Dismissing an employee in Estonia: 7 mistakes foreign employers make

By Ero Liivik, lawyer (jurist) at Erovik Law Office · Updated 2 November 2026

Dismissing an employee in Estonia requires a ground set out in the Employment Contracts Act (TLS), a notice in the correct form and the correct notice period. There is no termination ‘at will’, and the employee has 30 calendar days to challenge the dismissal in court or before the Labour Dispute Committee (töövaidluskomisjon), which charges no state fee. Here are seven typical mistakes foreign employers make, and how to avoid them.

Key points

• You cannot terminate without a statutory ground.
• Dismissal for breach of duties normally requires a prior warning.
• The notice must be in a form that can be reproduced in writing and must state reasons.
• Employer notice is 15 to 90 calendar days, depending on the length of employment.
• Pregnant employees, employees on family-related leave and employee representatives are specially protected.
• A void dismissal can cost three months’ average wages, or twelve months’ for some protected employees.

These rules apply when Estonian law governs the employment contract. English translations of the acts are published in Riigi Teataja.

Mistake 1: Assuming you can dismiss ‘at will’

Unlike in many countries, an Estonian employer may terminate only on a ground set out in the Act (TLS §§ 83, 85(5)). There are three routes:

• Probation, if the employee does not meet the level the job requires (see our probation period guide).
• Reasons relating to the employee (TLS § 88), for example long-term inability to do the work, ignoring reasonable instructions or breaching duties despite a warning, or theft or fraud causing loss of trust.
• Redundancy (koondamine) (TLS § 89).

A termination without a lawful ground is void (TLS § 104(1)). A cost-cutting decision at head office is not enough by itself: the work must actually have decreased, been reorganised or ended (see Mistake 5).

Mistake 2: Skipping the warning

A dismissal for breach of duties or for declining ability to do the work must normally be preceded by a warning (hoiatus). You can skip it only if the employee cannot in good faith expect a warning, for example because the breach is particularly serious (TLS § 88(3)).

• The Act prescribes no form for the warning, but you must be able to prove it. Put it in writing, name the specific breach and keep proof of receipt.
• Keep the warning and the notice separate. ‘If you are late again, your contract ends on 30 June’ is a conditional notice, and a conditional notice is void (TLS § 95(1)).
• Act within a reasonable time after you learned, or should have learned, of the reason (TLS § 88(4)).
• Offer other work first if possible (TLS § 88(2)).

Mistake 3: Getting the form or delivery of the notice wrong

The notice of termination must be in a form that can be reproduced in writing, or it is void (TLS § 95(1)). No handwritten signature is needed, but the notice must allow lasting written reproduction and name the person giving it (General Part of the Civil Code Act (TsÜS) § 79). A letter or an e-mail works; a phone call does not. State the reasons in the same form (TLS § 95(2)). Missing reasons do not invalidate the notice but can lead to a damages claim (TLS § 95(3)).

The notice takes effect when the employee receives it (TsÜS § 69(1)), and the 30-day deadline to challenge it runs from receipt. Keep proof of delivery.

Mistake 4: Ignoring the notice periods

Periods are counted in calendar days; a collective agreement may set different ones (TLS § 97(4)).

Situation	Minimum notice from the employer
Employment has lasted less than one year	15 calendar days (TLS § 97(2))
One to five years	30 calendar days
Five to ten years	60 calendar days
Ten years or more	90 calendar days
Termination during probation	15 calendar days (TLS § 96)

If your notice is too short, the employee is entitled to average daily pay for each working day of shortfall (TLS § 100(5)). When you dismiss for reasons relating to the employee or for redundancy, give the employee reasonable time off during the notice period to look for a new job (TLS § 99). Dismissal without notice is possible only for reasons relating to the employee (other than health), and only if continuing until the end of the notice period cannot reasonably be required (TLS § 97(3)).

Mistake 5: Calling it redundancy when the job has not gone

Redundancy is about the job, not the person. The employment can no longer continue on the agreed terms because the volume of work has fallen, the work has been reorganised or it has otherwise ended (TLS § 89(1)). You must first offer other work if possible (TLS § 89(3)) and follow the principle of equal treatment (TLS § 89(4)). Employee representatives and employees raising a child under three have a preferential right to stay (TLS § 89(5)). Hiring someone else for the same work soon afterwards suggests that the work never ended.

Budget for the costs:

• You pay compensation of one month’s average wages (TLS § 100(1)).
• After five years or more with you, the Unemployment Insurance Fund (Töötukassa) also pays the employee one month’s average wages (five to ten years) or two months’ (over ten years) (Unemployment Insurance Act (TKindlS) §§ 14¹–14²). You must apply within five calendar days after the employment ends (TKindlS § 14³).
• Ending a fixed-term contract early for economic reasons generally costs the wages until the end of the term (TLS § 100(3)).
• Collective redundancies require consulting the employees’ representative or the employees and notifying Töötukassa first (TLS §§ 90, 101–103).

