COVID-19 Guide for Businesses in Estonia

23.04.2020 COVID-19 Guide for Businesses in Estonia

We have prepared a COVID-19 guide for our clients which provides information on labor and employment, operational and tax-related measures enacted or planned in Estonia in response to COVID-19 (as of 22 April 2020) and information on existing laws that are applicable in this circumstance.




Tax measures:

  • The Estonian Tax and Customs Board (ETCB) suspends the calculation of interests on tax arrears for the period of emergency with retroactive effect from 1 March 2020 until 1 May 2020 or, if the emergency is extended, until the end of the emergency. However, all tax returns must be submitted on time and taxes must be paid whenever it is possible.
  • Starting from the end of the emergency until 31 December 2021, the ETCB lowers the interest rate from the current 0.06% to 0.03%.
  • From 1 May 2020 to 31 December 2021, the ETCB may reduce the interest rate when rescheduling the payment of a tax debt up to 100% as of the date of adoption of the deferral decision. Currently, the maximum possible interest reduction is 50%. The company should apply for rescheduling of the tax arrears if there is a need for continued interest relief or difficulties with paying the tax after the end of the emergency.
  • Due to an emergency, the employer is released from the minimum monthly obligation for social tax, e.g. during unpaid leave and part-time work. The exemption will be introduced for a limited period and the minimum social tax liability will not have to be met for salaries paid in March, April and May 2020.
  • From 12 March 2020 to 1 July 2020, a gift or donation made by a legal person to an agency or welfare institution of an Estonian state or local government or a hospital operator located in Estonia for charitable purposes is not subject to income tax.More information is available at:

Labour market measures:

  • Temporary subsidies (salary compensation) will be paid to those employees whose employers are significantly impacted by the current extraordinary circumstances. The aim of the subsidy is to grant an income for the employees and help the employers to surpass temporary difficulties without having to lay off their staff or call bankruptcy.
  • The subsidy is available to any qualifying employer for a period of two months during a three months-period from March to May 2020. The subsidy is paid when an employer is in a situation where they comply with at least two of the following terms:
    • The employer must have suffered at least a 30% decline in turnover or revenue for the month they wish to be subsidized for, as compared to the same month last year.
    • The employer is not able to provide at least 30% of their employees with work.
    • The employer has cut the wages of at least 30% of employees by at least 30% or down to the minimum wage.
  • The salary compensation will be paid directly to the affected employee to whom the employer does not have the agreed amount of work and whose employer has therefore unilaterally applied idle time or reduced wages under 35 or § 37 of the Employment Contracts Act.
  • The Unemployment Insurance Fund pays an employee compensation 70% of the average wage of an employee; however, the gross amount shall not exceed 1000 euros per calendar month. The employer is required to pay the employee who receives the salary compensation a gross salary of at least 150 euros.
  • The employer must apply for the subsidy. The application for the subsidy is available in e-töötukassa as of 6 April 2020.
  • More information is available at

Finance measures:

