Great talent is everywhere and if you’re looking to hire remote, global talent in Europe, Estonia may be your next stop thanks to straightforward labor legislation and a tech-savvy workforce that embraces remote, global work.
An Employer Of Record (EOR) can be ideal for companies looking to hire and pay talent around the world without legal and administrative hassle. For example, you may not know that in Estonia it is customary for many companies to reimburse employee gym memberships at 50% - 100%.
This article will walk you through the reasons, processes, and advantages of hiring employees in Estonia through an EOR.
Why Hire Talent in Estonia?
This Baltic nation boasts a highly-skilled, diverse labor market with tech-related education reigning supreme. Estonia has an ever-growing tech scene with skilled and technical talent that has been previously untapped due to its geographic location and lack of proximity to booming start-up ecosystems across the globe. Remote work can change all of that, enabling your company to expand into Estonia and hire previously overlooked software engineers, data, or technology professionals.
How Can I Legally Hire an Employee in Estonia?
To hire new employees in Estonia, your business must have a local legal entity. The process to establish a local entity can be a legal nightmare and is only worth it if you are going to set up long-term operations in the country.
This is where EORs come in handy. An EOR acts as a broker for hiring talent outside of the country you legally operate within. It will already have an entity set up and the legal framework in place to do the hiring for you. This gives you more time to focus on managing relationships with your employees and growing your business. Going through an EOR is a simple way to hire talent in Estonia without all the legal hassle.
What Does an EOR Do?
Simply put, EORs take care of the legal procedures while you manage your employees. The legal frameworks for hiring in Estonia can be quite different from those in the US and Canada. EORs handle worker visas and work permits, employment contracts, payroll, local compliance, termination, and a range of other HR services.
To learn more, check out our article on everything there is to know about EORs.
Contracts and Documentation
An EOR will handle the tedious administration involved in preparing and collecting contracts and documentation. This includes employment offers, signed contracts, banking information, and more.
Employee Insurance and Benefits
When the world is your competition, it pays to incentivize new and existing hires with attractive benefits like medical, dental, vision, life insurance, and retirement savings plans. A comprehensive EOR will have those kinds of benefits built into its service offering. Along with helping to retain your team, an attractive benefits package can also aid in attracting top talent. An EOR, like Borderless, will ensure you provide a benefits package that complies with local employment laws and regulations and meets the expectations of Estonian employees.
Vacation and Public Holidays
Vacation allotment in Estonia is the envy of working individuals in North America as it is typically much more generous than what’s offered in Canada and the United States. In Estonia, employees are entitled to 28 days of annual paid vacation excluding national and public holidays.
Estonia observes 12 public holidays of which employees may be granted the day off or double remuneration. As of 2023, these public holidays include:
- January 1: New Year’s Day
- February 24: Independence Day
- April 7: Good Friday
- April 9: Easter Sunday
- May 1: Spring Day
- May 28: Pentecost
- June 23: Victory Day
- June 24: Midsummer Day
- August 20: Day of Restoration of Independence
- December 24: Christmas Eve
- December 25: Christmas Day
- December 26: St. Stephen’s Day
Taxes
Employers in Estonia pay 33.8% of the employee’s salary in taxes which includes 20% in a mandatory pension and around 13% in health insurance.
Understanding the tax laws in Estonia can be a long and complicated process but it is necessary to ensure you are paying employees compliantly and abiding by local Estonian laws. Thankfully, an EOR can handle the logistics and ensure that payroll is processed properly and per the regulations in whichever country you are operating.
What Are Your Responsibilities?
While the EOR handles everything related to legal and HR processes, everything else will fall to you as the employer. You take care of your remote, global staff in the same way you would your local hires. That means search and recruitment, company onboarding, training, management, day-to-day communications, progress tracking, and so on.
While the relationship with the employee won’t be all that different through an EOR, you need to be clear with your staff on the legalities of their contracts. Of course, retention is also up to you. You will need to consider how you help your staff grow and succeed in their new roles at your organization.
What Are the Advantages of Going Through an EOR in Estonia?
Using an EOR to hire talent in Estonia will save you time, reduce costs, and mitigate risks.
Setting up an entity for hiring in Estonia is time-consuming and frankly, can be a huge headache. Since the EOR is already set up to hire employees in the country, it will be faster and easier to start hiring right away. The process won’t be that much different from hiring locally.
The set-up and HR costs can also be quite high, so going through an EOR can save you money. You will also be paying lower salaries than you would be in the US and Canada, so you’re bound to see some positive impact on your bottom line.
Most importantly though, you’ll be mitigating the risks associated with non-compliance. Because EORs have extensive experience in navigating complex local HR policies, you won’t have to worry about any issues arising from improper hiring practices.
How Do I Choose the Right EOR for Me?
Before selecting a vendor, consider these 5 things:
- Local Experience: Does the EOR have experience hiring in Estonia? As discussed earlier, one of the biggest advantages of hiring an EOR is the assurance of compliance. Often, this requires a lot of experience, so check the EOR’s track record in the country.
- Service Scale: Do you need someone who offers a full suite of services? If you want happy employees that you can retain in the long run, then you may need to offer them benefits like insurance and other welfare. Some EORs have systems in place for this but others may not. Also, certain EORs will offer consulting services to optimize your global hiring practices.
- Data and Systems Security: Protecting intellectual property in a remote working environment is critical. Ensure your vendor of choice has a specific agreement outlining how they plan to keep your sensitive information safe and secure.
- Collaboration: Ensure your vendor’s approach to communication and collaboration with its clients is aligned with your organization’s approach. Love having a point of contact person? Perhaps all you need is access to a Slack channel so you can quickly reach your vendor. Whatever your communication style, ensure your vendor can meet your needs.
Borderless: The Employer of Record Your Company Needs
Need an EOR? Look no further than Borderless. We can help you establish a business entity in Estonia – giving you access to a massive talent pool without all the headaches of traditional global expansion.
Book a demo today and see how we can help you quickly and easily hire, onboard, pay, and retain the talent your organization needs.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
