Opportunities to use foreign labor in Estonia

Updated on 21.03.2024

The media depicts a constant shortage of labor in many sectors. One way to alleviate labor shortages is to involve foreign labor and this can be done in several different ways.

Teleworking on the basis of a services contract

In the case of work that does not require a person’s physical presence in the usual place of work, and the time of the work is not important, one solution is to order services and work on the basis of a services contract.

There are no geographical restrictions when concluding a services contract, nor do you have to worry about an Estonian visa or residence permit. It must be taken into account that the service provider is independent in its activities, i.e. the contracting authority’s control over the service provider is limited.

It is therefore particularly important to agree on the deadlines and results that need to be achieved. If it proves necessary for the service provider to reside in Estonia, it may be necessary for the person to apply for a visa, depending on his or her citizenship.

Recruitment within the European Union

If the permanent and long-term presence of team members in Estonia is necessary, but there is no desire to deal with bureaucracy, it is possible to recruit citizens of the European Union. One of the fundamental freedoms of the European Union is the free movement of people, and therefore, there is little difference from the legal point of view in recruiting an EU citizen compared to the recruitment of an Estonian citizen.

To obtain the right of residence, a citizen of the European Union must register a place of residence in the Population Register and apply for an Estonian personal identification code. Depending on the nature of the work organization, an employment contract or a service contract may be concluded with a citizen of the European Union.

Start-up or growth company visa

If it is a start-up company, a start-up visa is an additional option for attracting foreign labor. The right of residence and employment granted on the basis of a start-up visa is not included in the immigration quota provided for in the Aliens Act.

To receive this particular visa, the employer must apply for the start-up status by sending an application to the Start-up Committee. Once the employer has received the status, the employee can apply for the visa or a residence permit, depending on their duration of stay in Estonia.

If a start-up has operated in Estonia for at least ten years and it meets the conditions concerning employees and labor taxes, then such start-up is considered a growth company and the employee can apply for a visa to work in a growth company.

Short-term employment

If the physical presence of the team members in Estonia is necessary, but the work project is short-term, it is possible to recruit foreign workers in a simplified manner by registering with the Police and Border Guard Board. In this case, the employee must have a legal basis to stay in Estonia (e.g. a short-term or long-term visa) and the period of employment may not exceed 365 days in 455 consecutive days. In addition, salary criteria must be taken into account, which varies according to the employee’s position and qualifications.

The (general) residence permit

If none of the above solutions are suitable, the employee may apply for a visa to live and work in Estonia. This option may prove to be the most difficult and time-consuming, as the quota under the Aliens Act, which fills up very quickly, also applies. The immigration quota for 2024 was 1303 permits. When considering this option, keep in mind that the quota fills up quite fast, generally within the first few months.

Residence permit for short-term work

If a foreigner has worked in Estonia for at least 9 months on the basis of short-term employment registration immediately before applying for a residence permit, they can apply for a temporary residence permit for short-term employment. Such a residence permit is granted to a foreigner for up to two years.

This residence permit for work is exempted from the immigration quota and can be applied for at any time if the conditions are met. However, this residence permit is not extended, and after the residence permit expires, a person cannot work in Estonia for a year.

In summary, Estonian entrepreneurs have several opportunities to involve foreign labor, but in order to find a suitable solution, the needs and opportunities of the employer as well as the employee must be taken into account.

In addition, when considering different options, employers also need to consider the tax aspects, which are not covered in this post.

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