Minimum Wage Level Increased

The situation

Effective January 1, 2019, the minimum monthly wage in Estonia has increased to EUR 540, up eight percent from last year. Additionally, the minimum monthly legal income required for foreign nationals and their family members has increased to EUR 300 per family member, up seven percent from last year (e.g. EUR 1,200 for a foreign worker travelling with a spouse and two children).

A closer look

• Impact on EU nationals. The minimum wage level applies to EU nationals under a local employment contract in Estonia. EU workers on assignment are not subject to a minimum salary requirement. Employers of EU nationals on a local contract must increase the employee’s salary to comply with the new rule.
• Impact on non-EU nationals. Non-EU workers are subject to a separate higher threshold which is not expected to change soon, but must receive at least the minimum legal income for each family member. Employers of non-EU nationals must increase the foreign worker’s salary if they no longer meet the new minimum monthly legal income requirement.

Reminders on other requirements

• Benefits and allowances. As before, benefits and allowances cannot be included in the minimum salary calculation.
• Currency. As before, employers are required to guarantee the salary in EUR regardless of payroll location and/or exchange rate fluctuations.
• Payment method. As before, the salary must be paid per the threshold from the first day of work onwards. Salary must be paid monthly and cannot be prorated.

Background

Estonia increased its minimum wage level by 9.3 percent for 2017 and 6.4 percent for 2018.

Looking ahead

The Estonian government is also expected to announce the quota figures for 2019 shortly. The quota of 1,351 residence permit applications for 2018 is currently exhausted, although many categories of applicants are exempt from the quota. Non-exempt applicants must await publication of the new quotas before they can file a work permit application. Fragomen will report on the new quota figures and any other relevant developments once available.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].