A number of positive changes will soon be made to the Aliens Act

On May 9, the Parliament of Estonia adopted the Act on Amendments to the Aliens Act and the Act on Granting International Protection to Aliens, which will make the conditions of labour migration of foreigners more flexible. For example, the amendments will allow foreigners to work in Estonia for a short period of time for three years, the requirement of the salary criterion of a top specialist will be reduced, and several incentives will apply to growth companies in connection with the involvement of foreign labour. 

The Chamber of Commerce considers it very positive that the Parliament of Estonia adopted the amendments to the Aliens Act submitted by the Ministry of the Interior and the Ministry of Economic Affairs and Communications as a matter of urgency. The rapid processing of the Act was absolutely necessary and justified, as several changes are related to the Ukrainian war refugees and their employment opportunities in Estonia. In addition, the Act contains a number of points that employers have been waiting for for years that will make the recruitment of foreign labour more flexible. 

The following is an overview of the most important changes. 

A new type of residence permit will emerge - a temporary residence permit for short-term employment
A residence permit with a term of up to two years is added to the Aliens Act, which can be applied for by a foreigner who has worked in Estonia on the basis of registration of short-term employment for at least nine months immediately before applying for the residence permit, and whose employment continues with the employer who registered the employees’ short-term employment. In addition, the Act provides for additional requirements for employers. Namely, the employer must be trustworthy and have paid the foreigner a corresponding salary during the period of short-term employment. 

Such residence permit is exempt from the immigration quota. However, it is not possible for a foreigner to extend this residence permit, and a new residence permit of the same type is allowed for a foreigner only after one year has passed from the expiry of the previous residence permit. In addition, a foreigner is not allowed to work in Estonia on the basis of registration of short-term employment within one year after the expiry of this residence permit. 

Thus, in the future, a foreigner will be able to work in Estonia for three years. First, a foreigner can work in Estonia for one year on the basis of the registration of short-term employment, and then he or she can apply for a residence permit for short-term employment for two years, which is exempt from the immigration quota. 

The corresponding amendments will enter into force in the Aliens Act on January 1, 2023. 

The salary requirement of a top specialist is reduced
If, according to the current law, a top specialist has to be paid at least twice the Estonian average salary, this requirement will soon be reduced to 1,5 times the average salary. This means that all foreigners who wish to work in Estonia and to whom the employer pays at least 1,5 times the Estonian average salary are considered top specialists and are exempt from the immigration quota. This amendment is likely to come into law in the coming weeks. 

Incentives for growth companies to attract foreign labour
On January 1, 2023, several positive changes for growth companies will enter into force. Namely, in the future, growth companies will be allowed to pay foreigners’ wages that are at least 80 per cent of the average salary in Estonia. In addition, residence permits issued to foreign employees of a growth company do not go under the immigration quota. In case of such residence permit, the permission of the Unemployment Insurance Fund is also required. 

A growth company is considered to be a company registered in Estonia that is growing its activities, the aim of which is to further develop a business model with high global growth potential, technology-based, innovative and repeatable, which significantly contributes to the development of the Estonian business environment and which meets the following conditions: 1) has been in business for at least 10 years; 2) at least 50 employees work in Estonia; 3) has paid at least one million euros in labour taxes in Estonia in the last year and 4) the cumulative increase in labour taxes over the last three years is 20 per cent. 

Changes related to the war in Ukraine
An amendment to the Aliens Act will also enter into force in the coming weeks, providing a legal basis for entry into Estonia and temporary stay in Estonia for a foreigner who may be granted temporary protection and for Ukrainian citizen who stayed in Estonia before February 24, 2022 if they have no other legal basis for staying in Estonia. 

If Ukrainian citizen worked on the basis of registration of short-term employment in Estonia before February 24, and his or her period of employment in Estonia expires, the Ukrainian citizen may continue to work in Estonia upon entry into force of the amendment and is not subject to the requirements of the Aliens Act. In such case, the Employment Contracts Act or the Law of Obligations Act and the conditions provided therein shall apply to his or her employment. 

At the same time, the employer of the foreigner described above is subject to an obligation to pay the foreigner at least 0,8 times the average salary of the respective field of activity. When calculating the average monthly gross salary of a field of activity, the code of the Estonian Classification of Economic Activities (EMTAK) must be used as a basis. 

Changes that would rather not have a positive impact on employers
The Act adopted by the Parliament of Estonia also contains several amendments that have a negative impact on some employers and reduce flexibility. For example, in the future, short-term employment can only be registered for full-time employment. In addition, the principle will enter into force that if a foreigner works on the basis of a temporary residence permit intended for work, the employer must pay the foreigner at least the Estonian average salary regardless the workload agreed in the employment contract. 

If at present the temporary employment agency must have a deposit of at least 10 per cent of the foreigner's salary fund, then in the future the employer must have a guarantee in the amount of one month's salary of the foreigner. 

The draft also restricts the granting of visas to family members of foreigners working in Estonia for a short period of time. 

You can read more about the amendments to the Aliens Act passed by the Parliament of Estonia HERE.