Employer’s background search

It is important to get to know the employer as a first-time employee and find out about their background as well as credibility.

It is possible to check the background of employers from E-Business register, E-Credit info, Information register, Estonian Tax and Customs Board website.

Preliminary information can also be found on social media and various public databases (e.g. www.teatmik.ee).

Entering into contract as an employee

It is custom to enter into contract of employment when starting a job. The most important conditions are agreed upon in this contract (description of responsibilities, salary paid for the work, working time, working place, rest periods, etc).

It is also possible to enter into a contract of services (in Estonian: töövõtuleping) or an authorisation agreement (in Estonian: käsundusleping). With these two types of contracts, social benefits guaranteed by the Employment Contracts Act don’t apply.

You can find comparison of employment contracts from the webpage of Labour Inspectorate.

Types of contracts

• Contract of employment (in Estonian: tööleping) – a contract in which the employee works for the employer being subject to their leadership and control
• Contract of services (in Estonian: töövõtuleping) – a contract for providing services with the aim to regulate achieving a certain outcome by a certain date (e.g. painting a house)
• Authorisation agreement (in Estonian: käsundusleping) – a contract for services with the aim to regulate completing a certain task (e.g. singing at an event or performing using a musical instrument)

Why is it beneficial for the employee to enter into contract?

• The salary agreed upon is paid out at least once a month
• The means for the job and work-related refresher and updating courses at the expense of the employer
• A break during the workday for eating and resting
• A right for compensation for working overtime, nights or on public holidays
• Safe work environment and regular health check-ups
• Salary is paid even if work is not provided under circumstances not dependent on the employee
• Right for holiday and holiday pay or to receive compensation for unused holiday days if and when employment contract is determinated
• Right to decline working on holidays, when being sick, etc. The employee does not have to do this undone work later

When working in Estonia

Calculating income tax, deduction of unemployment insurance tax and compulsory funded pension tax from salary is the responsibility of the employer. The employee doesn’t have to worry about paying taxes. It is, however, important to know how it works and how big your salary after tax deductions is.

What taxes and fees are paid from salary?

• Basic exemption is part of salary that income tax is not deducted from. In 2024 it is up to 654 EUR a month (up to 7848 EUR a year). Salary that exceeds 654 EUR a month is taxable income
• Income tax rate in 2022 is 20%
• Employer pays social tax 33%
• Unemployment insurance tax: 1,6% by the employee and 0.8% by the employer
• Compulsory funded pension tax rate is 2% – this money is transferred to your pension account in your pension fund where it will start to increase your pension. As of 1 January 2024, persons who have joined the II pillar will have the opportunity to increase their 2% funded pension contribution rate to 4% or 6% if they wish. For this purpose, a corresponding application must be submitted to the registrar of the pension register or account administrator (from 1 January 2024 to 30 November 2024) and the new payment rate will apply from 1 January 2025.
  More information: Amendment to the funded pension contribution rate as of 1 January 2025

Official salary vs envelope salary

Why work officially?

• Official career (trackable work experience and duration)
• The supplementary rights (holiday pay/days, solutions for possible arguments, support, etc)
• Physical person income tax return – a chance to get back income tax in case a person hasn’t worked a full calendar year
• No need to worry when some establishment (Tax and Customs Board, Work inspection, etc) asks information about your work relationships

What do you miss out on working unofficially?

• Sickness benefit
• Occupational accident benefit and unemployment insurance
• Chance to receive fair parental benefit (the so-called maternity leave benefit)
• Chance to get a bank loan
• Legal protection from the employer

Referenced from www.rmp.ee

Indicators of professional exploitation

• Excessive working days or hours
• Low or no salary
• No respect of labour laws or contract signed
• No social protection (contract, social insurance, etc.)
• Wage manipulation

Indicators of deceptive recruitment

• Deceived about the nature of the job, location or employer
• Deceived about conditions of work
• Deceived about content or legality of work contract
• Deceived about travel and recruitment conditions
• Deceived about wages/earnings

Please, make a call to human trafficking prevention and victim assistance counseling line +372 660 7320 or send e-mail to inimkaubandus@sotsiaalkindlustusamet.ee if you recognize above mentioned indicators. See additional information here