Estonia

Impact date: The Draft Act 602 SE was adopted by the Parliament on 19 November 2025, but the President refused to sign the Act and returned it to the Parliament for reconsideration. As a result, the Act has not been published in the State Gazette and has therefore not entered into force. Since the President’s objections concern procedural irregularities in the legislative process rather than the substance of the amendments, the Parliament is expected to vote on the Act again, likely in early 2026. Draft Act 602 SE proposed changes to the Employment Contracts Act. They would allow employers and employees to enter into flexible working time agreements. These agreements would let employees work additional hours beyond their agreed schedule up to the full-time limit, under certain conditions (e.g., written form, minimum hourly wage of 1.2 times the statutory minimum, and at least ten hours of work over a seven day period). The purpose of the amendment is to give both parties more flexibility when workload and staffing needs fluctuate and when an employee’s availability varies, while discouraging the use of civil-law contracts in favor of an employment contract.

Impact date: As above, the Parliament is expected to vote on the Act for a second time, likely in early 2026. Draft Act 602 SE also regulates employees’ consecutive rest periods. In line with the Court of Justice of the European Union’s ruling in case C-477/21, the Draft Act guarantees employees consecutive rest periods of 48 hours in the case of normal working time (Monday to Friday) and 36 hours in the case of summarized working time. Although this has been long-standing practice in Estonia, the Draft’s amendment ensures legal clarity in this regard.

Impact date: As above, the Parliament is expected to vote on the Act for a second time, likely in early 2026. The Draft Act 602 SE also amends the Employment Contracts Act to expand the permitted working hours for minors. Under the new rules:

• seven–12 year olds may work up to two hours on a school day, five hours on a non-school day, and a maximum of 12 hours per week during the school term (or up to six hours per day and 30 hours per week during school holidays)
• 13–14 year olds may work up to two hours on a school day and seven hours on a non-school day, with the same 12-hour weekly limit during school terms and up to 35 hours per week during holidays
• 15–17 year olds who are still subject to compulsory schooling may work up to two hours on a school day and eight hours on a non-school day, with the same 12-hour weekly cap during the school term and up to 40 hours per week during holidays
• 15–17 year olds who have completed compulsory schooling may work full time, provided they have at least 12 consecutive hours of rest in any 24-hour period.

Impact date: 1 January 2026 From 1 January 2026, Estonia will raise the monthly tax-free income threshold to €700 (up from €654). This means employees will not pay income tax on the first €700 of their monthly gross salary, reducing the overall tax burden for workers. This change already affects December 2025 wages.