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Wage subsidy


Lisatud 07.11.2013 | Uuendatud 07.09.2021

A wage subsidy is the support paid to an employer for the hiring of an unemployed person. It is designed to support the long-term unemployed, young people, people with reduced capacity for work, recipients of international protection and people who have been released from prison in finding work.

The wage subsidy can be used to hire people who:

  • Have been continuously registered as unemployed for more than 12 months.
  • Are aged 16-24 (inclusive) and have been continuously registered as unemployed for more than six months.
  • Are aged 16-29 (inclusive) and have no or only short-term work experience. Read more about the terms: My first job.
  • Has been registered as unemployed for at least 12 months in the last 15 months and whose unemployment status has meanwhile been cancelled due to employment (Labour Market Services and Benefits Act § 6 section 5 cl 3) or compulsory military service, alternative service or reserve service (LMSBA § 6 section 5 cl 7) – also applies to registered unemployed persons aged 16-24.
  • Was released from prison up to 12 months prior to registration as unemployed, regardless of their unemployment status periood.
  • Is of decreased working ability and been registered as unemployed for at least 6 months in a row or worked under protected employment immediately prior to commencing work on the open labour market;
  • Are recipients of international protection* who are registered as unemployed and who obtained an Estonian residence permit on the basis of their status as a recipient of international protection or a certificate of an applicant for international protection allowing them to work in Estonia for the first time.

A person cannot be hired with a wage subsidy if they are studying full-time or acquiring vocational education in full-time studies, including persons on academic leave. This condition does not apply to My I Job service.

*A wage subsidy can be applied for in order to hire a recipient of international protection as part of the My First Job in Estonia service. For more detailed terms and conditions, click on this link: My First Job in Estonia for recipients of international protection.

Wage subsidy is not paid if an unemployed person is a member of the management or supervisory body of a legal entity governed by private law that is applying for a wage subsidy and is planning to hire the unemployed person or a partner of a limited or general partnership or if they own more than 50 per cent of said company.

Wage subsidy may be applied for by natural persons, legal persons governed by private law and local government authorities, including city and rural municipality governments. Wage subsidy cannot be applied for by state authorities, legal persons governed by public law and other persons not listed in the previous sentence.

Please note! An administrative contract for wage subsidy is entered into before commencement of the employment relationship.

Services „My First Job“ and „My First Job in Estonia“ are co-financed from the European Social Fund. 

„My First Job“ wage subsidy co-financed by the European Social Fund programm will be finished by the end of year 2022. In the case of wage subsidy agreements entered into until 31.12.2021, we will pay subsidy for salary declarations submitted until the end of 2022.

The wage subsidy for people with decreased working ability is co-financed by the European Social Fund. The programm will be finished by the end of year 2022. We will pay subsidy for salary declarations submitted until the end of 2022.

How to apply for a wage subsidy

A written application must be submitted to apply for a wage subsidy. You can submit the application

  • through the Unemployment Insurance Fund's self-service (you must be logged in to the portal as an employer to submit an application) by clicking on the following link: Application for wage subsidy
  • via e-mail or
  • on paper to a regional department of the Unemployment Insurance Fund.

What is the amount of the wage subsidy and on what basis is it paid out?

Wage subsidies can be requested for both fixed-term employment contracts and employment contracts entered into for an unspecified term. A fixed-term employment contract must be entered into for at least six months or in the case of applying for a "my first job" subsidy, for at least two years. You can read about the latter by clicking here: My first job.

When do I have to pay back the wage subsidy?

An employer shall return a wage subsidy in full if the employment relationship is terminated on the initiative of the employer earlier than one year after entry into the employment contract or the employment relationship with a term shorter than one year is prematurely terminated on the initiative of the employer.


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