The Parental Benefit Act is designed to contribute to the successful intertwining of work and family life. The benefit itself provides parents with their average salary from the preceding calendar year for the time that they temporarily take off work to care for their children. All parents have the right to the parental benefit.
Who is eligible for the parental benefit?
Any parent, adoptive parent, step-parent, guardian or foster parent who is raising a child and who is a permanent resident of Estonia or a foreigner living in Estonia on the basis of a temporary residence permit has the right to the parental benefit.
The father of a child has the right to the parental benefit once the child has reached the age of 70 days. If the initial recipient of the parental benefit is the father, the mother must prove that she is not on parental leave.
Period during which the parental benefit is issued
People have the right to receive the parental benefit from the day following the final day of pregnancy and maternity or adoption leave. Parental benefit is paid for the period of 435 days. If a mother hasn't right to maternity leave she has the right to the parental benefit starting from the moment her child is born.
If the mother hasn't right to maternity leave, the parental benefit is paid until the child reaches the age of 18 months.
Calculating the amount of the parental benefit
The parental benefit is calculated on the basis of the income subject to social tax earned in the calendar year prior to the day on which the right to the benefit arose. Income from work on which social tax is paid in Estonia is considered income. If the state pays social tax on behalf of a person, this is not considered to be work income. Nor is income earned abroad which is not subject to social tax in Estonia taken into consideration.
The annual income is divided by 12 (months), with the number of days on which the parent was absent from work on a doctor’s certificate, a certificate for care leave or pregnancy and maternity leave having previously been subtracted. The resulting figure is the amount of the parental benefit. For example, if a mother takes pregnancy and maternity leave in March 2016 and the right to the parental benefit is based on income earned in 2015, the total income she earned in 2015 is divided by 12. However, if pregnancy and maternity leave begins on 1 November 2015 and the payment of the parental benefit commences in March 2016, the amount of the benefit is calculated as follows: income from 2015 divided by 10 (months). The months during which the mother is on pregnancy and maternity leave are not taken into account.
If the parent did not work during the year preceding the time at which the right to the benefit arises, the parental benefit is paid at the designated benefit base rate, which in 2016 is 390 € per month.
If the parent worked during this year but his or her average income was lower than the minimum wage, the benefit is paid at the minimum wage rate, which in 2016 is 430 € per month.
The upper limit of the amount of the parental benefit is three times the average salary from the year before last, which in 2016 is 2724,36 € per month.
If a mother has the right to take pregnancy and maternity leave but does not use it, the parental benefit is paid at not higher than the minimum wage rate for the first 70 days.
Once designated, the upper and lower limits on the parental benefit do not change when the calendar year changes. If the amount of the parental benefit is the minimum wage rate and in the new year this rises or the designated benefit falls below the minimum wage rate based of salary, the parental benefit is paid at the new minimum wage rate.
Calculating the amount of the parental benefit in the event of previous employment in a member state of the European Union
The calculation of the amount of the parental benefit for an applicant who worked in a country in the European Union, Norway, Liechtenstein, Iceland or Switzerland during the calendar year preceding the time at which the right to the benefit arose is done in accordance with Regulation no. 883/2004 of the European Union, which states that the time worked in these countries must be considered as being the same as if the person had worked in Estonia, i.e. the social tax imposed in Estonia for the previous calendar year is considered paid even during periods of employment in other countries. Income actually earned in another country is not taken into account when calculating the amount of the benefit.
If a parent worked in another EU country in the previous calendar year and received no income in Estonia, the parental benefit is designated at the minimum wage rate.
As an exception, more equitable treatment is extended to parents who only worked in another EU country during the previous calendar year but who worked in Estonia during the year in which the right to the parental benefit arose and who took pregnancy and maternity leave in Estonia. In this case the average salary in Estonia for the year during which the parent worked abroad is considered to be the income received abroad.
