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Planned amendments to the Aliens Act

Two draft acts have reached the second reading in the Riigikogu, covering amendments to both the Aliens Act and other acts resulting from its amendment.

Draft Act 785 SE

The first draft act provides that sectors experiencing labour shortages may apply for temporary residence permits for employment on more favourable terms than previously.

Once the draft enters into force, the quota for temporary residence permits will no longer apply in certain sectors, and authorisation from the Unemployment Insurance Fund will no longer be required to take up employment. The list of affected sectors will be established for a maximum of five years and compiled on the basis of the labour needs forecast of the Estonian Qualifications Authority’s OSKA programme, the sector’s share of exports and average wages. The waiver is currently intended to apply primarily to the manufacturing, and transportation and storage sectors.

To prevent the inflow of low-cost foreign labour, the wage threshold has been set at 80% of the average gross wage in Estonia. In addition, an annual quota for residence permits issued for employment in sectors experiencing labour shortages will be established, depending on the economic environment. Under conditions of economic growth, this amounts to up to 0.2% of the permanent population (approximately 2,600 permits), and under other conditions, up to 0.1% of the permanent population (approximately 1,300 permits). Economic growth is assessed on the basis of the Ministry of Finance’s forecast for real GDP growth in the current year, which reflects the prevailing economic situation more accurately.

The draft act is available HERE.

Draft Act 786 SE

The aim of the second draft act is to transpose into Estonian law the EU directive that harmonises the right of third-country nationals to reside and work in the EU. According to the planned amendments, it will be possible to change the employer during the period of validity of a temporary residence permit issued for employment without having to apply for a new residence permit.

The amendment will accelerate the process of changing the employer and significantly reduce the administrative burden, as registering the change of employment with the Police and Border Guard Board will suffice instead of applying for a new residence permit. In the event of a change of employment, the established requirements for employment will continue to apply at the new workplace, including the wage threshold and the authorisation from the Unemployment Insurance Fund.

A residence permit issued for employment will allow an alien to stay in Estonia as an unemployed person for up to six months, depending on the duration of the permit, instead of the current 90 days. If the residence permit has been valid for less than two years, the period of unemployment may last for a maximum of three months; if the permit has been valid for more than two years, the period may extend up to six months. In exceptional cases, the period of stay in Estonia as an unemployed person may be extended to a maximum of nine months.

In addition to extending the permitted period of stay in Estonia as an unemployed person, these conditions will also apply to all cases of termination of an employment contract, including termination at the employee’s own initiative. If an alien is unemployed for more than three months, they must demonstrate that they have sufficient financial resources to cover their living expenses in Estonia.

Aliens working in Estonia on the basis of a long-term visa will be entitled to various social security benefits, including parental benefits, and benefits related to incapacity for work and pensions. Entitlement to social security benefits will arise only if all general eligibility requirements are met. Family allowances will not be extended to aliens.

Additionally, in response to the increase in violations related to the employment of aliens, fines imposed on legal entities will be increased. Whereas the maximum fine for legal entities has until now been 3,200 euros, following the amendments the maximum fine for material violations will be up to 100,000 euros.

The amendments will enter into force on 22 May 2026, which is also the deadline for transposing the directive.

The draft act is available HERE.

Amendments to the Employment Contracts Act allow for flexible working time agreements

On 13 February 2026, amendments to the Employment Contracts Act came into force, enabling employers and employees to conclude a flexible working time agreement, that is, agree on a working time as a period. A flexible working time agreement allows the parties to organise work more flexibly and to better accommodate fluctuations in workload and labour needs.

Under the amended Act, employers and employees may agree on working time as a period, specifying both the minimum and maximum possible working hours. For example, the parties may agree that the employee will work 20–30 hours per week, of which 20 hours must always be guaranteed by the employer, with the remaining 10 hours being additional. Under a flexible working time agreement, an employee may work additional hours beyond the agreed minimum hours until they have completed the standard full-time hours. Such additional hours will not be considered overtime if they remain within the agreed limits.

A flexible working time agreement must be concluded in writing and must specify at least the agreed number of working hours, the number of additional hours, and the minimum notice period for the possibility of working additional hours. In addition, the agreement must clearly state that the employee has the right to refuse to work additional hours. The employee must confirm their agreement to work additional hours in advance each time, in a form capable of being reproduced in writing.

It should also be taken into account that flexible working time agreements may only be concluded with employees whose hourly wage is at least 1.2 times the minimum hourly wage, and that the total of the agreed working hours and additional hours may not exceed standard full-time working hours, i.e. 40 hours per week.

In the case of the summarised working time calculation, the employee must be provided, at the end of the calculation period, with a clear schedule showing the agreed working hours, additional hours, and overtime hours for the entire period.