News
How to Conclude a Flexible Working Hours Agreement
How to Conclude a Flexible Working Hours Agreement
Since February 2026, Estonia’s Employment Contracts Act has allowed employers and employees to conclude flexible working hours agreements. These agreements allow the parties to agree on additional hours alongside the employee’s regular working hours. Employers are not required to offer these additional hours, employees are free to decline them, and hours worked under such arrangements are not considered overtime. This provides greater flexibility, particularly for employers whose staffing needs fluctuate or employees looking to balance work with studies or other commitments. Maria-Helena Rahumets, Lawyer at RASK, explains what employers should consider when concluding a flexible working hours agreement.
A flexible working hours agreement can only be concluded if both of the following conditions are met:
The agreement can be formalised as an amendment or addendum to an existing employment contract. For new employees, the relevant terms can be included directly in the employment contract. The agreement must be in writing and signed by both the employer and the employee. Both handwritten and digital signatures meet this requirement.
Under the Employment Contracts Act, the agreement must specify at least the following:
Agreed working hours and additional hours combined must not exceed full-time working hours. Employers must clearly distinguish between agreed working hours, additional hours and overtime, including in work schedules. At the end of each reference period, employers must also provide employees with a work schedule showing these three categories separately for the entire period. This allows both parties to see exactly which hours were worked and how they should be compensated. Additional hours are paid at the employee’s regular rate. However, where working time is calculated on an aggregated basis and the employee works more than the combined total of agreed and additional hours during the reference period, the excess hours are treated as overtime. If the parties have agreed on monetary compensation for overtime, these hours must be paid at 1.5 times the employee’s regular wage.
Employers should also be aware that an agreement which does not meet the statutory requirements may be deemed void. In addition to creating uncertainty, an invalid agreement can result in significant additional costs, as hours previously classified as additional hours may instead be treated as overtime. In such cases, the employer must compensate the overtime with paid time off or, where monetary compensation has been agreed, at 1.5 times the employee’s regular wage.
For this reason, seeking legal advice is recommended when concluding a flexible working hours agreement for the first time or preparing a standard agreement template.
Who Can Enter into a Flexible Working Hours Agreement?
A flexible working hours agreement can only be concluded if both of the following conditions are met:
- The employee works at least 10 hours in a seven-day period.
- The employee’s hourly wage is at least 1.2 times the statutory minimum hourly wage, which in 2026 amounts to EUR 6.81 per hour.
How Should the Agreement Be Formalised?
The agreement can be formalised as an amendment or addendum to an existing employment contract. For new employees, the relevant terms can be included directly in the employment contract. The agreement must be in writing and signed by both the employer and the employee. Both handwritten and digital signatures meet this requirement.
What Must the Agreement Include?
Under the Employment Contracts Act, the agreement must specify at least the following:
- Agreed working hours: The minimum number of hours the employer is required to provide (e.g. 20 hours per week).
- Additional hours: The number of hours the employee may work beyond the agreed working hours, without being obliged to do so. These hours are not considered overtime. For example, if the agreement provides for 20 agreed hours and 10 additional hours per week, the employee’s working hours may range from 20 to 30 hours per week.
- Minimum notice period: How far in advance the employer must notify the employee of the need for additional hours (e.g. a specified number of days or weeks).
- Voluntary nature of additional hours: The agreement must clearly state that the employee has the right to refuse additional hours and must confirm their consent in advance each time. This confirmation must be provided in a form that can be reproduced in writing, such as by email or SMS.
What Else Should Employers Consider?
Agreed working hours and additional hours combined must not exceed full-time working hours. Employers must clearly distinguish between agreed working hours, additional hours and overtime, including in work schedules. At the end of each reference period, employers must also provide employees with a work schedule showing these three categories separately for the entire period. This allows both parties to see exactly which hours were worked and how they should be compensated. Additional hours are paid at the employee’s regular rate. However, where working time is calculated on an aggregated basis and the employee works more than the combined total of agreed and additional hours during the reference period, the excess hours are treated as overtime. If the parties have agreed on monetary compensation for overtime, these hours must be paid at 1.5 times the employee’s regular wage.
Employers should also be aware that an agreement which does not meet the statutory requirements may be deemed void. In addition to creating uncertainty, an invalid agreement can result in significant additional costs, as hours previously classified as additional hours may instead be treated as overtime. In such cases, the employer must compensate the overtime with paid time off or, where monetary compensation has been agreed, at 1.5 times the employee’s regular wage.
For this reason, seeking legal advice is recommended when concluding a flexible working hours agreement for the first time or preparing a standard agreement template.