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Good to Know: Estonia’s Outdated Employment Law Is Set for Change
Good to Know: Estonia’s Outdated Employment Law Is Set for Change
Until quite recently, employees were regarded as the weaker party in the employment relationship. It was assumed that they were not aware of their rights and were unable to assert them. Today, the situation has changed. Employees’ awareness and level of assertiveness, particularly regarding flexibility in working conditions, have increased significantly, write Annika Vait, Partner at RASK, and Helen Aluvee, Lawyer at RASK.
At the same time, employment law regulation has struggled to keep pace with these changes. Employers have often found themselves navigating rigid legal requirements that offer limited practical value while restricting flexibility in work organisation. As a result, Estonian employment law has, in several respects, fallen behind modern workplace needs. Recent legislative developments, however, indicate a long awaited shift towards a more flexible and contemporary employment law framework.
The shift is reflected in several legislative amendments that have already entered into force and take better account of the needs of both employers and employees. The most significant of these is the amendment to the Employment Contracts Act introducing the possibility to conclude flexible working time agreements. This increases flexibility in work organisation for both parties, including enabling employees to shape their working hours according to their personal and professional needs and preferences.
In addition, it is hoped that the introduction of flexible working time arrangements will reduce the use of contracts governed by the law of obligations in situations where an employment contract should in fact be concluded. This, in turn, improves employees’ legal protection and grants them access to the state guarantees provided under employment contracts.
Furthermore, a long awaited amendment concerning the regulation of weekly rest periods has now entered into force. Changes to the regulation of minors’ working time also merit attention.
The legislative amendment creates an opportunity for employers and employees to conclude a flexible working time agreement. This is an additional option rather than an obligation and provides flexibility that was not available under the previous version of the Employment Contracts Act. It is now possible to agree on guaranteed working hours for the employee, as well as on the volume of additional hours that may be agreed on an ongoing basis without qualifying as overtime.
Several conditions must be met in order to conclude a flexible working time agreement. The employee’s hourly wage must be at least 1.2 times the statutory minimum wage, the agreement must be concluded in writing, and the guaranteed working time must be at least 10 hours per seven day period. It is also important that the total number of agreed basic and additional hours must not exceed the number of working hours corresponding to full time employment.
Employees have the right to refuse additional hours. This gives them the freedom to decide on each occasion whether they wish to work beyond the agreed minimum working hours. They are under no obligation to accept additional hours, and consent must be recorded each time in a form that can be reproduced in writing.
Such an amendment increases flexibility in work organisation, which is increasingly needed not only by employers but also by employees. In addition, it is hoped that the possibility of concluding flexible working time agreements will help reduce situations where contracts under the law of obligations are used instead of employment relationships, thereby depriving employees of adequate social guarantees and legal protection.
Amendments to the Employment Contracts Act have clarified the regulation of daily and weekly rest periods in order to ensure legal certainty following the 2023 judgment of the Court of Justice of the European Union (C 477/21). The amendments confirm that, in the case of summarised working time accounting, the weekly rest period must be at least 36 consecutive hours, and in the case of daily working time accounting, at least 48 consecutive hours.
The amendments do not change the length of the rest period but clearly stipulate that Estonia continues to apply the previous practice that existed prior to the CJEU judgment. Under this practice, employees must be guaranteed at least 36 or 48 hours of uninterrupted weekly rest, depending on the type of working time accounting applied.
As a result of the amendment, the long standing practice is reinstated under which employers must ensure employees at least 48 consecutive hours of weekly rest, and 36 hours in the case of employees working according to a schedule. This clarification eliminates previous legal uncertainty and takes into account employers’ concerns regarding flexibility in work organisation and potential additional costs.
The regulation governing the employment of minors has recently been amended several times. Interestingly, the legislator initially moved in one direction and then in the opposite direction: amendments that entered into force on 1 September 2025 made restrictions on the employment of minors stricter, while amendments that entered into force in February 2026 subsequently relaxed those restrictions.
For example, a 15–16 year old who has completed basic school, or a minor who has reached the age of 17, is now permitted to work full time during a school term on a day off from school, provided that the minor wishes to do so and the legal representative gives consent. In addition, children aged 7–14 are now allowed to work more hours than before on days off from school, offering greater flexibility for both young people and employers.
In addition to the above, there are plans to clarify the procedural rules of the Labour Dispute Committee and to simplify occupational health and safety requirements. While the planned amendments are not without their drawbacks, clearer procedures are generally in the interests of all parties involved. The proposed changes would reduce the administrative burden on both employers and the state, without making significant compromises in the quality of occupational health or safety requirements. It is hoped that these amendments will be adopted in the near future.