  • The following may be available via KredEx, a foundation set up by the Ministry of Economic Affairs and Communications:
    • Extraordinary loan surety for easing repayment schedules of existing bank loans and issuing new loans. If the bank eases the repayment schedule of an existing loan or is ready to issue a new loan to the company, KredEx will give its surety for this loan. The extraordinary loan surety for existing loans is offered to enable a longer grace period (at least 6 months) and extension of the loan period. The extraordinary loan surety for new loans is offered to enable companies to take new working capital loans. Under the general rules, KredEx will not be giving any surety to secure new loans refinancing previous loan obligations. The extraordinary loan surety shall be given for a period not longer than 72 months.
    • Extraordinary loan. If banks are no longer financing companies, KredEx will provide the company with an emergency working capital loan to overcome liquidity problems caused by the coronavirus outbreak or an investment loan to take advantage of the new business opportunities created by the coronavirus outbreak. KredEx shall be granting loan with a loan period of 6-72 months.
  • The total aggregate amount of loans secured by the extraordinary loan surety of KredEx and the extraordinary loans granted by KredEx may not exceed double of the total amount spent on wages in 2019 together with social tax. In special cases under the terms and to the extent specified by KredEx, the extraordinary loan surety and extraordinary loan granted to a company may exceed that amount.
  • The extraordinary loan surety and extraordinary loan are not available for all companies. KredEx has provided a list of business activities which are not supported with these extraordinary measures. In addition, there are certain additional requirements to the financial status the company applying for a extraordinary loan surety or extraordinary loan has to meet.
  • More information is available at
  • The following measures may be available via Rural Development Foundation to agricultural enterprises, food industry and enterprises in rural areas:
    • surety for loans from the bank;
    • working capital and investment loan to undertakings;
    • sale and lease-back transactions of arable land (finance lease).
  • More information is available at
  • The following measures are being prepared by the Enterprise Estonia in cooperation with the Ministry of Economic Affairs and Communications:
    • Business restructuring support for businesses negatively affected by the COVID-19 virus outbreak totaling € 10 million which is targeted at companies that need public support to restructure their business in response to the crisis; create new opportunities arising from the crisis (focus on new products and services and / or redesign existing ones); to change their business model; to rebuild an interrupted supply chain; to make changes in production organization, etc.
    • Aid to compensate for the damage to the tourism sector adversely affected by the COVID-19 virus outbreak totaling  € 25 million which is targeted at groups most influenced and affected by the crisis, whose activities have come to a standstill or suffered significantly. This includes accommodation companies, catering companies, travel companies, permanent attractions and tourism service providers operating in the tourism sector. 
  • The exact criteria of the measures and the conditions of application will be made public by Enterprise Estonia when the aid package is approved by the European Commission and the Government of the Republic. More information is available at



Sick pay:

  • If an employee is sick or has come into direct contact with a COVID-19 infected person, a doctor can issue a sick leave certificate.
  • From 16 March 20206, as a temporary measure, employees can open a period of sick leave themselves online in the Patient Portal. Entries into the Patient Portal will be forwarded to the Estonian Health Insurance Fund (EHIF), the employer and the family doctor; the record is also automatically opened and the employee will be contacted by the family doctor within a week to clarify their state of health and any presenting symptoms. The doctor can annul or close the period of sick leave.
  • Based on the sick leave certificate, the employer and the EHIF will pay to the employee the sickness benefit. The first three days would normally be without payment, four to eight days will be paid for by the employer and beginning from the ninth day will be paid-for by the EHIF. The government has decided that from March to May 2020, the state will reimburse the employee for the first three days of sick leave. The EHIF promises to start paying compensation for the first three days of illness no later than May 2020,
  • The sickness benefit is paid at the rate of 70% of daily income. The sickness benefit is subject to income tax.
  • Sick leave certificates are not issued for people who return from abroad and are, therefore, obliged to self-isolate, but who are healthy.

Enforced leave / use of holiday (paid vs unpaid):

  • There is no such notion as “enforced leave” in Estonian labour law.
  • Employers can unilaterally determine the time of employee leave during the first quarter of each year if they draw up a holiday schedule. The employer shall include annual leave and unused leave in the schedule, but other leave may be added as well. When planning the holiday schedule, the employer does not generally have to accept the employees’ requests if these cannot be reasonably combined with the interests of the employer’s enterprise. The employer is also entitled to prescribe a collective vacation in the holiday schedule. 
  • Certain employees, such as parents raising a child up to the age of 7, have the right to demand annual holiday at a time suitable for them, and the employee's holiday wishes must be taken into account by the employer.
  • If an annual holiday schedule has been approved, changes in annual leave times can only be made if mutually agreed.
  • If the employer has not prepared or announced a holiday schedule by 31 March, each employee can stay on leave at a time of their choice, giving 14 calendar days' notice (e.g. by e-mail).
  • Unpaid leave is possible upon mutual agreement.
  • In addition to the annual leave, there are also other types of leave that could be used. For example, a child leave (see below). However, the employer cannot force the employee to use these types of leave.