Changing the recipient of the benefit
Fathers have the right to receive the parental benefit once their child has reached the age of 70 days. If the father applies for the benefit after the mother has already received it, the benefit to be paid to the father is calculated according to the same period of income which formed the basis for calculation of the benefit for the mother. Since the parental benefit is a monthly benefit, the recipient can be changed at the beginning of the calendar month. The recipient is changed from the beginning of the following month provided that the application to this effect is lodged by the 15th of the current month. Payments to the new applicant are made in the month following the next calendar month.
In the event that the recipient of the parental benefit is changed, evidence of the end of parental leave must be submitted to the Social Insurance Board if the previous recipient of the benefit was on parental leave. This is also the case if the initial recipient of the benefit is the father: the mother must provide evidence that she is not on parental leave and confirm that she agrees to the benefit being paid to the father.
The parental benefit, other family allowances and pensions
During the period of payment of the parental benefit, parents are not paid a child care allowance for any child. The child allowance and other family benefits are paid at the same time as the parental benefit.
Those who have 2nd pillar funded pensions have one percent of the parental benefit paid into their pension fund for every child born before 01.01.2013. This payment is made from the state budget.
From 1 January 2013 the state began to make additional contributions to the 2nd pillar of insured persons obliged to pay contributions to the mandatory funded pension, who are raising a child under three years of age. The state contributes to the 2nd pillar in the amount of 4% from the Estonian average monthly income subject to the social tax. Contributions are made for the children born since 01.01.2013. The request for payment of contributions should be submitted to the Social Insurance Board, the recipient of the contributions does not have to be the recipient of the parental benefit.
Applying for the parental benefit
To apply for the parental benefit, submit an application at the Social Insurance Board. Take your passport or ID card with you.
During the first two months of each calendar year the applicant is required to submit a ‘TSM’ form regarding the amount of social tax they have paid. Social Insurance Board usually able to obtain the data they require from different databases, but since data about social tax is received with a delay, a ‘TSM’ form is needed from employers in the first two months of the year. This form can also be sent by post or electronically.
You can apply for the parental benefit online via the citizens’ portal https://www.eesti.ee/eng/.
Payment of the parental benefit
The parental benefit is paid out each month for the preceding month: the payment for January is made in February, and so on. In the event of later application the benefit is paid retrospectively, but not for more than the previous 6 months.
The parental benefit and working and earning income during the period of payment of the parental benefit
A parent may work or earn income during the period in which they receive the parental benefit, but if the income earned exceeds the rate of the benefit, the amount of the benefit for the month in question is reduced. Reducing the benefit in the case of income being earned is justified by law as being designed to maintain the income from the previous calendar year for the parent. Income covers all sums paid by employers, including bonuses, holiday pay and others.
If the income earned is less than the 390 € per month (base rate of the benefit) , the amount of the benefit is not changed. If more than 390 € is earned in a month, the amount of the benefit is changed as follows: new benefit amount = benefit – (income – benefit base rate) / 2 .
Persons have right to get at least half of the benefit granted to them. It is also prohibited to reduce the amount of the benefit under the limit of the benefit base rate.
In the event of earning an income, the Social Insurance Board must be informed each month during which the income was earned. If the Social Insurance Board is not informed of the income being earned, an injunction will be issued against the recipient of the benefit for the repayment of the parental benefit, since data about income will be received by the Social Insurance Board at a later date from the database of the Tax and Customs Board. The Social Insurance Board also has the right to determine a penalty payment.
The amount of the benefit is not decreased in the following cases:
• during the first calendar month of payment of the benefit in terms of income earned previously;
• during the final calendar month of payment of the benefit in terms of income earned after payment of the benefit has come to an end;
• in terms of income later paid due to the wrongful or unlawful behaviour of the employer;
• in the event of the receipt of benefits related to the insolvency of the employer on the basis of the Unemployment Insurance Act; and
• income earned as a self-employed person.
Successive births of children
The Parental Benefit Act promotes the birth of further children. If the benefit has been paid to a parent for one child and the parent’s next child is born less than two and a half years later and the amount of the parental benefit calculated for that child is smaller than that for the previous child, the benefit is determined on the basis of previous income.
A parent receiving the previous benefit who has the right to the maternity benefit can apply for compensation of the difference between the parental benefit and the maternity benefit once the child is born.