Employer of Record in Latvia

Businesses can only operate smoothly in Latvia if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Latvia below, to avoid any compliance issues.

Employment Contract Requirements

In Latvia, employment contracts must be in writing before work begins, typically in Latvian. If the employee does not understand Latvian, the terms must be provided in a mutually understood language. Key contract details to include are:

• Company and employee identification
• Commencement date (duration for temporary contracts)
• Job description, duties, and responsibilities
• Basic salary, additional compensation, or benefits
• Pay date
• Work hours
• Annual holiday entitlement
• Notice periods for termination
• Probationary period

Onboarding Process

We can help you get a new employee started in Latvia quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Latvia

In Latvia, the standard workweek is 40 hours over 5 days (Monday to Friday), with 8 hours per day. Employees must have at least 12 hours of uninterrupted rest between workdays, ensuring a weekly rest period of 42 hours.

Overtime in Latvia

In Latvia, any work beyond standard hours or on public holidays requires mutual agreement between employees and employers before commencement. Overtime compensation is set at 200% of the regular salary rate, with a maximum of 8 additional hours per week and an annual cap of 200 hours.

Probation Period in Latvia

Probation usually lasts up to three months but can be extended to six months by collective agreements without compromising employee rights.

Fiscal Year in Latvia

1 January - 31 December is the 12-month accounting period that businesses in Latvia's use for financial and tax reporting purposes.

Payroll Cycle in Latvia

The payroll cycle in Latvia's is usually bi-weekly/monthly, with employees being paid as stipulated in employment agreement.

Minimum Wage in Latvia

The minimum wage for employees in Latvia's is typically 4.4 EUR per hour, amounting to ~700 EUR per month for a typical 40 hour work week.

Bonus Payments in Latvia

There is no legal obligation to offer a 13th-month salary.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 20.77% - 23.59% on top of the employee salary in Latvia.

Employee Payroll Tax Contributions

In Latvia , the typical estimation for employee payroll contributions cost is around 9.25% - 10.5%%.

Individual Income Tax Contributions

The individual income tax in Latvia ranges from 20% to 31%. Income tax is calculated based on progressive rates.

Pension in Latvia

The mandatory social security contributions covers state pension insurance.

Mandatory Leave Entitlement in Latvia

The annual leave entitlement in Latvia is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Latvia

Latvia observes 13 national holidays which are a public holiday. If Restoration Day or Proclamation Day falls on a weekend, the following Monday is observed as a public holiday.

Paid Time Off in Latvia

Employees with at least six consecutive months of employment in this jurisdiction are guaranteed a minimum of 20 days of annual paid leave, which excludes public holidays, subject to the following details:

• They can take their annual leave in segments, but one part must consist of at least two uninterrupted weeks.
• Additionally, with a written agreement, employees have the option to carry over up to two weeks of unused leave to the following year.

Maternity Leave In Latvia

Pregnant employees are eligible for 140 days of paid maternity leave, subject to the following details:

• Employees are required to take a mandatory 56-day leave before the child's birth and an additional 56 days after the child's arrival.
• This can be extended to 70 days before birth if employee registers their pregnancy with a doctor by the 12th week and 70 days after birth in certain situations, such as experiencing health complications during pregnancy, childbirth, or postpartum, or having multiple births.
• During this period, the employee will receive 80% of their average salary, and payment will be administered by the State Social Security Agency (SSA).
• The employee has the option to prolong the leave through parental leave.

Paternity Leave In Latvia

Employees may take up to 10 working days of paid paternity leave, with the following conditions:

• During this period, the employee will receive 80% of their average salary, with payment administered by the State Social Security Agency (SSA).
• Leave is granted immediately after the birth of the child, but must be taken no later than 6 months past the birth of the child.
• The employee has the option to extend the leave through parental leave.

Sick Leave In Latvia

In Latvia, there is provision for paid sick leave with the following conditions:

• The initial sick day is unpaid.
• The employer covers days two to three at 75% of the salary and days four to ten at 80% of the salary.
• Starting from the 11th day, sick pay is provided by the state.

Parental Leave In Latvia

Parents have the choice between two paid leave packages: a 13-month option or a 19-month option, each with specific terms:

• Under the 13-month option, employees receive 60% of their regular salary. The basic period spans 9 months and can be taken by one parent until the child is one year old. Subsequently, each parent must take a minimum of 2 months of parental leave before the child turns 8 years old. This portion cannot be transferred to the other parent.
• With the 19-month option, employees receive 43.75% of their regular salary. The basic period lasts for 15 months and can be taken by one parent until the child is one and a half years old. Subsequently, each parent must take a minimum of 2 months of parental leave before the child turns 8 years old. This portion cannot be transferred to the other parent.
• The recipient of the parents benefit, who resumes work, discontinuing the parental leave, or resumes earning income as a self-employed, the benefit is paid in the amount of 30% of the benefit granted.

Termination Process in Latvia

In Latvia, terminating employment involves various considerations. Employers cannot terminate contracts at will post-probation and must provide justifiable reasons. Acceptable grounds for termination include:

• Voluntary resignation
• Mutual agreement
• Unilateral termination by the employer based on causes specified in Section 101 of the Labor Law

Notice Period in Latvia

In Latvia, the statutory notice period is one month (this however can be shortened depending on reason for termination). During the probation period, only a written notice of three days is required, which can be further shortened by mutual agreement in the employment contract.

Severance in Latvia

In Latvia, statutory severance pay is based on the length of service:

• Up to 5 years: 1 month's pay
• Between 5 and 10 years: 2 months' pay
• 10 to 20 years: 3 months' pay
• Over 20 years: 4 months' pay