Sick leave, holiday pay, and parental benefits in 2026: what changed and what do employees need to know?
2026 saw several changes to rules affecting employees’ income in Estonia. The most important changes concern the new upper limit for sickness and care benefits paid by the Estonian Health Insurance Fund, the calculation of tax-exempt income, and parental benefits. However, the basic rules for calculating ordinary annual leave and holiday pay did not change significantly in 2026. It is therefore worth distinguishing the new rules from those that were already in force.
Here are the most important changes and rules of 2026 that employees should know about.
1. A new daily upper limit for sickness benefit applies from 2026.
From 1 January 2026, a new upper limit applies to the temporary incapacity for work benefit paid by the Estonian Health Insurance Fund.
In 2026, the maximum amount of sickness and care benefits paid by the Estonian Health Insurance Fund is 126,87 euros per calendar day.
This does not mean that everyone on sick leave receives 126,87 euros per day. This is the maximum amount that the Estonian Health Insurance Fund will pay for one day.
For ordinary sick leave, the Estonian Health Insurance Fund’s benefit rate is generally 70% of the person’s average income subject to social tax in the previous calendar year.
For example, if the calculation gave a person a sickness benefit of 128,10 euros per day, the upper limit for 2026 applies, and the Estonian Health Insurance Fund calculates the benefit based on 126,87 euros per day.
The new upper limit applies to new cases of incapacity for work that begin on or after 1 January 2026.
If a sickness or care leave began before 1 January 2026 and continued after the turn of the year, the new upper limit does not apply to it.
Also, the upper limit of 126,87 euros does not apply to sickness benefits paid by the employer.
2. Who pays for ordinary sick leave?
The principle for ordinary illness or a household injury did not change in 2026.
For ordinary sick leave, the Estonian Health Insurance Fund generally pays 70% of the calculated daily income, but in 2026, the daily benefit paid by the Estonian Health Insurance Fund cannot exceed 126,87 euros.
It is important to note that not all certificates of incapacity for work follow exactly the same rules. For example, different compensation rules apply in cases of occupational accidents, occupational diseases and certain other special circumstances.
Benefits comparison table
Depending on the cause of incapacity for work, the benefit amount, the payer, and the start and duration of benefit payments may differ.
| Reason for exemption from work | Reason number | Type of certificate | Compensation rules | Payment duration for a single insured event |
|---|---|---|---|---|
| Illness or domestic injury | 1 | Sick leave certificate | The employer pays the benefit from day 4 of illness through day 8. The Health Insurance Fund pays from day 9; the benefit rate is 70%. | Up to 182 days (up to 240 days in the case of tuberculosis) |
| Traffic injury Complication/illness resulting from a traffic injury |
4 18 |
Sick leave certificate | The employer pays the benefit from day 4 of illness through day 8. The Health Insurance Fund pays from day 9; the benefit rate is 70%. | Up to 182 days |
| Quarantine | 10 | Sick leave certificate | The employer pays the benefit from day 4 through day 8. The Health Insurance Fund pays the benefit from day 9. The benefit rate is 70%. | Until the end of quarantine |
| Occupational disease | 2 | Sick leave certificate | Tervisekassa pays benefit from the 2 day of illness, benefit rate 100%. | Up to 182 days |
| Work accident Work accident in traffic Complication/illness resulting from a work accident |
5 6 7 |
Sick leave certificate | Tervisekassa pays benefit from the 2 day of illness, benefit rate 100%. | Up to 182 days |
| Injury sustained while protecting the interests of the state or society or preventing a crime | 8 | Sick leave certificate | Tervisekassa pays benefit from the 2 day of illness, benefit rate 100%. | Up to 182 days |
| Providing work suitable for the health condition of a pregnant woman | 17 | Sick leave certificate | Tervisekassa reimburses the difference between the average salary in effect on the day before the initial sick leave began and the salary paid by the employer.
