Key facts
Employer pays
1 month
any tenure, TLS §90
5-10 years
+1 month
from Töötukassa
10+ years
+2 months
from Töötukassa
Redundancy severance in Estonia isn't a single payment from a single source, it's two different payments from two different payers, stacked together based on your years of service. Confusing the employer's fixed portion with Töötukassa's tenure-gated top-up is the most common source of confusion when someone tries to estimate what they're actually owed.
Here's exactly how koondamishüvitis works, who pays which part, and why it's easy to underestimate if you assume it's one flat number.
The employer's portion: 1 month, no exceptions
Under Article 90 of the Töölepingu seadus (Employment Contracts Act), any employee made redundant is owed 1 month's average salary from their employer, calculated from the average of their last 6 months of pay. This applies regardless of how long the employee has worked there, there's no minimum tenure requirement for this base payment.
Töötukassa's top-up: gated by tenure
| Years of service | Employer pays | Töötukassa adds | Total |
|---|---|---|---|
| Under 5 years | 1 month | Nothing | 1 month |
| 5 to 10 years | 1 month | 1 month | 2 months |
| 10+ years | 1 month | 2 months | 3 months |
This is redundancy-specific, not universal
Koondamishüvitis applies to koondamine, redundancy for economic, structural, or organizational reasons. It does not apply to termination for cause or proven misconduct, which carries no statutory severance at all, or to an ordinary resignation with standard notice. The one exception worth knowing: if you resign because your employer seriously breached the employment contract, you can leave without notice and may be entitled to a discretionary payment of up to 3 months' salary, decided case-by-case rather than by this formula.
Notice periods scale with tenure too
Separate from the severance amount itself, the notice period an employer must give before a redundancy also scales with how long you've worked there: at least 15 calendar days under 1 year of service, 30 days for 1 to 5 years, 60 days for 5 to 10 years, and 90 days for 10 or more years.
How it's taxed
Koondamishüvitis is subject to Estonia's flat 22% income tax, the same rate that applies to ordinary salary, and funded pension (II pillar) contributions are withheld from it too if you participate at a non-zero rate. It's exempt from social tax (sotsiaalmaks) and unemployment insurance premiums (töötuskindlustusmakse) on both the employee and employer side, since it's treated as compensation rather than wages for work performed.
A practical checklist
- Confirm the termination is genuinely classified as koondamine, not misconduct or resignation.
- Check your average salary over the last 6 months, the basis for the calculation.
- Confirm your exact years of service to determine which tenure tier applies.
- Verify which portion is coming from your employer directly and which from Töötukassa.
- Check the notice period you were given matches your tenure bracket.
Model your own severance
See the employer and Töötukassa portions separately, and exactly how much income tax and funded pension apply.
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Frequently asked questions
How much is koondamishüvitis in Estonia?
Your employer always pays 1 month's average salary (based on your last 6 months of pay), regardless of tenure. If you have 5 to 10 years of service, Töötukassa (the Unemployment Insurance Fund) adds 1 more month; at 10+ years, it adds 2 more months. Total: 1 month under 5 years, 2 months at 5-10 years, 3 months at 10+ years.
Does my employer pay the whole amount?
No. Your employer pays only the base 1 month directly. Any additional tenure-based top-up comes from Töötukassa, a separate state fund, not your employer's own payroll.
Does koondamishüvitis apply to every kind of termination?
No, only to koondamine (redundancy) specifically, under Article 90 of the Töölepingu seadus. Termination for cause or proven misconduct carries no statutory severance, and an ordinary resignation with standard notice doesn't trigger it either.
What if I resign because my employer breached the contract?
That's a different, discretionary situation. You can resign without notice and may be entitled to compensation of up to 3 months' salary, but the exact amount is decided case-by-case, not by the fixed koondamishüvitis formula.
Is koondamishüvitis taxed the same as regular salary?
For income tax, yes, the same flat 22% rate applies, and funded pension (II pillar) is withheld from it too if you contribute. It's exempt from social tax and unemployment insurance premiums on both sides, since it's compensatory rather than ordinary wages.
What notice period applies before a redundancy?
It scales with tenure: at least 15 calendar days under 1 year of service, 30 days for 1-5 years, 60 days for 5-10 years, and 90 days for 10+ years.
Related tools and reading
General information only. Check current official guidance and obtain professional advice for a decision affecting your tax, employment or immigration position.