The government approved a decision on Friday which will see €250 million used to support the income of employees who cannot work due to the economic effects of the coronavirus pandemic.
The funds will pass via the Unemployment Insurance Fund (Töötukassa).
"The coronavirus spread is not only affecting the health of people in Estonia but is also having a major impact on our economy," Prime Minister Jüri Ratas (Center) said in a statement.
"It is the government's desire to ensure we can provide our people with jobs and incomes during the current situation. We must maintain our peace of mind and the certainty that we will return to our normal rhythm of life and the functioning of our society, as soon as the emergency is over," Ratas continued.
Employers may apply to the Unemployment Insurance Fund for two months'-worth of compensation, for a period of their choice starting between March 1 and May 31 and through to June 30, the government said.
The benefit can be paid to any employee whose volume of work or whose salary has been cut by at least 30 percent.
The compensation will be based on 70 percent of the employee's average gross salary of 2019, but will not exceed €1,000 in a month.
The employer must also pay the employee a gross salary of at least €150 in a month over the same period, according to the government press release.
The compensation can be claimed only where the disruption has been directly caused by the coronavirus pandemic, relating to significant falls in turnover and income, making it difficult to employ staff and pay their wages, the government said.
Tanel Kiik, Chairman of the Unemployment Insurance Fund Council and Minister of Social Affairs said: "I think it is right that in a difficult time, the state will help workers and employers and reimburse employees for 70 percent of their average gross wages for the last 12 months, thereby helping employers in trouble to keep workers' jobs and avoid layoffs. In this way, we also support the continuation of the business activity of companies. If necessary, the Council of the Unemployment Insurance Fund will also consider supplementing the support measure and implementing new measures."
Editor: Andrew Whyte