When a pregnant employee performs lighter work, the employer must pay a salary of at least 50% of their salary before the sick leave for transfer to lighter work began. If a pregnant woman has one employer and is released from work because no lighter work is available, Tervisekassa pays the benefit from the 2 day of sick leave at a rate of 70%, based on income subject to social tax in the previous calendar year. |
Until the mother starts receiving maternity benefit, or until 182 days have elapsed |
| Illness or injury during pregnancy | 19 | Sick leave certificate | The Health Insurance Fund pays benefit from the 2th day of illness, at a rate of70per cent. | Up to 182 days |
| Caring for a sick child under the age of 12 or a person with a disability under the age of 19 | 14 | Maintenance sheet | The Health Insurance Fund pays compensation from the first day of sick leave; the compensation rate is 80%. | Up to 60 days |
| Caring for a sick family member at home | 12 | Maintenance sheet | The Health Insurance Fund pays compensation from the first day of sick leave; the compensation rate is 80%. | Up to 7 days |
| Caring for a child under the age of 3 or a child with a disability under the age of 16, where the carer is ill or receiving antenatal care | 13 | Maintenance sheet | The Health Insurance Fund pays compensation from the first day of sick leave; the compensation rate is 80%. | Up to 10 days |
| Donation of an organ or haematopoietic stem cells | 20 | Sick leave certificate | The Health Insurance Fund will pay from 1 onwards, at a rate of 100per cent. | Up to 182 days |
| Temporary easing of working conditions, no earlier than the 31th day of sick leave | 21 | Sick leave certificate | Tervisekassa reimburses the difference between the average salary in effect on the day before the initial sick leave began and the salary paid by the employer.
During the period of temporary adjustment of working conditions, the employer must pay the person a salary of at least 50% of their salary before the initial sick leave began. |
Compensation for sick pay and the difference in pay for working under adapted conditions is payable for a total of up to 182 days per case (or 240 days in the case of tuberculosis). |
Source:
Health Insurance Fund – Sickness Benefit
: Comparison table of benefits, last updated on 10.07.2026.
3. Ka hooldushüvitisele kehtib 126,87 euro upper limit
The new restriction also applies tothe care allowance paid by the Health Insurance Fund.
Care allowance may be paid, for example, if a person has to be absent from work:
- to look after a sick child;
- to care for a sick family member at home;
- in certain circumstances, to care for a young child if the child’s usual carer falls ill.
The Health Insurance Fund pays the care allowance from the first day of the care certificate, and in 2026, a maximumdaily allowance of 126,87 euros will also apply to this.
For example, if 80% of a care benefit calculated based on a person's income were 146,40 euros per day, due to the annual maximum for 2026, they would be paid a maximum of 126,87 euros per day.
The change will therefore have the greatest impact on people on higher incomes.
4. From 1 April 2026, sickness and unemployment insurance benefits will not be paid simultaneously
Another important change came into forceon 1 April 2026.
For new cases of temporary incapacity for work commencing on or after that date, the Health Insurance Fund will cease to pay incapacity benefit from the date on which the person becomes covered by health insurance through the Unemployment Insurance Fund as a recipient of unemployment benefit.
This means that a person will no longer be paid at the same time:
- Sickness or care allowance from the Health Insurance Fund;
- and unemployment benefit from the Unemployment Insurance Fund.
The change applies tonew cases of incapacity for work arising from 1 April 2026 onwards.
Holiday pay 2026: what has changed?
5. The basic rules for vacation pay did not change in 2026.
Unlike sick pay, there was no major new reform to the payment of ordinary annual leave in 2026.
An employee is still entitled to holiday pay and, as a general rule, this must be paid no later than the penultimate calendar working day before the start of the holiday.
The employer and the employee may also agree otherwise.
However, the agreement may not stipulate that holiday pay is to be paid later than on the pay day following the holiday.
Thus, for example, an employee and an employer may agree that holiday pay will not be paid before the holiday, but on the usual payday.
6. How is annual leave pay calculated?
If an employee has been paida fixed salary over the previous six months, there is no need to calculate the average salary separately for the purposes of paying annual leave pay, and the principle of salary retention applies.
If an employee’s remuneration has changed — for example, if they receive bonuses, performance-related pay or their basic salary has changed —the remuneration for the previous six calendar months is generally used.
In the case of annual leave, the average daily rate is calculated.
In simplified form:
average daily rate × number of annual leave days = holiday pay
When calculating the average daily pay, the wages earned over the previous six months and the number of calendar days in that period are taken into account.
