Estonia’s Aliens Act regulates the entry, exit and temporary stay of foreigners in Estonia. On May 9, Estonia’s parliament passed amendments to the country’s aliens act and act on granting international protection to aliens. The changes will make it easier for foreigners to work in Estonia, by reducing the salary criterion for top specialists and providing incentives for growth companies that hire foreign labor.
The Chamber of Commerce (the chamber) welcomed the amendments, saying they were necessary and justified, particularly in light of the current war in Ukraine and the need to provide employment opportunities for refugees. The chamber also said the changes will make it easier for employers to recruit foreign labor. This article will provide an overview of the main changes to the Aliens Act, as well as a look at how these changes will impact employers and foreigners seeking work in Estonia.
A new type of residence permit will allow foreigners who have worked in Estonia on a short-term basis for at least nine months to apply for a residence permit that is valid for up to two years. In addition, the employer must meet certain requirements in order for the employee to be eligible for this type of residence permit, such as being trustworthy and having paid the employee a corresponding salary during the period of short-term employment.
A foreigner who has been granted this type of a residence permit in Estonia is exempt from the immigration quota, but cannot extend this residence permit. A new residence permit of the same type can only be issued to a foreigner one year after the previous one expires. Additionally, a foreigner is not allowed to work in Estonia on the basis of registration of short-term employment within one year of the expiration of their residence permit. Therefore, in the future, a foreigner will only be able to work in Estonia for three years total. First, a foreigner can work in Estonia for one year on the basis of registration of short-term employment. After that, they can apply for a residence permit for short-term employment for two years, which is also exempt from the immigration quota.
The proposed amendment to the law would reduce the salary requirement for top specialists from twice the Estonian average salary to 1.5 times the average salary. This would mean that any foreigner wishing to work in Estonia and being paid at least 1.5 times the Estonian average salary by their employer would be considered a top specialist and exempt from the immigration quota and work permit from the Estonian Unemployment Insurance Fund. This amendment came into law on 24.05.2022.
Incentives for Hiring Foreign Labor
As of January 1, 2023, growth companies will be allowed to offer salaries to foreign employees that are at least 80% of the average salary in Estonia. In addition, residence permits issued to foreign employees of a growth company will not be subject to the immigration quota. For such residence permits, permission from the Unemployment Insurance Fund will also be required.
In Estonia, a growth company is defined as a company registered in Estonia that is growing its activities, with the goal of further developing a business model that is highly innovative and globally scalable. To be eligible, the company must also contribute significantly to the development of the Estonian business environment, and meet the following criteria: 1) being in operation for at least 10 years; 2) having at least 50 employees located in Estonia; 3) paying at least one million euros in labor taxes in Estonia over the course of the last year; and 4) experiencing a cumulative increase in labor taxes of 20% or more over the last three years.
Ukraine and Refugees
The Aaliens Aact will be amended to provide a legal basis for entry into Estonia and temporary stay in Estonia for a foreigner who may be granted temporary protection and for Ukrainian citizens who stayed in Estonia before February 24, 2022 if they have no other legal basis for staying in Estonia.
This amendment will allow Ukrainian citizens who were working on the basis of registration of short-term employment in Estonia before February 24 to continue working in Estonia after the amendment goes into effect. The employer of such a foreigner is required to pay the foreigner at least 0.8 times the average salary of the respective field of activity. The Estonian Classification of Economic Activities (EMTAK) must be used as a source when calculating the average monthly gross income for a field of activity.
Impact For Employers
The new law passed by the Estonian parliament includes several provisions that will have a negative impact on some employers, including reducing flexibility. For example, in the future, short-term employment can only be registered for full-time employment. In addition, a principle will go into effect that requires employers to pay foreigners working on temporary residence permits at least the Estonian average salary, regardless of the workload agreed to in the employment contract.
The draft law also restricts the granting of visas to family members of foreigners working in Estonia for a short period of time. This will make it more difficult for employers to hire foreigners for short-term work.
Clearly, the proposed changes to Estonia’s immigration laws will have a significant impact on employers and employees alike. Employers should be aware of the new salary requirements, as well as the restrictions on short-term work visas. Employees may also find it more difficult to bring family members with them when they come to work in Estonia.
Overall, the proposed changes appear to be aimed at attracting highly-skilled workers to Estonia and enabling them to stay in the country for longer periods of time.
All of this progress speaks to Estonia’s forward-thinking legal system, which is always adapting to the needs of businesses and individuals. And it’s just one more reason why Estonia is considered a world leader in digital innovation.
If you are a foreigner or expat with legal questions, be sure to check out LEGID, the leading AI-powered marketplace for connecting with lawyers in Estonia. With just a few clicks, you can find an attorney who specializes in your specific legal issue and secure the help that you need. Learn more at www.legid.app.