[Updated 3/25/23] The number one employee benefits 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 say retirement, death, and disability.

Asinta Partner
Natalia Zaborovska

GrECo Group

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Average Cost

The average cost for employee benefits for employers is about €80 per month.

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 is a regular payment made in case of old age, incapacity for work, or loss of a provider. The Estonian pension system aims to help people maintain their living standard and monthly income when they retire. 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 says, the state pension is paid by the state. The aim is to ensure regular monthly income for persons who have reached retirement age, have become incapable of work, or have lost their provider.

There are several types of state pensions: old-age pension, pension for incapacity for work and the survivor’s pension, national pension, and superannuated pension.

The first pillar is the state old-age pension, which is paid to a person who has reached the pensionable age and whose length of employment is at least 15 years.

The general pensionable age in Estonia is 63 years. The pensionable age for women gradually increased to 63 by the year 2016. 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 to today’s pensioners are paid from the taxes of currently working people. The state pays the state pension from funds collected for the state budget from social tax. The direct payer of the social tax is the employer, who withholds 33% of social tax from the employee’s salary, which the state then pays for health insurance and pensions.

II Pillar: Mandatory Funded Pension

The second pillar aims to direct a part of the salary of the people working towards their pension so that people would have, in addition to the constantly financed state pension, an additional pension that they accrue themselves.

In the case of the mandatory funded pension, an employee pays a monthly 2% of their gross salary to the pension fund they have selected, and the state adds 4% out of the current social tax that the employee pays.

The money paid into the pension funds is managed by the fund management companies, which invest the pension contributions paid by the employees into different assets to increase the value of the money contributed by the employees over the years.

  • Subscribing to the funded pension is mandatory for persons born in 1983 and later.

In the case of the mandatory funded pension, when a person reaches retirement age (as a general rule), a contract must be concluded with an insurance company when the insurance company undertakes the obligation to pay the pension. The sum depends on the volume of the assets accrued until the person’s death.

III Pillar: Supplementary Funded Pension

The third pillar, or the supplementary funded pension, was established to provide 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:

  • Payments based on the insurance contract or
  • Payments from the voluntary pension fund.

The individual determines the sum contributed to the supplementary fund, which can be changed at any time. If the contributions are less than €6,000 or 15% of the gross income per year, contributions are not income-taxed.

Legislated Leaves

The duration of the annual vacation is 28 days. An extended vacation is granted in the case of some professions, such as state officials and local government officials, teachers, academic, pedagogical, and scientific staff, and others. National holidays and public holidays are not included in the vacation duration calculations. Employees may be granted unpaid leave at their request for a period established by the parties’ agreement.

  • Maternity leave – A woman is granted 140 days of pregnancy and maternity leave, which may commence at least 70 days before the estimated birth date of the child. The state pays the maternity benefit.
  • Parental leave – A mother or a father shall be granted parental leave at her or his request for raising a child of up to 3 years of age. The state pays the parental benefit. Together the maternity benefit and the parental benefit are paid for 575 days.
  • Sickness – in case of sickness, the employee can be given up to 182 calendar days of paid sick leave (max 250 days per year). The gross wage during this period is 70% of their 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.

Employment Insurance

Unemployment insurance is compulsory insurance collected to pay employees benefits 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 employees’ salaries automatically. Persons who are old enough to receive an old-age pension do not have to pay unemployment insurance.

Unemployment insurance benefits are paid to legal residents of the EU. Insurance contributions must have been paid for at least 12 months of the previous 36 months to receive an unemployment insurance benefit.

A legal resident of the EU has the right to apply for an unemployment insurance benefit from the country where they last worked and paid taxes. The period a person has worked and paid unemployment insurance contributions in other EU countries is considered when deciding whether and how long a person is entitled to receive the unemployment insurance benefit. The sum of the benefit 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 (€10,55 per day in 2022) is paid for a maximum of 270 days.

Dental Care

Dental care is free of charge for persons under the age of 19. Free dental care is provided only by doctors who have concluded the contract for financing medical treatment with the Health Insurance Fund.

The Health Insurance Fund will reimburse dental care to adults with health insurance up to €40 per year. The patients pay at least 50% of the price of the services.

Pregnant women, mothers with children under one year of age, old-age pensioners, persons receiving benefits for incapacity for work and people with partial or no ability for work, people over the age of 63, and people with an increased need for dental care will receive dental care benefit up to €85 per year. The patients pay at least 15% of the price of the services.

Find more information here


Supplementary Employee Benefits


Estonia has two types of healthcare systems: public and private. The public is provided by 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 for them. Insurance carriers offer private coverage in the country as well.

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.

Check out the materials made by the Estonian Health Insurance Fund and the Health Board for more details.

Voluntary Benefits

People not belonging to 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 based on a temporary residence permit or the right of residence. They must also have insurance for at least 12 months over two years before 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 might 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 born twelve times, calculated based on a minimum monthly social tax rate. In 2023, the monthly rate on which the minimum social tax liability is based is 654 euros, i.e., the minimum social tax liability for the employer is 215,82 euros per month. This means that if you wanted to sign a voluntary insurance contract in 2019, the social tax received in 2018 must be at least 12 x 215.82 euros, i.e., a total of 2589,84 euros.

Persons receiving a pension from a foreign country also qualify for the signature of the contract unless otherwise provided for by international agreements.


Very large employers can provide ‘gym 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 popular. Perks can range from small things such as fruit in the office, but a large proportion of employers also pay for gym memberships and supports employees who want to compete in athletic events such as marathons.

Workplace Canteens

This benefit is not common in Estonia. However, in highly competitive industries such as technology, we see an increase in catered lunches for employees. Large employers often have an onsite 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 understand that ‘salary is your benefit.’ The following perks some employers offer:

  • Additional vacation days – 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. For example, many companies offer additional days as collective holidays when all the staff is away from the office and business is virtually closed down during Christmas and summer.
  • Company cars – These are typically offered to salespeople and senior executives and are provided for business and private use, but are taxed. Reimbursement for the use of personal cars is also a practice employers use, and the reimbursement runs about €0.30 per kilometer (tax-free) but not more than 335 euros per month. If the reimbursement is more than €335 the overpaid part is taxed.
  • Gym memberships – Supporting employees’ health has always been popular. Perks can range from small things such as fruit in the office, but a large proportion of employers also pay for gym memberships and supports employees who want to compete in athletic events such as marathons.
  • Health insurance– 5 insurers now offer this, and €400 per year per employee is free from fringe benefits tax. Currently popular, there are 1264 insurance contracts in the market, 10 times the number in 2019 (157). Health insurance usually covers in- and outpatient treatments, prophylactic checks, vision, and dental care. Massage and/or rehabilitation limits are also available, as well as some other extras.
  • Telecommuting – It’s very popular to let employees work from home, especially those who use a phone and laptop.
  • Personal Accident Insurance – This perk is getting more popular from our point of view. It usually covers death, disability, and traumas. 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.

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