How to Hire Remote Employees In 


The Basics

Euro (EUR)
Employer Taxes
Payroll Frequency
Official Language

Employment in 


Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Time savings: Hiring through a subsidiary or EOR can take months of onerous paperwork and legal wrangling. This is only multiplied if you want to hire in multiple countries.
Reduced overhead: You can save tens of thousands of dollars in onboarding costs by hiring through a company like Panther. You also have fewer responsibilities to provide benefits, further reducing overhead.
Greater flexibility: Contractors can be brought on as-needed. If they are not a good fit, you can choose not to renew them without incurring significant additional termination costs.
Reduced legal risk: Contractors generally don't have the host of legal protections that typically cover full-time employees.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: While it's important to understand local contractor law, for most firms, misclassification risk is minimal.
Lack of Control: For a worker to be classified as a contractor, they should be allowed to work independently on their assigned tasks. Hiring full-time employees offers a wider range of management options.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.

Set up a subsidiary in 


A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Estonia can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Estonia, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Estonia.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Estonia is not the same as paying workers in your own country. Employees have to be paid using Estonia’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.


 Specific Information

Working Hours

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.  

Payroll Tax


  • 33.8% - Employer Contributions

Minimum Wage

The monthly minimum wage in Estonia is 584 EUR for full-time work or 3.84 EUR for hourly work.


Pay Cycle


13th Salary

There are no provisions in the law regarding 13th salaries.


Paid Time Off (PTO)

Employees are entitled to 28 days of paid leave per year.

Public Holidays

There are 12 public holidays.

Sick Days

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

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. 

Paternity Leave

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.

Parental Leave

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.

Other Leave

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:

  • Up to 2 children under the age of 14 – 3 days of leave
  • 3+ children under the age of 14- 6 days of leave

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.

Marriage Leave


Bereavement Leave



Termination Process

The termination procedure differs based on the type of termination:

  • Immediate termination- an employer is able to terminate an employment agreement immediately in the event of gross misconduct.
  • Employee resignation- An employee can terminate an employment agreement with written notice for an indefinite or definite contract. In this case, the employee would need to give between14- days- one months’ notice.
  • Termination with notice- If the employer initiates the termination of an employment agreement, the notice period is determined based on the duration of the employment

Notice Period

Notice period varies based on the duration of the employment:

  • Less than 1 year – 15 days’ notice
  • 1-5 years of employment- 30 days’ notice
  • 5-10 years- 60 days’ notice
  • 10+ years- 90 days’ notice

It is also possible to give pay in lieu of notice.

Severance Pay

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.

Probation Period

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.