Definitive Guide to Hiring in Latvia

Hiring in Latvia

Hiring employees compliantly in Latvia means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Latvia so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Latvia; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Latvia

Employment laws in Latvia are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Latvia employment laws and Latvia policies here.

Employee Probation Period

• The maximum length of a probationary period is three months.

Annual Leave in Latvia

• Employees are entitled to at least 4 weeks of paid annual leave.

Holidays in Latvia

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Latvia:

Maternity Leave Latvia

• Female employees are generally entitled to 112 days of maternity leave: 56 before the birth and 56 after, although the employee may use all 112 days regardless of how many she used before the birth.
• Social insurance covers the employee’s wages during leave if she is insured.
• The Labour Law gives a woman the right to supplementary leave of 14 days added to the prenatal leave in three cases:
  • In case of complications in the pregnancy, childbirth or postnatal period.
  • If two or more children are born.
  • If the woman has initiated pregnancy-related medical care at a preventive medical institution by the 12th week of pregnancy and has continued for the whole period of pregnancy.

Paternity Leave Latvia

• Fathers are generally entitled to 10 days of paternity leave to be taken with two months of the child’s birth.

Sick Leave in Latvia

• Employees are generally eligible for 10 days of employer paid sick leave. 
• The second are third days should be paid at least 75% of regular wages, and the 4th through 10th days at least 80%.
• The State Social Insurance Agency pays for sick leave from the 11th day through 26 weeks at 80% of the regular wages.
  
  

Working Hours in Latvia

• In general, Latvians work 40 hours per week with 5, 8-hour days.

Overtime in Latvia

• Work exceeding the daily working time of 8 hours is considered to be overtime.
• It is interpreted restrictively and, for instance, where the duration of working time is reduced by agreement, overtime is still computed only after 8 hours of work.
• The limit of allowed overtime hours is laid down in Section 136 (5) of the labor Law stipulating that overtime work may not exceed 48 hours within a four-week period and 200 hours within a calendar year.
• A worker who performs overtime work receives a supplement of at least 100% of the hourly or daily wage rate specified for him/her.

Termination of Employment in Latvia

• A contract of employment can be terminated either at the initiative of an employer or an employee.
• A contract of employment may also be terminated by expiry of a fixed-term contract, by mutual consent of employer and employee, or pursuant to the request of a third party.
• Pursuant to Section 101 of the labor Law, an employer has the right to give a written notice of termination of a contract of employment only on the basis of circumstances related to the conduct of the employee, his or her abilities, or of economic, organizational, technological measures or measures of a similar nature
• Prior notice is required to terminate a contract of employment concluded for an indefinite period as well as a fixed-term contract where an employer intends to terminate such contract before the expiry of the term.
• An employer, when giving a notice of termination of a contract of employment, shall comply with different time periods, depending on the grounds of dismissal.
• The notice of dismissal will take effect either immediately, or 10 days after the notice, or one month after the notice, accordingly to Sections 103 and 101 of the labor Law
• In all cases when giving a notice of termination, an employer has a duty to notify an employee in writing those circumstances that serve a basis for the notice of termination of the contract of employment.
• The employer has to pay severance pay in accordance with the law

Notice Period in Latvia

• The minimum notice period to be provided by the employer is one month except in cases of employee’s misconduct or medical unsuitability.
• An employer is prohibited from giving a notice of termination of a contract of employment to an employee who is a member of a trade union without prior consent of the relevant trade union.

Severance in Latvia

• Employees are generally eligible for severance payment as follows:
  • up to 5 years’ service: one month’s wages
  • 5-10 years’ service: two month’s wages
  • 10-20 years’ service: three month’s wages
  • 20+ years’ service: four month’s wages

Latvia Salary and Wages

13 / 14th Month Salary in Latvia

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• Bonuses are generally given monthly and they are given to management level employees.
• Only a small percentage of employees receive the 13th month salary.

• As of 1 July 2021, a minimum NSIC object of a minimal wage (EUR 500 for FY 2021) has been introduced.
• In case an individual earns less from all NSIC taxable income sources, the employer is responsible for making the contributions on employees’ behalf.
• Individuals employed by multiple employers or individuals who are both self employed and employees must sum their total income to determine whether the income is within the minimum amount.
• The contribution rates are summarized in this table:

Immigration  Latvia

• A residence permit is required if a foreigner wants to reside in Latvia for a time period exceeding 90 days within a half year, beginning from the date of first entry.
• EU citizens are not required to obtain a residence permit.
• However, they must register and obtain a residence card or permanent residence card (with the exception of an EU citizen who works in Latvia but travels back to his or her residence country on a weekly basis).
• Residency permit for non-EU citizens.
• Non-EU citizens can obtain five-year residency permits in Latvia, which allow unrestricted travel within the territory of Schengen member states.
• An individual can apply for a residency permit if he or she makes the following investments in Latvia and complies with certain criteria provided by law:
  • Investment in a company
  • Purchase of real estate
  • Investing in a bank’s subordinate capital (deposit)
• EU Blue Card
  • To live and work in Latvia as a highly-qualified worker you may apply for an EU Blue Card.
  • To qualify for the Blue Card, you must hold a university or college diploma from an educational programme that lasted three years or more.

Value Added Tax (VAT) in Latvia

• Latvian VAT rules are based on regulations drawn up by the EU, of which Latvia was a founding member.
• The Standard Latvian VAT rate is currently 21%, with a reduced rate of 12%. As an EU member, Latvia is obliged to implement the EU’s VAT Directives which provide guidance on VAT.
• Where there is a conflict, the European Directive takes precedence.
• A 5% VAT rate applies to supplies of foodstuffs that are fresh fruits, berries, and vegetables that have been washed, peeled, shelled, cut, and prepacked, but not thermally or otherwise treated (i.e. frozen, salted, or dried), textbooks (in force till 31 December 2023), and supply of books and magazines in printed or electronic form, including online or by download.

Mandatory Benefits in Latvia

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, maternity leave, paternity leave, sick leave, notice period, and severance pay
• Mandatory benefits also include social security benefits.

Payroll Accrual in Latvia

Country Accruals Additional Information

Description

There is an income cap for social security contributions of EUR62,800. Employment income above EUR62,800 is subject to solidarity tax. The solidarity tax is paid on monthly basis in the same manner and at the same rate as for the social security contributions.

The solidarity tax rate is 25.5 percent. By 1 March of the year following the taxation year the solidarity tax will be recalculated by applying the 25.5 percent rate. The overpayment will be repaid to the employer by 1 September of the year following the taxation year.

Payroll Accruals Additional Information

Accrued Benefits in Latvia

Why use Global Expansion to hire in Latvia

Establishing a branch office or subsidiary in Latvia can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Latvia labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Latvia law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Latvia. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Latvia Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.