unlocking growth: the strategic benefits of hiring in estonia

What makes Estonia a great place to hire? Administration is 100% online, employment legislation pro-business, and hiring decisions can be made with flexibility and growth at front of mind.

The decision to hire is usually a big step for entrepreneurs. For e-⁠resident companies, the very idea of e-⁠Residency and running a company online does not necessarily conjure up associations with hiring employees. But for businesses to grow and scale, hiring a team is essential.

Recently, the e-⁠Residency team has resolved to put more focus in supporting e-⁠Residency businesses in their growth phase. This has particularly meant helping e-⁠resident companies to connect with Estonia’s startup ecosystem - by raising awareness of entrepreneurship programmes and funding opportunities. However, hiring employees is no less important. 

In this blog article we aim to give our founder community more confidence and support in your decision-making to hire and grow your teams in Estonia. We are also happy to make available special deals for e-⁠residents in HR- and coworking-related topics from some of our trusted partner companies (please see the offers at the end of this blog post). 

The e-Residency team recently put together a one-pager that explores benefits Estonia offers to employers. For e-⁠residents, employment registration and payroll can be completed 100% online. Many e-⁠Residency Marketplace service providers also provide payroll services.

Company hiring administration can be managed online, and it is possible to manage it in English. Employment contracts must be in English or Estonian or in both languages.

A business-friendly legal framework for employers is no less important. Some European countries have very strict employment legislation where letting go of employees can be very costly and difficult. This sometimes leads to situations where small entrepreneurs try to avoid taking on full-time employees, hindering their growth opportunities. 

E-⁠resident Luke Seelenbinder co-founded Funktional OÜ and has had experience hiring in both Estonia and outside. About his experience, he notes:

In order to survive in an increasingly fluctuating global economy, businesses need to have the flexibility to downsize when necessary. Estonia’s pro-business legislation permits ending an employment relationship in Estonia quite easily with 3-month remuneration being required for a role that is no longer necessary. 

Startup companies in particular need flexibility with employment decisions. For example, at the beginning of the Covid-19 crisis, Starship Technologies, an Estonian startup offering autonomous robot deliveries, had to let go of around 100 people. Only 3 months later, they were able to grow their head count by 60. 

Last, but not least, Estonia’s entrepreneurial spirit and can-do attitude also reflects in our multilingual workforce. Having employees in Estonia will help e-⁠resident founders to connect and benefit more from Estonia’s entrepreneurial and startup ecosystems.

What is the main limitation of Estonia as a place to employ?

It is important to stress that Estonia’s population of 1.36 million does not always allow you to find a large pool of candidates for each specific business role that you may be looking for. Unemployment in Estonia is relatively low at 6.4% as of 2024. For Ida-Viru county in Northeast Estonia where unemployment tops 10% there are grants available for SMEs to enable local hiring.

It should also be noted that Estonia is not a low-cost location for hiring. The average monthly salary in Estonia is around 1,900 Euros as of Q4 of 2023. However, Estonia’s average wage still significantly lags the EU average. Some regional differences also exist with Estonia’s average wage being below 1,500 Euros in 12 of its counties. Paying bonuses is not strictly required, but nonetheless a widespread practice.

Overall employer costs for salary sums can be calculated here. And to get a rough idea of average monthly salaries for specific roles, here are some examples:

• Software developers: 4,420 Euros (per calendar month)
• Chief Financial Officer: 3,909 Euros
• HR manager: 3,501 Euros
• IT system administrators: 3,249 Euros
• Senior PR specialists: 2,768 Euros
• Senior production and manufacturing engineers: 2,620 Euros
• HR assistants: 2,056 Euros
• Executive assistants and secretaries: 1,707 Euros
• Administrative staff: 1,262 Euros

Watch our webinar introducing hiring in Estonia

Last month, e-⁠Residency hosted a webinar about hiring in Estonia. Joining the author of this blog post were e-⁠Residency service providers Alma Career/CV.ee, Brandem, as well as e-⁠resident founder of Glassity Jose Enresto Suarez Font.

How to bring employees to Estonia from non-EU countries

Citizens of the EU and Schengen Zone are free to move to Estonia and work here, as long as they register within 90 days if they stay longer. But what about people from outside the region?

To enable a larger pool of hires, Estonia has a number of measures in place to make it easier to attract and move employees here from outside the EU.

ICT specialists in particular are exempt from Estonia’s migration quota, allowing them to easily move to Estonia in order to take on a role. Estonia's startup visa allows growth companies to easily move employees for any role from outside the EU to Estonia. US and Japanese citizens also enjoy an exemption from Estonia’s immigration quota. Estonia’s Police and Border Guard Board’s migration advisers available free of charge, whereas Work in Estonia also offers some relocation advisory and services.

For specific roles where there is simply not enough talent available in Estonia, employers can also use employees of record service by intermediaries, including e-Residency Marketplace Partner Deel.

Why should e-⁠resident companies hire in Estonia?

Those who are more familiar with cross-border taxation topics would know that tax treaties consider the location of company directors and employees as a key variable to measure where a company should pay income tax. 

Therefore hiring a local director and other employees supports your business claim to substance in Estonia. This means your company will be more likely to take advantage of Estonia's competitive tax system, and help de-risk a permanent establishment forming in your own country of residence. Similarly, having employee(s) and a base in Estonia makes it much easier to open business banking accounts with traditional Estonian banks and financial institutions.

Nevertheless the possibility to get more out of Estonia’s ecosystem, to use Estonia to test new products and ideas, build stronger ties to our institutions, education system and collaborate with fellow Estonian enterprises and startups also becomes much easier whilst having a stronger base in Estonia through employee(s). 

About hiring in Estonia for his company, e-⁠resident Damir Tomicic notes:

Get in touch to discuss hiring in Estonia

If you're interested in hearing more about where to get started with your hiring concerns, feel free to contact the author by booking a call.

Deals from our partner network to help you get started

The e-⁠Residency Team has reached out to HR, hiring, coworking and relocation partners in Estonia to secure some great deals for e-⁠resident founders. View these deals in the table below.

Please note that in case of high demand or lack of compatibility with clients, the companies reserve the right to cut the amount of free/reduced services or turn down individual clients.

The author would like to thank my colleague Maren Krimmer for her help researching and writing this article.