Starting 1st January 2026, Estonia will introduce new restrictions that impact how businesses, particularly newly established and foreign-owned companies, hire non-EU workers. The changes reflect a broader government effort to increase oversight of foreign labour and ensure a stronger local business presence before granting access to long-term immigration routes.

Key regulatory changes

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1. Minimum operational history requirement

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Companies applying for a temporary residence permit to hire a foreign national will need to demonstrate at least six consecutive months of actual business activity in Estonia immediately prior to submitting the application.

Previously, no such operational history was required. This marks a substantial shift in policy, one that will likely delay the ability of newly founded entities to access long-term foreign talent.

Importantly, this requirement does not apply to companies using Estonia’s short-term employment registration route, which remains a more flexible and less burdensome process. However, that option may not meet the hiring needs of businesses requiring longer-term roles or more complex talent onboarding.

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2. Reform of temporary work agency rules

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Temporary work agencies leasing out foreign workers will now be required to demonstrate six months of actual business activity, either in Estonia or in another EEA (European Economic Area) member state.

At the same time, Estonia will eliminate the current rule requiring these agencies to provide a financial guarantee equivalent to one month’s salary per foreign worker. While this eases the financial burden on agencies, it also places greater emphasis on business history and raises questions about how employee wage protection will be enforced moving forward.

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3. Mandatory employer registration

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From 2026, any employer wishing to engage a foreign national, whether under a short-term employment registration or a temporary residence permit, must be registered in the Estonian business register.

Currently, foreign employers can send workers to Estonia without local business registration, provided the employment is registered under the short-term regime. This route will no longer be available. Once the new rule takes effect, such assignments will only be permissible via an intra-corporate transferee permit.

The reform does not affect public sector entities such as state or municipal institutions.

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Practical implications for employers

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These changes will particularly affect startups, foreign investors, and temporary staffing agencies. New businesses aiming to scale quickly with foreign talent will face an initial hiring freeze for up to six months unless they can rely on short-term employment registration, which may not be viable for all job types.

Established companies with a verifiable operating history in Estonia or within the EEA will find themselves in a more favourable position under the new rules.

In light of these changes, companies with planned foreign hiring strategies are advised to:

• Assess whether current or future hires fall under temporary or short-term employment categories.
• Consider whether operations should commence in advance of foreign recruitment efforts to satisfy the new six-month requirement.
• Review internal compliance with business registration obligations under the Estonian business register.
  
  

Employers should act now to review their hiring structures and assess compliance risks ahead of the 2026 enforcement date. For further guidance or support in navigating these changes, our immigration and labour law team is available to assist.

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Should you have any queries regarding the above information or if you require assistance with your corporate, employment or immigration matter, please get in touch with a legal professional at Hudson McKenzie via email at londoninfo@hudsonmckenzie.com or by telephone +44(0) 20 3318 5794.

The information provided does not amount to legal advice.

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