In summary, the modernisation of employment law regulation has made a positive start. It is now important to successfully advance to the next stages, which would enable businesses to remain competitive with the rest of Europe and encourage the inflow of foreign investment into Estonia.
At the same time, employment law regulation has struggled to keep pace with these changes. Employers have often found themselves navigating rigid legal requirements that offer limited practical value while restricting flexibility in work organisation. As a result, Estonian employment law has, in several respects, fallen behind modern workplace needs. Recent legislative developments, however, indicate a long awaited shift towards a more flexible and contemporary employment law framework.
The Most Important Recent Developments
The shift is reflected in several legislative amendments that have already entered into force and take better account of the needs of both employers and employees. The most significant of these is the amendment to the Employment Contracts Act introducing the possibility to conclude flexible working time agreements. This increases flexibility in work organisation for both parties, including enabling employees to shape their working hours according to their personal and professional needs and preferences.
In addition, it is hoped that the introduction of flexible working time arrangements will reduce the use of contracts governed by the law of obligations in situations where an employment contract should in fact be concluded. This, in turn, improves employees’ legal protection and grants them access to the state guarantees provided under employment contracts.
Furthermore, a long awaited amendment concerning the regulation of weekly rest periods has now entered into force. Changes to the regulation of minors’ working time also merit attention.
Flexible Working Time Agreements
The legislative amendment creates an opportunity for employers and employees to conclude a flexible working time agreement. This is an additional option rather than an obligation and provides flexibility that was not available under the previous version of the Employment Contracts Act. It is now possible to agree on guaranteed working hours for the employee, as well as on the volume of additional hours that may be agreed on an ongoing basis without qualifying as overtime.
Several conditions must be met in order to conclude a flexible working time agreement. The employee’s hourly wage must be at least 1.2 times the statutory minimum wage, the agreement must be concluded in writing, and the guaranteed working time must be at least 10 hours per seven day period. It is also important that the total number of agreed basic and additional hours must not exceed the number of working hours corresponding to full time employment.
Employees have the right to refuse additional hours. This gives them the freedom to decide on each occasion whether they wish to work beyond the agreed minimum working hours. They are under no obligation to accept additional hours, and consent must be recorded each time in a form that can be reproduced in writing.
Such an amendment increases flexibility in work organisation, which is increasingly needed not only by employers but also by employees. In addition, it is hoped that the possibility of concluding flexible working time agreements will help reduce situations where contracts under the law of obligations are used instead of employment relationships, thereby depriving employees of adequate social guarantees and legal protection.
Weekly Rest Period
Amendments to the Employment Contracts Act have clarified the regulation of daily and weekly rest periods in order to ensure legal certainty following the 2023 judgment of the Court of Justice of the European Union (C 477/21). The amendments confirm that, in the case of summarised working time accounting, the weekly rest period must be at least 36 consecutive hours, and in the case of daily working time accounting, at least 48 consecutive hours.
The amendments do not change the length of the rest period but clearly stipulate that Estonia continues to apply the previous practice that existed prior to the CJEU judgment. Under this practice, employees must be guaranteed at least 36 or 48 hours of uninterrupted weekly rest, depending on the type of working time accounting applied.
As a result of the amendment, the long standing practice is reinstated under which employers must ensure employees at least 48 consecutive hours of weekly rest, and 36 hours in the case of employees working according to a schedule. This clarification eliminates previous legal uncertainty and takes into account employers’ concerns regarding flexibility in work organisation and potential additional costs.
Restrictions on the Working Time of Minors
The regulation governing the employment of minors has recently been amended several times. Interestingly, the legislator initially moved in one direction and then in the opposite direction: amendments that entered into force on 1 September 2025 made restrictions on the employment of minors stricter, while amendments that entered into force in February 2026 subsequently relaxed those restrictions.
For example, a 15–16 year old who has completed basic school, or a minor who has reached the age of 17, is now permitted to work full time during a school term on a day off from school, provided that the minor wishes to do so and the legal representative gives consent. In addition, children aged 7–14 are now allowed to work more hours than before on days off from school, offering greater flexibility for both young people and employers.
Upcoming Amendments
In addition to the above, there are plans to clarify the procedural rules of the Labour Dispute Committee and to simplify occupational health and safety requirements. While the planned amendments are not without their drawbacks, clearer procedures are generally in the interests of all parties involved. The proposed changes would reduce the administrative burden on both employers and the state, without making significant compromises in the quality of occupational health or safety requirements. It is hoped that these amendments will be adopted in the near future.
In summary, the modernisation of employment law regulation has made a positive start. It is now important to successfully advance to the next stages, which would enable businesses to remain competitive with the rest of Europe and encourage the inflow of foreign investment into Estonia.