Hiring foreign workers

2022 - 12 - 16
Article by: Karina Paatsi, Heili Haabu

At the end of November, the Government of Estonia confirmed the immigration quota for 2023, and based on this, the Police and Border Guard Board announced the time slots for submitting residence permit applications in their online booking system in December and January. The time slots were fully booked in just a matter of minutes, and many foreigners waiting for the booking calendar to load lost their booking. Therefore, applying for residence permits for third-country nationals is becoming increasingly difficult, with luck playing a role in the process. However, the Aliens Act has recently been supplemented with provisions allowing certain types of employees to go through the necessary immigration formalities in a simplified way.

Employees of growth companies

A new provision in the Aliens Act entering into force on 1 January 2023 stipulates that employees of growth companies can apply for a residence permit in Estonia outside the immigration quota. For the purposes of the Aliens Act, a growth company is a company registered in Estonia that is expanding its activities to further develop a technology-based, innovative and repeatable business model with high global growth potential, thereby significantly contributing to the development of the Estonian business environment, and that meets the following criteria:

  1. the company has been operating for at least ten years;
  2. it has at least 50 employees in Estonia;
  3. the company has paid at least one million euros in labour tax in Estonia in the last year; and
  4. the labour tax paid by the company has made a 20% cumulative increase over the last three years.

In essence, this is an extension of the exception for start-ups, which allows long-operating technology companies to hire foreign workers through a simplified procedure. Foreign workers in growth companies are also subject to a lower-than-usual minimum wage requirement, standing at 80% of the Estonian average wage. In addition, when applying for a residence permit for these employees, it is not necessary to obtain consent from the Unemployment Insurance Fund to fill the position with a foreign worker.

Temporary residence permits for short-term work

As another exception, from 1 January 2023, foreign workers who are granted a temporary residence permit for short-term work will be exempted from the immigration quota. This new category of residence permit is issued for up to two years to a foreign worker if:

  1. immediately before applying for a residence permit, the worker has worked in Estonia for at least nine months based on short-term employment registration;
  2. they will continue to work with the same employer;
  3. the employer is reliable; and
  4. the employer has paid the worker wages that meet the requirements for the period of registered short-term employment, that is, wages equal to at least the average Estonian wage.

This provision is primarily aimed at employees whose long-term visa and the right to work in Estonia based on short-term employment registration are about to expire but who wish to continue working in Estonia temporarily. This type of residence permit is not suitable for permanently settling in Estonia, because after it expires, the employee cannot reapply for the same type of residence permit or extend the existing residence permit during one year, nor can the spouse of the holder of the residence permit, as a rule, obtain a residence permit to settle with them in Estonia (except for Ukrainian citizens). On the other hand, it is a practical (albeit temporary) solution for those employees who do not fall under the immigration quota but wish to continue working in Estonia.

Ukrainian workers

There has been a lot of media attention on the possibilities for Ukrainians to apply for temporary protection and the right of Ukrainians receiving such protection to start working in Estonia. However, employers are less familiar with the simplified procedures for employing Ukrainian citizens who arrived in Estonia before 24 February 2022 and are therefore not eligible for temporary protection or have not applied for protection for other reasons. An exception established by the Aliens Act from 24 May 2022 allows the employment of such persons on the condition that the employer pays them a salary equal to at least 80% of the Estonian annual average gross monthly wage in the field of activity in which they are employed, based on the latest data published by Statistics Estonia. You can find the average wages by field of activity on the Statistics Estonia website: https://andmed.stat.ee/en/stat/majandus__palk-ja-toojeukulu__palk__aastastatistika/PA001.

Provided that the wages paid to the Ukrainian worker meet this requirement, the worker does not need to apply for a residence permit to work in Estonia, and the employer does not need to register their short-term employment.