Mistake 6: Dismissing a protected employee

You may never dismiss an employee because they are pregnant or entitled to maternity leave, take family-related leave, are briefly unable to work for health reasons, represent other employees, or are in conscript, alternative or reserve service, among other reasons (TLS § 92(1)). Retaliating against an employee for relying on their rights is also prohibited (TLS § 2¹).

If the employee is pregnant, is raising a child under three, or in the past year has applied for or used certain family-related leave, the dismissal is presumed to be for a prohibited reason unless you prove a lawful ground (TLS § 92(2)). The same applies to employee representatives during their mandate and for one year after it (TLS § 92(3)). Before dismissing a representative, ask the employees who elected them, or the trade union, for an opinion; they have ten working days to give it (TLS § 94).

Pregnant employees, women entitled to maternity leave and employees on paternity, adoption or parental leave cannot be made redundant, except when the employer’s activity ends or in certain bankruptcy situations (TLS § 93(1)). Pregnant employees and women entitled to maternity leave also cannot be dismissed for declining ability to do the work (TLS § 93(2)). The employee may tell you about the pregnancy or leave entitlement up to 14 calendar days after receiving the notice (TLS § 93(3)), so a dismissal can turn out to be void after the event.

If the employee was pregnant, entitled to maternity leave or an elected employee representative, the committee or court will normally refuse your request to end the employment (TLS § 107(3)). If it is ended, compensation is twelve months’ average wages, which the committee or court may adjust (TLS § 109(2)).

Mistake 7: Having no evidence when the claim arrives

The Labour Dispute Committee operates at the Labour Inspectorate. It hears disputes with employers registered in Estonia, operating through an Estonian branch or registered as a non-resident employer (Labour Dispute Resolution Act (TvLS) §§ 2(1), 4(1)). Each party must prove the facts it relies on (TvLS § 45(1)), and the committee sets a deadline for your reply and evidence (TvLS § 37(3)). It should hear the application within 45 calendar days of receipt, unless objective circumstances justify longer (TvLS § 38(1)).

Keep a file from day one: the contract, warnings with proof of receipt, the notice with proof of delivery and, for redundancy, the business decision and any offers of other work. The committee may hold a hearing by video link (TvLS § 42¹), which helps managers based abroad.

Ending the contract by agreement

Often the cleanest exit is an agreement, possible at any time (TLS § 79). Record the end date, the final pay and compensation for unused holiday (TLS § 71), any extra payment and its due date, and which claims are settled. A non-compete clause binds the employee after the end only if, among other conditions, it is in writing, lasts no more than one year and you pay reasonable monthly compensation (TLS § 24). Expect negotiation: after termination by agreement, the employee has no right to the income-based unemployment insurance benefit (TKindlS § 6(2)).

What the employee can claim, and how fast

• Deadline: 30 calendar days from receiving the notice to apply to the committee or a court. After that, unless the deadline is restored, the termination stands (TLS § 105).
• Cost: no state fee at the committee; each party bears its own costs (TvLS §§ 15–16).
• Outcome: a void termination does not end the contract (TLS § 107(1)). At either party’s request, the committee or court ends it and awards three months’ average wages, which it may adjust (TLS §§ 107(2), 109(1)). If the employment continues instead, the employee can claim lost wages, less what they earned elsewhere (TLS § 108).
• Court: either side may take the committee’s decision to court within 30 calendar days of receiving it, as a new civil action rather than an appeal (TvLS § 58). In court, the losing party generally bears the costs (Code of Civil Procedure (TsMS) § 162(1)).

Related guides: Redundancy in Estonia and Employment contracts in Estonia.

Frequently asked questions

Can I fire an employee in Estonia without a reason?

No. You need a statutory ground and must give the reasons in a form that can be reproduced in writing (TLS §§ 85(5), 95(2)), even during probation.

Is severance pay mandatory in Estonia?

Only in specific cases, mainly redundancy: one month’s average wages from the employer (TLS § 100(1)), plus the Töötukassa benefit after five years. A lawful dismissal for the employee’s breach of duties carries no statutory severance pay, but unused holiday must still be paid out (TLS § 71).

Can a Labour Dispute Committee case be held in English?

Proceedings, including the minutes, are in Estonian. A hearing can be held in another language only if the parties and the committee members agree. Otherwise, a party who does not speak Estonian and has no Estonian-speaking representative must find an interpreter, at its own cost (TvLS § 13¹).

How Erovik Law Office can help

Erovik Law Office in Tallinn advises employers, including foreign companies, on Estonian employment law. Ero Liivik, lawyer (jurist), can review a planned dismissal before you act, draft warnings, notices and settlement agreements, and prepare your reply to a Labour Dispute Committee claim. We work in Estonian and English and usually reply within one working day. An initial written legal analysis and action plan costs EUR 120–180 (see our fees). See also our employment law services and the guide to termination of employment in Estonia, or send a short description via our contact page.

This guide reflects Estonian law in force on 1 November 2026. It is general information, not legal advice for your situation.