Temporary lay-offs / idle time:

  • There is no such notion as “temporary lay-offs” in Estonian labour law.
  • If the employer is forced to shut down its operations temporarily or is otherwise temporarily unable to provide (enough) work to the employees otherwise ready and willing to work (in practice called as “idle time”), the employer must pay average wages to the employees.
  • Failure to provide work to the employees may, depending on the circumstances (e.g. the length of the idle time, cause for the idle time), constitute a good reason for the employee to terminate the employment contract extraordinarily with no prior notice. The employee may claim compensation upon extraordinary termination if the failure to provide work constitutes a fundamental breach of the employment contract by the employer. However, this is unlikely the case here where the failure is due to the current emergency situation.

Reduction in pay and/or hours:

  • The declared situation of emergency and the measures taken to prevent the spread of COVID-19may allow the employer to reduce the salary of the employee for up to 3 months unilaterally, provided that this has caused a situation where there is not enough work to provide to employees and paying the agreed salary is an unreasonably heavy burden for the employer.
  • It is not permitted to reduce the salary unilaterally if the employer does not have enough work for the employee to do, but still has enough liquidity to pay the salary; in this case, the employer must pay average wages for the idle time.
  • It is permitted to reduce the salary up to the minimum wage as determined by the Government of Estonia (584 euros per month or 3.48 euros per hour).
  • An employee has the right to refuse to perform work in proportion to the reduction of the salary.
  • In order to reduce the salary unilaterally, the employer must follow the specific procedure which includes an obligation to offer another job, if possible; an obligation to inform the trustee of the employees, or in case there is no trustee, the employees directly, at least 14 days in advance, and an obligation to give employees an opportunity to be involved in the decision. The employee must present their opinion within 7 days.
  • If the employee does not agree to a reduced salary, the employee has the right to terminate the contract with 5 working days’ advance notice. In the event of termination of the employment contract, the employer must pay the employee one month’s average salary as compensation in addition to the contractual final pay, which consists of the earned salary and unused vacation pay.


  • If it is clear that the situation will not improve and the employer is not able to provide work nor pay a reduced salary, redundancy is an option. Redundancy is an extraordinary termination of the employment contract by the employer due to economic reasons, i.e. if following the agreed work conditions is impossible because of a reduced amount of work or the rearrangement of work. Redundancy also happens when the employer terminates its operation or files for bankruptcy.
  • Employers must follow a redundancy procedure which includes an obligation to offer another job, if possible; an obligation to present a termination notice in writing (signed manually or digitally) or in a format which can be reproduced in writing (e.g. e-mail), which must set out the justification for termination; an obligation to give advance notice of termination or payment in lieu of notice. Depending on the length of the time the employee has been working for the employer, the advance notice period is 15-90 calendar days.
  • In the case of collective redundancy, additional notification and consultation requirements apply, incl. an obligation to notify a governmental authority – the Unemployment Insurance Fund, and it will take more than 45 days before the employer may start terminating the contracts.
  • Upon redundancy, the employer shall pay the employee compensation to the extent of one (1) month’s average wages of the employee. In addition, a prior notification of 15-90 calendar days (depending on the length of service) OR equivalent monetary compensation is required.
  • Employees will be entitled to statutory redundancy benefit where they have worked for the employer at least 5 years. The amount of the statutory redundancy benefit is 1-2 months’ average salary depending on the duration of the employment relationship.
  • In addition, employees may be entitled to statutory unemployment insurance benefits.




  • The government has asked businesses to encourage employees to work at home wherever possible; in particular, employees from vulnerable groups. In order to facilitate this, employers should:
    • support employees to continue to work wherever possible, including providing technology where possible to facilitate remote working; and
    • maintain contact with employees and encourage staff members to support each other and be flexible whilst the workforce adjusts.

