Estonia Implements Updated Regulations for Hiring Foreign Employees

Key Highlights

1. Estonia plans to simplify regulations for temporary work agencies.

2. The updated rules will take effect starting January 2026.

3. While wage requirements will be eased, agencies must prove six months of continuous business activity to qualify as established entities.

Estonia to Enforce New Employer Requirements for Hiring Foreign Workers by 2026

Starting January 1, 2026, Estonia will introduce new restrictions for business owners and employers seeking to hire foreign nationals. These changes aim to ensure greater accountability and operational stability among companies employing foreign labor.

Under the new legislation, businesses must apply for a temporary residence permit and demonstrate at least six consecutive months of active business operations within Estonia to qualify. This requirement also applies to temporary work agencies hiring foreign employees. Agencies must show similar activity in Estonia or any other Schengen country to be considered legally established.

What’s Changing Under the New Framework

The reform introduces a mandatory business activity threshold, ensuring only companies with a proven record of stable operations can employ foreign workers.

While businesses registering foreign nationals for short-term employment will remain exempt from this requirement, those applying for temporary residence permits must meet the six-month activity criterion.

These reforms are expected to benefit well-established companies but may slow down the hiring capabilities of newly established businesses.

Shift in Rules for Temporary Work Agencies

Temporary work agencies will no longer be required to guarantee one month’s salary for the workers they lease. Instead, they must demonstrate six months of business operations within the Schengen Area, reducing financial pressure on agencies but potentially limiting wage protection for employees.

Additionally, all employers must be registered with Estonian authorities to hire foreign nationals, whether for short-term employment or via residence permits. As of 2025, work assignments will only be allowed under intra-corporate transferee permits.

Addressing Labour Shortages Through Immigration Reform

Estonia has recently moved to open its labor market to more foreign workers amid growing concerns about workforce shortages across several critical sectors.

“Of course, EKRE and others in parliament fear that seven million people will move to Estonia, but I encourage the public to focus on economic needs. The media could help raise awareness by presenting the OSKA report,” said Estonian Prime Minister Kristen Michal.

The OSKA report, cited by the Prime Minister, outlines Estonia’s urgent need for foreign labor, driven largely by shifting demographics and an aging population.