more simple in
Estonia
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Estonia
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Estonia
.
Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Estonia
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and generally puts you at a bigger risk for legal fees. When you hire contractors overseas, your biggest risk is misclassification—but even then, misclassification penalties are often minimal and just require you to pay off any compensation that the person would have been owed as an employee.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Estonia
, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Estonia than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Estonia
Employees are entitled to 28 days of paid leave per year.
There are 12 public holidays.
Employees are entitled to up to 182 paid sick leave days per year, paid at a rate of 70% of the employee’s previous years’ average salary.
Sick leave is paid starting from the 4th day of illness and is paid by the employer. From the 9th day onward, sick pay is paid by health insurance.
Maternity leave is 20 weeks (140 days) in Estonia and a mother may begin taking this 70 days before the expected due date of the child. Health insurance pays the maternity allowance which is paid at a rate of 100%.
Childbirth allowance- When a child is born, an allowance of 320 EUR is granted. If triplets are conceived, the amount is 1,000 EUR per child.
Fathers are entitled to 10 working days and can be taken within 2 months of the expected due date of the child. After the birth, the father is entitled to 2 months’ paternity leave. Pay is based on the average wage of the employee. The father is entitled to 100% of their regular wages, however, is capped at 3 times the minimum wage.
In Estonia, paid parental leave can be taken until the child reaches the age of 3. The mother or father is able to take 435 days of consecutive or inconsecutive leave. However, only one parent can take this leave at a time.
Adopter’s leave: a person who adopts a child under the age of 10 is entitled to paid leave based on the employee’s average salary.
Child care leave: a mother or father is able to take paid leave (pay is equal to the minimum wage) and varies based on the age of the child:
For parents with a disabled child- the mother or father is able to take off an additional day of work each month until the child reaches the age of 18. This leave is also compensated based on the minimum wage.
None.
None.
The termination procedure differs based on the type of termination:
Notice period varies based on the duration of the employment:
It is also possible to give pay in lieu of notice.
In the case of termination due to redundancy, the employee is entitled to the average of the previous 6 months’ salary.
For fixed-term contracts that were terminated due to redundancy, the employee is entitled to the wages that they would have received from the date of termination to the expiry date of the contract.
Employees who have been employed for 5-10 years are entitled to an additional month’s salary. For employees who have been employed for 10+ years, they are entitled to an additional 2 months’ salary.
The probation period cannot be more than 4 months.
For fixed-term contracts, the probation period cannot be more than half of the term of the contract.
If an employer decides to terminate an employment contract during the probation period, the employer must give the employee 15 days’ written notice.
A full workweek in Estonia is 40 hours for employees over the age of 18.
In general, overtime must be agreed upon by the employee and employer. Overtime hours cannot exceed a total of 8 hours within a 7-day period.
However, the employee and employer may agree that overtime over a 4-month time frame can average 12 hours for every 7 calendar days. This agreement may be canceled at any time by the employee so long as 2 weeks’ notice is given.
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