In a significant policy shift aimed at strengthening oversight and ensuring fair treatment of foreign workers, the Estonian government has approved new requirements for business owners and employers hiring non-native labor. The new regulations will come into force on January 1, 2026, and are expected to bring lasting changes to Estonia’s labor and migration landscape.

Stricter Requirements for Business Activity Before Hiring Foreign Nationals

As part of the reform, employers seeking to hire foreign nationals through temporary residence permits must now demonstrate at least six consecutive months of active business operations in Estonia. This rule is intended to ensure that only stable and legitimate businesses are eligible to bring in foreign labor.

These requirements are especially relevant for companies applying for residence permits for foreign workers. Unlike those hiring through short-term employment registration—who remain exempt from the new rule—these companies must provide documented evidence of business continuity and economic activity.

The Estonian government has clarified that this measure is designed to curb abuse in the immigration system and to prevent shell companies or recently-established entities from bypassing labor regulations.

Temporary Work Agencies Face New Compliance Measures

Temporary work agencies, which play a major role in leasing foreign workers to other companies, are also impacted by the new changes. Under the revised policy, such agencies will no longer be obligated to guarantee one month’s salary in advance for leased foreign employees.

Instead, they must prove six months of continuous business operations, either within Estonia or in any other Schengen Area country. While this adjustment eases the financial burden on agencies, it may also raise concerns about wage security and financial protection for foreign workers.

Employer Registration Now Mandatory for All Foreign Labor Hiring

In a move aimed at increasing transparency and accountability, only employers registered with the Estonian authorities will be allowed to hire foreign workers. This condition will apply to both:

• Employers applying for temporary residence permits, and

• Those engaging in short-term employment registration.

Unregistered companies will be ineligible to employ foreign workers under either category, effectively closing any remaining loopholes in the system.

Intra-Corporate Transfers and Exceptions

It’s important to note that while most reforms take effect from January 2026, assignments under intra-corporate transferee permits will continue to be allowed under existing rules.

Reform Intended to Support Labor Market Needs

Despite the more stringent requirements, Estonian authorities emphasize that these reforms are not meant to limit foreign labor, but rather to ensure that the businesses bringing them in are viable and accountable. In fact, the reforms coincide with government efforts to increase the number of foreign workers in Estonia amid growing labor shortages in key industries.

Estonian Prime Minister Kaja Kallas, referencing the OSKA labor market report, acknowledged that the country is facing a demographic shift and a shrinking workforce. These changes, she noted, are critical to maintaining productivity and ensuring that foreign workers are treated fairly and employed under lawful, stable conditions.