Estonian redundancy pay comes from two places, and knowing that changes what you should expect. Your employer pays one month of average pay however long you have worked there. The Unemployment Insurance Fund, Töötukassa, then adds one more month if you have five to ten years of service and two more beyond ten years.
On a €3,500 salary that is €3,500 gross for a shorter tenure and €10,500 once you pass ten years, which nets to about €8,026 after the flat 22% income tax and the II pillar contribution.
What tenure is worth
| Length of service | Employer pays | Töötukassa adds | Gross | Net |
|---|---|---|---|---|
| Under 5 years | 1 month | None | €3,500 | €2,675 |
| 5 to 10 years | 1 month | 1 month | €7,000 | €5,351 |
| 10 years or more | 1 month | 2 months | €10,500 | €8,026 |
PayMetric's own modelled figures from the Estonia severance engine, €3,500 a month, 2026 tax rates, a 2% II pillar contribution and no other income. Redundancy pay is taxed but does not carry unemployment insurance premiums.
Work out your own figure by salary and years of service.
Open the Estonia severance calculatorNotice runs on its own scale
The payment and the notice period are separate entitlements, and the notice ladder under the Employment Contracts Act is steeper: 15 calendar days under one year of service, 30 days from one to five years, 60 days from five to ten, and 90 days beyond ten years.
An employer that wants you to leave sooner can do so, but it must pay compensation for the unworked part of the notice period in addition to the redundancy payment. That makes a long-tenured Estonian exit considerably more expensive than the headline one-month employer share suggests.
Check the service length your employer reported
Töötukassa pays its share based on the length of service the employer reports. Because the thresholds sit at exactly five and ten years, a misreported start date or an unrecognised period of earlier service with the same employer can cost a full month of pay. If you are close to either boundary, confirm the figure before the employment ends rather than after the payment arrives.
Model your redundancy payment
Enter your monthly pay, years of service and II pillar rate to split the employer and Töötukassa shares and see the figure after tax.
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Frequently asked questions
How much redundancy pay does an Estonian employee get?
The employer always pays one month of average pay. The Unemployment Insurance Fund (Töötukassa) then adds a top-up that depends on tenure: one further month for five to ten years of service, and two further months for ten years or more. On a €3,500 salary that is €3,500 gross under five years, €7,000 from five to ten years and €10,500 beyond ten years.
Why does the state pay part of it?
Estonia deliberately splits the cost so that a redundancy does not fall entirely on an employer who may already be in difficulty. The employer's share is fixed at one month regardless of how long someone has worked there, and the length-of-service element is funded from the unemployment insurance contributions both sides have been paying throughout the employment. It is an unusual design: most countries put the whole obligation on the employer.
What does it net down to after tax?
Redundancy pay is ordinary taxable income, so the flat 22% income tax applies and the II pillar contribution is withheld if you participate. It does not carry unemployment insurance premiums, which ordinary salary does. On the €10,500 example for someone with ten years of service, that leaves about €8,026 net.
How much notice am I entitled to?
Notice is separate from the payment and also scales with tenure under the Employment Contracts Act: 15 calendar days for less than a year of service, 30 days for one to five years, 60 days for five to ten years and 90 days for ten years or more. If the employer gives less notice than required, it must pay compensation for the shortfall on top of the redundancy payment.
Do I have to claim the Töötukassa part myself?
The employer notifies Töötukassa of the redundancy and the length of service, and the fund pays its share to you directly, normally after the employment ends. It is worth checking that your service length was reported correctly, because the difference between nine and ten years of service is a whole extra month of pay.
Is this the same as unemployment benefit?
No, they are separate and you may receive both. The redundancy payment compensates for losing the job. Unemployment insurance benefit is a separate earnings-related payment you claim by registering as unemployed, and it depends on your contribution history rather than on which employer let you go.
What counts as a genuine redundancy?
The role has to have ceased to exist, for example because work volumes fell, the organisation was restructured or the employer is winding up. If the work continues and someone else is simply doing it, the termination may not be a lawful redundancy, and a challenge can lead to compensation for unlawful termination instead. Get the stated ground in writing.
General information only, not legal advice. Figures come from PayMetric's Estonia severance engine at 2026 tax rates, under the Employment Contracts Act. Your entitlement depends on your contract and the reason for termination. Take professional advice before agreeing a settlement.