Hire Employees in Latvia

Your own entity is normally an SIA. Registration is simple and Latvia sits between its Baltic neighbours on cost, sharing the structure of neither.

An Employer of Record inverts the sequence: the Latvian entity signs the contract, registers the employee with the State Revenue Service before they start, pays 23.59% in contributions and manages the solidarity tax position, while you direct the day-to-day work.

Latvian employment law is codified in the Labour Law, which enumerates dismissal grounds and requires union consent for most dismissals where the employee is a member, a consultation step that adds time as well as risk.

Latvia sits between its Baltic neighbours and shares neither of their structures. Employer contributions are 23.59% and employee 10.5%, giving 34.09% combined, conventional, unlike Lithuania's employee-loaded split or Estonia's uncapped flat charge. The ceiling is €105,300 a year.

Above that ceiling the solidarity tax applies at the same rates, but its effective burden works out at about 25%. The employer's excess is refunded, though not until September 2027 for the 2026 year, so it is a cash-flow item rather than a cost, and it needs tracking because it will not be returned automatically to anyone not watching for it.

Two figures are commonly wrong in circulating guidance. The personal allowance is €550 a month, or €6,600 a year, and several calculators state €540 a year, wrong by a factor of twelve. And the minimum wage rose to €780 from January 2026, which also sets the minimum contribution base.

The overtime premium is 100%, among the highest in the EU, so an operation with genuine overtime exposure should cost that explicitly rather than assume a European norm of 25% to 50%.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Latvian entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Employer contributions are 23.59% and employee 10.5%, giving 34.09% combined, capped at €105,300 a year. That is a conventional split, unlike Lithuania’s employee-loaded structure or Estonia’s uncapped flat charge.

Above the ceiling the solidarity tax applies at the same rates but works out at an effective 25%. The employer’s excess is refunded, though not until September 2027 for the 2026 year, so it is a cash-flow item rather than a cost, and it needs tracking because it will not return automatically to anyone not watching for it.

Two figures are commonly wrong in circulating guidance. The personal allowance is €550 a month, or €6,600 a year, and several calculators state €540 a year, wrong by a factor of twelve. The minimum wage rose to €780 from January 2026 and also sets the minimum contribution base.

Latvia’s ceiling behaves unlike almost any other, and it can be misread in two opposite directions. The maximum contribution base is €105,300 a year, but contributions do not stop there. Income above the cap becomes Solidarity Tax, paid monthly at exactly the same rates, 23.59% employer and 10.5% employee. Because the effective Solidarity Tax rate is only 25% in total, the employer is then refunded the difference, arriving by 1 September of the following year. Assume contributions cease at the cap and you understate the cash going out; assume 23.59% runs uncapped with no relief and you overstate the final cost and overlook a recoverable balance. There is a floor as well as a ceiling: where an employee’s total income across all sources falls below the €780 monthly minimum wage, the employer must contribute on the minimum wage regardless, with VSAA reconciling annually.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Because the main charges continue above the €105,300 ceiling as the employer solidarity tax at 23.59%, the on-cost percentage does not fall above the ceiling. Model a senior hire explicitly rather than scaling the junior figure, the error runs in your favour but it distorts the comparison against uncapped markets.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in euros. Contributions and withheld income tax are reported and paid monthly to the State Revenue Service.

Personal income tax runs at 25.5% on income up to a threshold, 33% above it, and 36% on annual income exceeding €200,000. The progressive structure replaced the previous differentiated allowance mechanism, which simplified administration considerably.

The overtime premium is 100%, among the highest in the EU. An operation with genuine overtime exposure should cost that explicitly rather than assuming a European norm of 25% to 50%, the difference compounds quickly in shift-based work.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved, there are 1 such rows on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written contract in Latvian is required and the employee must be registered with the State Revenue Service before starting work.

Probation is three months and cannot be extended. During it either party may terminate on three days’ notice without giving a reason, which is unusually short and makes probation useful here.