The calculation excludes, amongst other things, days on which the employee was not paid in accordance with section 19 of the Employment Contracts Act due to absence from work. When calculating annual leave pay, neither national holidays nor public holidays are included in the number of calendar days.
Tax-free income and holiday pay 2026
7. The tax-free allowance for a person of working age is 700 euros a month
One of the most significant tax changes in 2026 is the new standard tax-free allowance.
From 1 January 2026, a person who has not yet reached retirement age and will not reach retirement age during that calendar year is entitled to a general tax-free allowance of:
up to 700 euros per month, or up to 8400 euros per year.
The tax-free allowance no longer decreases as income rises.
In 2026, the income tax withholding rate is22per cent.
An employer may apply tax-free income to an employee’s payments on the basis of a written application from the employee.
If a person receives taxable income from several payers, they may submit an application to claim the general tax-free allowance to one payer of their choice.
But what about an employee who has reached retirement age?
A person who has reached retirement age is entitled to a separate tax-free allowance in 2026:
776 euros a month, or 9312 euros a year.
Consequently, the 700-euro rule is not universal for all employees.
8. Advance payment of holiday pay may affect the use of tax-free income
This is one of the more practical nuances of 2026.
700 The tax-free allowance in euros is calculated on a calendar month basis.
If, for example, an employee is paid both their June salary and their July holiday pay in a single payment in June, their July payment may be smaller than usual or may not be paid at all.
If, in any given month, part of the 700-euro tax-free allowance remains unused,it cannot be carried over to the following month, used in advance or combined with other months’ allowances.
The MTA specifically highlights the situation where tax-free income remains unused due to illness or a long period of leave, as holiday pay has been paid in advance.
However, unused tax-free income may not necessarily be lost for good.
When submitting an annual tax return, a person’s annual tax-free allowance can be taken into account — up to 8400 euros per year for a person of working age.
Consequently, a portion of the income tax withheld during the year may be refunded on the basis of the tax return.
What happens if an employee falls ill whilst on holiday?
9. Leave may be interrupted due to illness
If an employee falls ill whilst on annual leave, they are not necessarily required to treat their sick days as days of annual leave.
Under section 69 of the Employment Contracts Act, an employee has the right to interrupt their holiday, postpone it or terminate it early, provided that this is due to a significant circumstance relating to the employee personally, including temporary incapacity for work.
However, there is one important point to note:
A holiday is not automatically interrupted simply because a sick note has been issued.
An employee must notify their employer of any circumstances preventing them from taking leaveat the earliest opportunity.
An employee may claim any unused portion of their annual leave immediately after the obstacle has ceased, or take it at another time by mutual agreement between the parties.
Parental allowance 2026
10. Vanemahüvitise ülempiir langes 3806,10 euros
From 1 January 2026,the maximum rate of parental benefit was reduced.
In 2025, the maximum amount of parental benefit was5265,09 euros per month.
In 2026, it is:
3806,10 euros a month.
The reason for this is a change whereby the upper limit is no longer three times, but twice, the average monthly income in Estonia subject to social security contributions.
The new upper limit applies to all types of parental benefit, but 2025. and 2026. In cases where there is a change of year, the applicable limit depends on the type of benefit and the date of birth.
Why is the situation more complicated for children born at the end of 2025 and the beginning of 2026?
Parental allowance for a working motheris calculated on the basis of the child’s expected date of birth.
Other types of parental benefit, such as shared parental benefit and paternity benefit, are generally based on the child’s actual date of birth.
For example, if lapse eeldatav sünnikuupäev on jaanuaris 2026, kuid laps sünnib tegelikult detsembris 2025, different upper limits may apply to the mother’s parental benefit and the father’s parental benefit or the shared parental benefit.
It is therefore advisable, in borderline cases at the end of 2025 and the beginning of 2026, to check your specific circumstances with the Social Insurance Board.
11. Income earned whilst receiving parental benefit no longer reduces the benefit — but you cannot work whilst receiving any form of benefit
This is where the change in 2026 is often explained in overly simplistic terms.
From 1 January 2026,the previous income limit for receiving parental benefit was abolished.
