Estonia
[Updated 6/19/25] The number one employee benefit that people in Estonia care about is health insurance. This is supplementary to the national healthcare service, which can be subject to long waiting lists. When asked to rank three other common benefits in order of importance, Estonian employees are likely to list life, death, and disability benefits.
Mandatory employee benefits in Estonia include a three-pillar pension system, legislative leaves, employment insurance, and dental care. Common supplementary employee benefits in Estonia include health insurance, voluntary benefits, and gym memberships. Common employee perks include additional vacation days and company cars.
Mandatory Employee Benefits in Estonia
Pension
Pension is a regular payment made in case of old age, incapacity for work, or loss of a provider. The aim of the Estonian pension system is to help people maintain their standard of living and monthly income after retirement. The Estonian pension system stands on three pillars:
I pillar: State pension
II pillar: Mandatory funded pension
III pillar: Supplementary funded pension
I Pillar: State Pension
As the name suggests, the state pension is a pension paid by the state, the aim of which is to ensure a regular monthly income for individuals who have reached retirement age, have become unable to work, or have lost their provider.
There are several different types of state pensions: old-age pension, pension for incapacity for work, survivor’s pension, national pension, and superannuation pension.
The first pillar is the state old-age pension, which is paid to individuals who have reached the pensionable age and have a minimum of 15 years of employment.
The general pensionable age in Estonia is 64 years and 9 months. By the year 2026, the general pensionable age in Estonia will be 65.
The state pension is based on the principle of solidarity, which means that the pensions of today’s pensioners are paid from the taxes of people who are currently working. The state pension is paid by the state from funds collected through the social tax in the state budget. The direct payer of the social tax is the employer, who withholds 33% of the social tax from the employee’s salary, which the state then uses for health insurance and pensions.
II Pillar: Mandatory Funded Pension
The second pillar aims to direct a portion of the salaries of individuals working towards their pension, so that they will have, in addition to the state pension, an additional pension that they accrue themselves.
In the case of the mandatory funded pension, an employee pays 2% of their gross salary monthly to the pension fund they have selected, and the state adds 4% from the current social tax that the employee pays.
The money paid into pension funds is managed by fund management companies, which invest the pension contributions paid by employees in various assets to increase the value of the contributions over time.
- Subscribing to the funded pension is mandatory for individuals born in or after 1983.
In the case of a mandatory funded pension, when a person reaches retirement age (generally), a contract must be concluded with an insurance company. The insurance company undertakes the obligation to pay the person a pension, the amount of which depends on the volume of assets accrued into the pension fund until the person’s death.
III Pillar: Supplementary Funded Pension
The third pillar, or the supplementary funded pension, was established with the aim of providing people with an opportunity to insure their retirement years even better.
There are two options for subscribing to the supplementary funded pension:
- Conclude a pension insurance contract with a life insurance company or
- Make contributions to the voluntary pension fund.
There are also two options for receiving payments:
- Based on the insurance contract or
- From the voluntary pension fund
The amount contributed to a supplementary funded pension can be determined by the individual and may be adjusted at any time. If annual contributions are less than €6,000 or do not exceed 15% of gross income (whichever is lower), no income tax will be charged on these contributions.
Legislated Leaves
The duration of the annual vacation is 28 days; an extended vacation is granted in certain professions, such as state officials and local government officials, teachers, academic, pedagogical, and scientific staff, among others. National holidays and public holidays are excluded from the calculation of vacation duration. An employee may be granted unpaid leave at their request for a period mutually agreed upon between the parties.
- Maternity leave – A woman is entitled to maternity leave of 100 calendar days, which becomes payable at least 70 calendar days before the estimated date of birth. If a woman starts using maternity leave less than 70 days before the estimated date of birth, the maternity leave is shortened by the respective period. This means that the length of maternity leave will depend on when the mother goes on maternity leave. The state pays the maternity benefit.
- Parental leave – A mother or father may be granted parental leave at their request to care for a child up to 3 years of age. The state pays for the parental benefit. Together, the maternity benefit and the parental benefit are paid for a period of 475 days.
- Sickness – In the case of sickness, the employee can be granted up to 182 calendar days of paid sick leave (a maximum of 250 days per year). The gross wage during this period is 70% of his or her last year’s average salary. The employer pays the wage from the 4th to the 8th day of sickness, and the state starts on the 9th day. Many higher percentile employers pay the sickness benefit starting from the 1st or second day of sickness.
Unemployment Insurance
Unemployment insurance is a compulsory insurance that is collected to pay benefits to employees in the event of unemployment. All employees pay 1.6% of their gross earnings, and employers pay 0.8% of the payroll for unemployment insurance. Unemployment insurance is withheld from the employee’s salary automatically. Individuals who are eligible for an old-age pension are exempt from paying unemployment insurance.
Unemployment insurance benefits are paid to legal residents of the EU. To receive an unemployment insurance benefit, unemployment insurance contributions must have been paid for at least 12 months of the previous 36 months.
A legal resident of the EU has the right to apply for unemployment insurance benefits from the country where they last worked and paid taxes. The time a person has worked and paid unemployment insurance contributions in other EU countries is considered when deciding whether and for how long they are entitled to receive the unemployment insurance benefit. The sum of the benefits paid by Estonia is calculated based on the wages earned in Estonia.
If a person does not meet the conditions to receive an unemployment insurance benefit or has exhausted their rights to a benefit, they may still qualify for the state unemployment allowance.
