Cross-Border Telework 2026: What Your Employment Contracts Must Now Cover

One of your best developers is moving to Finland to follow their partner. They want to keep working for you, just from Helsinki. You agree — remote work is routine anyway. But six months later a question lands from the Finnish tax authority: why has this employee's social tax not been paid in Finland, when they physically work there?

This is a scenario that touches more and more Estonian employers in 2026. And since 1 February 2026 there is a clear framework for handling it — if you know how to use it, and if your employee is in the right country.

What changed on 1 February 2026

On 1 February 2026 Estonia joined the EU framework agreement on cross-border telework and became its 23rd signatory. (Belgium, as the depositary state, maintains the text of the agreement and an up-to-date list of signatory countries — that is where you can check whether a particular country has joined.) It is a multilateral agreement that governs one specific question: which country's social security covers an employee who teleworks from one country for an employer in another.

To understand what the agreement changes, you need to know the rule that came before it. Under the EU social security coordination regulation (Regulation 883/2004), an employee's social security shifts to their country of residence once they work there for a "substantial part" of their time — and "substantial part" means 25% or more of working time. In other words, before the framework, staying in the employer country's social security meant keeping telework in the country of residence below 25%. In the age of remote work, that was an absurdly low threshold.

The framework creates a new exception: within the 25–49.99% band a cross-border teleworker can opt to remain in the employer country's social security. Put plainly: an employee can telework from their country of residence up to 49% of the time and social tax still flows to the country where the employer is. From 50% onward, social security automatically moves to the country of residence — and the exception no longer applies.

It is important to keep the scope clear. The framework concerns social security only — where social contributions are paid. Income tax and labour law (leave, termination, minimum terms) follow separate rules and are not changed by this agreement. This article is about social security.

There is one catch for Baltic employers

Here comes the most important nuance that many news items skip: the framework can only be used if both countries have signed it — both the employee's country of residence and the employer's country.

And in the Baltic context that means this: Latvia and Lithuania have not signed the framework agreement.

This turns the usual assumption on its head. If you have an Estonian company and an employee teleworking from Latvia or Lithuania, the framework does not apply — the old 25% default rule stays in force. The same is true in reverse: a Latvian or Lithuanian employer with an employee teleworking from Estonia cannot use the agreement either.

Where the framework does work is in Estonia's relations with other signatory countries — Finland, Germany, the Netherlands, Ireland, Spain and most of the EU have signed. These are exactly the scenarios where an Estonian employer should act now:

• An Estonian-resident employee teleworking from Estonia for an employer in Finland or Germany.
• An employee of an Estonian employer who has moved to another signatory country and keeps working from there.

If your employee is in Latvia or Lithuania, do not assume the framework's protection — instead the 25% threshold applies, or you need to apply for a slower individual exception.

Why it doesn't sort itself out

The most common mistake is to assume the framework "applies automatically." It does not. The framework is not a change to the default rules — it is an exception that must be applied for.

For an employee to remain in the employer country's social security, someone has to apply for an A1 certificate. The A1 is the document confirming which country's social security law applies to the employee. Without it, the default situation stands — and if the employee teleworks 25% or more, that default may mean the social tax should have gone to the country of residence instead.

A few practical details about the A1 are worth knowing:

• The employer applies, the certificate is in the employee's name. In Estonia the application is filed with the Social Insurance Board through the eesti.ee portal — that page also has the application form and detailed guidance.
• Electronic applications are fast. The certificate is usually issued within the next working day. Paper or incomplete applications are processed within up to 30 days.
• Retroactivity is limited. The certificate can cover up to three months before the application date — so it is not worth waiting too long.
• The certificate is time-limited. An A1 is valid for up to three years, after which it must be renewed.

The A1 is an administrative step. But that step rests on something that has to be in writing first — an agreement with the employee about where and how much they work.

What the contract must document

This is where social security rules and contract management meet. The A1 application assumes the telework arrangement is clear and documented. And under employment law the place of work is a mandatory term of the employment contract anyway. When an employee starts doing part of their work from another country, that should be reflected in writing — and the cleanest way is a telework addendum to the existing employment contract.

A good telework addendum documents at least the following:

1. Place and country of work — including, clearly, that part of the work is done from another country (e.g. "telework at the employee's residence in Finland").
2. Share of telework — what proportion of working time the employee does from the country of residence (important because of the 25% and 50% thresholds).
3. Applicable social security — confirmation that the parties will apply for an A1 certificate so the employer country's social security applies.
4. Work equipment and data protection — how access and protection of the employee's data are ensured across borders.

The point is not bureaucracy for its own sake. These four points are exactly what helps you justify the A1 application, and what protects you if a tax authority asks years later why the arrangement was set up the way it was.

How Agrello helps here

If you have two employees abroad, you can draft the addenda by hand. With ten, the manual approach quickly turns into the same chaos as any other copy-paste contract process: the wrong percentage in one file, an old date in another, an unsigned third.

The idea with Agrello is to turn the telework addendum into a template you can reuse:

• One template set. Turn the telework addendum from a Word file into a template — mark the variable fields (country, telework %, dates) with curly braces and fill them in per employee.
• Bulk creation for distributed teams. When you need to issue addenda for several people working abroad at once, connect an Excel or CSV file to the template and generate all the documents in one go.
• Signing that works across borders. You send the signing invitation by link to an email address — the employee signs with Smart-ID, Mobile-ID or an ID card. For an employment contract and its addenda, Estonia requires a digital signature equivalent to a handwritten one, and these qualified methods meet that bar.
• Audit trail as evidence. Every signed addendum stays in the system with its timestamp and signers. If years later you need to prove when and what was agreed, it is one search away — not buried in someone's email.

Signing the contract does not solve the social security question — the A1 certificate does. But a properly documented, signed and findable telework addendum is the foundation the rest of your compliance rests on.

In short: three steps before summer

Estonia joining the framework is good news for any employer with staff in other signatory countries. But it doesn't do the work for you. Three concrete steps:

1. Map where your employees actually work. Who teleworks from abroad, and from which country? Immediately set apart those in Latvia or Lithuania — the framework does not help there.
2. Document the arrangement in writing. Create a telework addendum that fixes the place of work, the share of telework and the social security — and get it signed.
3. Apply for the A1 certificate. Not "some time later," but now — retroactivity is only three months.

The easiest place for step two to break down is drafting the contract itself: ten addenda, ten manually filled files, ten unsigned drafts. That is exactly the part you can do once, correctly, and then repeat.

Try Agrello templates for free and turn the telework addendum into a template you can send for signing, per employee abroad, in minutes.