Travel (business and personal):

  • The government has strongly advised against all non-essential travel worldwide.
  • There are restrictions on entering Estonia and on movement between the islands and the mainland.
  • As of March 17, everybody who do not fall under any exemptions must remain at home or at their place of stay for 14 calendar days when entering Estonia (obligation to self-isolate). This does not automatically mean that the employee is not required to work during the isolation. The employee must inform the employer and agree on new arrangement of work. The suggested solution is to enable the employee to work remotely from home. If this is not possible, both sides must reach an alternative agreement, e.g. agreement on unpaid or paid leave.
  • Employers should encourage staff to avoid unnecessary travel, including to and from the workplace or work-related events. In the event of necessary travel, employers should encourage staff to comply with the government guidance to minimise risks, including avoiding busy times, maintaining distance from other commuters and washing hands as soon as they arrive at their destination.
  • If employees cannot travel abroad as planned, it is likely that they will request a cancellation of booked annual leave. Employers are not obliged to allow employees to cancel their leave; however, should consider whether this would be appropriate in the given circumstances.

Preventive actions:

  • Employers should ensure the workforce is kept updated as to preventative actions being taken by the business and the latest guidance on how to reduce risk.
  • Where workplaces are open, employers should provide facilities for hand washing and hand sanitisers and instruct and encourage staff to use them regularly. Rooms must be regularly aired and surfaces cleaned. From 7 April 2020, additional requirements will apply to the ventilation of non-residential and welfare institutions, which is in use for at least 60%. During an emergency, the ventilation system of such a building must not be switched off, even when it is not in use, such as in the evenings and on weekends. The building-based return air ventilation system must be completely switched to outside air by closing the return air valves and opening the fresh air valves.
  • From 20 March 2020, at least 2 meters distance between people should be kept indoors (except at home) and in public places, such as outdoor playgrounds, sports grounds, beaches, promenades, health and hiking trails, except when this cannot be ensured.
  • Companies should ensure that managers are made aware of how to identify symptoms in staff and of procedures to follow in the event a staff member exhibits symptoms.
  • More information is available at .

Employees with children or older dependents:

  • Employees may be entitled to reasonable time off to care for dependents. However, reasonable time off means usually 1-2 working days within which the employee could be expected to arrange for the care of their children or other dependents and, if necessary, to find a mutually satisfactory solution and conclude an agreement with the employer for the new arrangement of work such as teleworking, part-time work for a fixed period, annual leave or otherwise.
  • The employer shall pay employees average wages for such reasonable time off (usually 1-2 working days) to care for dependents. An employee cannot claim an average wage from the employer for the entire period of time at home when, for example, the childcare facilities are closed.
  • Child leave may be an option. Each calendar year a mother or father (or a guardian or a foster parent) has the right to receive child leave up to 3 or 6 working days, depending on the number and age of children. This is compensated for with the minimum salary. In 2020, the daily child leave rate is 27.70 euros. On top of that, a (foster) parent or a guardian of a disabled child has the right to one extra working day off per month until the child reaches the age of 18 years, which is remunerated for on the basis of the average wages. The compensation is calculated and paid to the employee by the employer. The employer must file an application to the Social Insurance Board to have it compensated from the state budget.
  • In addition, unpaid child leave may be possible. A (foster) parent or a guardian who is raising a child of up to 14 years of age or a disabled child of up to 18 years of age has the right to child leave without pay of up to 10 working days every calendar year.
  • If the child leave is not included in the holiday schedule, the employee must notify the employer of the wish to use the child leave at least 14 calendar days in advance.
  • In case the employee needs to care for a dependant who is sick, the employee may be entitled to statutory care allowance on the basis of a certificate for care leave which will be issued by a doctor. From March 16, as a temporary measure, employees can open a period of care leave themselves online in the Patient Portal (see above). The statutory care allowance rate is 80% from daily income and the allowance is paid by the state as of the first date of care leave. Income tax is withheld from the allowance amount.

TGS Baltic created a Pan-Baltic Sharp Response Team to help you with all legal matters arising in these extraordinary circumstances.
The Sharp Response Team experts are availaible to provide you assistance under the law of various jurisdictions and most importantly - the Baltic region. Our team members can be reached by e-mail, telephone or video conferences (Skype, Zoom, Teams, etc.)

Sharp Response Team contact information:
Triin Kaurov |
Chirag Mody |
Leonid Tolstov |