The unemployment allowance is paid to unemployed persons who:
- Do not qualify for the unemployment insurance benefit
- Actively look for work
- Have worked or finished full-time studies
- Have an income that is less than the allowance
The unemployment allowance €13.23 per day in 2025) is paid for a maximum period of 270 days.
Dental Care
Dental care is free for children under the age of 19. However, free dental care is provided only by doctors who have entered into a contract with the Health Insurance Fund for financing medical treatment.
The Health Insurance Fund will reimburse dental care for adults with health insurance up to €60 per year. The patients themselves pay at least 50% of the service cost.
All insured women who are pregnant or mothers of children under one year of age are eligible for dental care benefits of up to € 105 per year, with the patient paying at least 12.5% of the treatment cost.
Unemployed persons registered with the Unemployment Insurance Fund are eligible for dental care benefits at a higher rate. The benefit is €105 per year, with the patient paying at least 12.5% of the treatment invoice.
Persons who have received subsistence allowance under the Social Welfare Act during the two calendar months preceding the month in which the service was received are eligible for the dental care benefit at the increased rate. The benefit is €105 per year, with the patient paying at least 12.5% of the treatment invoice.
Old-age pensioners, persons receiving a pension for incapacity for work, individuals with partial or no capacity for work, and the elderly over the age of 63 are entitled to dental care benefits of €105 per year, with the patient paying at least 12.5% of the invoice.
Supplementary Employee Benefits
Healthcare
In Estonia, there are two types of healthcare systems: public and private. The public one is provided by the Estonian Health Insurance Fund (EHIF; Haigekassa in Estonian), which a person receives if they have an employment contract in Estonia and their employer is paying social taxes on their behalf. The private one differs from insurers offering private healthcare insurance.
The Estonian health insurance system is a solidarity-based social insurance system. This means it provides healthcare for everyone. It is a solid healthcare system, and treatment is equally available in all regions.
For more details, refer to the materials provided by the Estonian Health Insurance Fund and the Health Board.
Voluntary Benefits
Individuals not covered by a group plan can sign a voluntary insurance contract with the Health Insurance Fund and pay the premium. Two conditions must be met to enter into a contract with the Health Insurance Fund.
The person must be a permanent resident of Estonia or a person residing in Estonia on the basis of a temporary residence permit or the right of residence. They must also have been insured for at least 12 months over a two-year period prior to signing the contract through:
- An employer
- State
- As a pupil or a student
- As a sole proprietor or their spouse participating in their activities
- As a notary, a sworn translator, or a bailiff registered with the Tax and Customs Board
The said insured persons may also sign a voluntary insurance contract to insure their dependents. A dependent must be a permanent resident of Estonia or a person residing in Estonia with a temporary residence permit or the right of residence.
The persons qualifying for the signature of the contract are those who have paid social tax or for whom social tax has been paid during the preceding calendar year. Social tax must have been paid at least twelve times and calculated based on a minimum monthly rate of social tax. In 2025, the monthly rate on which the minimum social tax liability is based is €886, meaning the minimum social tax liability for the employer is €292.39 per month.
Persons receiving a pension from a foreign country also qualify for the contract’s signature unless otherwise provided for by international agreements.
Gymnasiums
Very large employers can provide on-site facilities, whereas smaller employers may offer gym subsidies or access to a gym with lower corporate rates. Supporting employees’ health has always been a popular initiative. Perks can range from small things, such as fruit in the office, to large ones, including gym memberships and support for employees who want to participate in athletic events, like marathons.
Workplace Canteens
This benefit is not common in Estonia; however, in highly competitive industries such as the technology industry, we are seeing an increase in catered lunches for employees. Large employers often have an on-site cafeteria with discounted food prices.
Employee Perks
There are not many perks Estonian employers offer. Western and financial/technical companies are usually more generous. More traditional and local companies generally have an understanding that ‘salary is your benefit.’ The following are some perks some employers offer:
- Additional vacation days—The Typical holiday allowance is 28 days of paid holiday (mandatory by law). In the public sector, it’s typically 30-35 days. Any extra days would be considered a perk. Many companies offer extra days off in the form of collective holidays, when all staff are away from the office and business is virtually closed, such as during Christmas and summer.
- Company cars—These are typically offered to salespeople and senior executives for both business and private use, but this is subject to tax. Employers also reimburse employees for the use of personal cars, with reimbursement at approximately €0.40 per kilometer (tax-free), but not exceeding €550 per month. If the reimbursement exceeds €550335, the overpaid portion is taxed.
- Gym memberships – Supporting employees’ health has always been a popular initiative. Perks can range from small things, such as fruit in the office, to large ones, including gym memberships and support for employees who want to compete in athletic events, like marathons.
- Health insurance – This is now offered by 7 insurers, and €400 per year per employee is not taxed by fringe benefits tax; it has become very popular in the market– there was a total of 1484 insurance contracts in the market in 2024, which is 10 times the number it was in 2019 (157). 10% of the total workforce had supplemental health insurance coverage. Health insurance typically covers inpatient and outpatient treatments, preventive care, vision, and dental services. Massage and/or rehabilitation services are also available, along with additional extras.
- Telecommuting – It’s very popular to let employees work from home, especially employees who use a phone and a laptop for their work.
- Personal Accident Insurance – This benefit is gaining popularity from our perspective. It usually covers death, disability, and trauma. It’s an inexpensive product to buy.
Related Government Websites
This information about mandatory and supplemental employee benefits in Estonia comes from Asinta’s Central and Eastern European Partner, the GrECo Group.