This means that, where working whilst receiving the relevant type of parental benefit is permitted,the parental benefit will no longer be reduced on account of the amount of income earned.
When can I work?
You are permitted to work whilst receiving the shared parental allowance.
From 2026 onwards, a person may also earn an unlimited amount of income subject to social security contributions during that period without the payment of parental benefit being reduced as a result of the income earned.
It is also permitted to workadoptive parent’s benefit.whilst receiving
When is it not possible to work?
It is not permitted to work whilst receiving maternity benefit or paternity benefit, as a working mother is on maternity leave during this period and a working father is on paternity leave, and the relevant employment relationship is suspended for the duration of the leave.
Consequently, the amendment of 2026 does not mean that it is now possible to work without restriction whilst receiving any form of parental benefit.
It is more correct to say:
If working is permitted whilst receiving a specific type of parental benefit, then income earned from 2026 onwards will no longer reduce the benefit.
12. The upper limits for parental leave benefits have also changed
The reduction in the upper limit for parental benefit also affected certain holiday benefits paid to parents.
In 2026, the following applies:
- lapsepuhkuse päevamäära ülempiir 63,44 euros;
- lapse vanema puhkuse päevamäära ülempiir 181,24 euros.
2025. aastal olid vastavad ülempiirid 87,75 ja 251,72 euros.
These are maximum daily rates, not amounts that every parent automatically receives.
Sick leave and holiday pay 2026: a quick overview
These articles may also be of interest
Pregnancy, childbirth and parental leave in Estonia: rights, benefits and deadlines
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A comparison of the Health Insurance Fund and private health insurance in Estonia
Find out what the Health Insurance Fund covers, when private health insurance might be beneficial, and how public and private health insurance differ.
How to check your pensionable service in Estonia: a simple step-by-step guide
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Salary before a job interview: what changed in Estonia on 13 July 2026?
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Frequently asked questions
What is the upper limit for sickness benefit in 2026?
The daily ceiling for sickness and care benefits paid by the Health Insurance Fund is 126,87 euros. This limit applies to new cases of incapacity for work arising from 1 January 2026 onwards.
Are the first three days of sick leave paid in 2026?
Not in the case of ordinary illness. No benefit is paid for the first three days; the employer pays for days 4–8, and Tervisekassa pays from day 9.
Did the procedure for calculating holiday pay change in 2026?
The basic rules for calculating ordinary annual leave pay did not change significantly in 2026. A more substantial change concerns tax-free income: the general tax-free allowance for a working-age person is up to 700 euros per month.
Can the unused 700 euro tax-free allowance be carried over to the following month?
No. The 700 euro tax-free allowance is calculated on a monthly basis, and any unused portion cannot be carried over to the following month or combined with other months. On an annual basis, any unused tax-free allowance can be taken into account on your tax return up to the annual limit.
What happens if I fall ill whilst on holiday?
In the event of temporary incapacity for work, an employee is entitled to interrupt, postpone or terminate their holiday early. The employer must be notified of this at the earliest opportunity. A holiday is not automatically interrupted simply because a sick note has been issued.
Is it possible to work in 2026 whilst receiving parental benefit?
This depends on the type of parental benefit.Working is permitted whilst receiving shared or adoptive parental benefit, and from 2026 onwards, income earned will no longer reduce the benefit. Working is not permitted whilst receiving the mother’s or father’s parental benefit.
Ametlikud allikad
Health Insurance Fund – sickness benefit
Health Insurance Fund – care allowance
Working life – calculating average pay and holiday pay
Official Gazette – Employment Contracts Act
Estonian Tax and Customs Board – calculation of tax-free income
Estonian Tax and Customs Board – Tax rates for 2026
Tax and Customs Board – tax-free income for old-age pensioners
Social Insurance Board – the upper limit for parental benefit and changes in 2026
Social Insurance Board – Earning an income whilst receiving parental benefit
Social Insurance Board – family benefit rates
Social Insurance Board – Changes to benefits for 2026
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This article is for information purposes only and does not constitute individual legal, tax or accounting advice. Legislation, benefit rates and official guidelines are subject to change. In specific circumstances, always check the current information on the relevant authority’s website. Artificial intelligence has also been used in the preparation of this article, and the facts have been verified against official sources.
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