The minimum contribution base applies even where actual pay is lower, so part-time arrangements attract a floor rather than a proportionate amount. That makes low-hours structures proportionally expensive in the same way as in Romania.

Eight hours a day and 40 a week. Overtime requires written agreement, is capped at 144 hours over any four-month period, and carries a 100% premium, among the highest overtime supplements in the European Union.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise, reconstructing records after a complaint is far harder than keeping them.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected, reconstructing a record after a complaint is considerably harder than keeping one.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies, some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 13 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Latvia observes 13 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 112 calendar days, 56 before and 56 after the birth, 80% of average earnings, paid by the State Social Insurance Agency rather than the employer. Paternity: 10 working days within six months of the birth. 80% of average earnings, agency-funded. Parental benefit: Until the child is 1 or 1.5 years. Paid at a rate depending on the period elected; two non-transferable months are reserved to each parent. Sick leave: From day 2. The employer pays days 2 to 9 at 75% then 80%; the agency pays from day 10.

Study leave: 20 working days a year where agreed. Paid where the collective agreement or contract provides.

Termination requires a ground in the Labour Law, and the grounds are enumerated. Notice varies by ground, from immediate dismissal for serious breach to one month for redundancy.

Severance is graded by length of service: one month's average earnings under five years, two months from five to ten, three months from ten to twenty, and four months beyond twenty. That scale is steeper than several neighbours and needs provisioning from the outset rather than treated as a redundancy-only cost.

Where a trade union operates and the employee is a member, the employer must obtain the union's consent before dismissing on most grounds, a consultation requirement that adds time as well as risk.

Probation may run up to three months and cannot be extended. During it either party may terminate on three days' notice without giving a reason.

EU, EEA and Swiss nationals need no permit. A third-country national needs a work and residence permit, with a labour market test in most cases requiring the vacancy to be registered with the State Employment Agency first.

Allow two to three months. The EU Blue Card route applies to roles meeting a degree and salary threshold and avoids the labour market test, which is materially faster where the role qualifies.

Latvia also operates a start-up visa for founders of innovative businesses, separate from the employment route and with its own criteria.

A cross-border hire may not attract local contributions at all. Under EU Regulations 883/2004 and 987/2009 a worker moving within the EEA is subject to one state’s social security system at a time. A posted worker stays in the home system for up to 24 months under Article 12, and someone working across two or more states follows a single state determined by a 25% activity test under Article 13. Where a valid A1 portable document is held, the host state cannot charge contributions. The certificate is declaratory rather than constitutive, the right legislation applies either way, but without it a host state can assess retroactively with penalties, and enforcement is aggressive in France, Belgium and Austria. Residual local charges are not always nil, so confirm the specific position rather than assuming zero.

Severance is graded steeply by service, one month’s average earnings under five years, two months from five to ten, three months from ten to twenty and four months beyond twenty. That scale is steeper than several neighbours and needs provisioning from the outset rather than treated as a redundancy-only cost.

The union consent requirement is the second constraint. Where a trade union operates and the employee is a member, the employer must obtain consent before dismissing on most grounds.

Practical controls: configure the personal allowance at €550 a month rather than the erroneous €540 a year, track the solidarity tax refund due in September 2027, register the employee before the start date, and cost overtime at the 100% premium rather than a European default.

Work backwards from the start date. For an EU national, a week or two is realistic. A non-EU hire needs a work and residence permit, adding two to three months, with a labour market test in most cases.

Confirm before making an offer: that the personal allowance is configured at €550 a month rather than the erroneous €540 a year; whether the salary crosses the €105,300 ceiling, which switches on the solidarity tax and a refund to track; and whether the role involves overtime, given the 100% premium.

The employee must be registered with the State Revenue Service before starting work. The minimum contribution base applies even where actual pay is lower, so part-time arrangements attract a floor rather than a proportionate amount.