Hire in Latvia
Here’s where you get started with human resources best practices and hiring in Latvia.
Key Country Facts
Latvia belongs to a group of three countries known as the “Baltic States.” The region is also known as Lettland, named after the “Letts” or Lettish people. Latvia is a stable democracy and offers one of the fastest growing economies in the European Union. From 1940 to 1991, the country was a republic of the Soviet Union. It declared its independence on August 21, 1991, restoring the Latvian constitution from 1922. With a unitary form of government, the country is divided into 26 self-governed “rajons” (districts).
Latvia spans an area of 64,589 km2 and is bordered by Estonia to the north, Lithuania to the south, Russia to the east and Belarus to the southeast. It also shares a maritime border with Sweden to the west. The country’s mostly flat landscape offers a mix of beaches, rivers, lakes, marshes and forests.
Latvia hosts a temperate climate with four seasons of almost equal length. Coastal regions have cooler summers and milder winters, while to the east the summers are warmer and winters colder. Spring and autumn are mild, while summers average 19 C and winters average -6 C.
The country’s culture combines traditional Latvian and Livonian heritage, along with influences of the country’s varied historical heritage.
The religious makeup of the country is as follows: Lutheran 19.6%, Orthodox 15.3%, other Christian 1%, other religion 0.4%, unspecified religion 63.7%.
Latvian is the sole official language of Latvia, which belongs to a Baltic branch of the Indo-European language family. Russian is also widely spoken.
Latvia HR at a Glance
The Constitution of the Republic of Latvia (the “Satversme”), which was adopted in 1922, lays down the fundamental rights and freedoms of Latvian citizens in Chapter VIII. This section contains provisions on labor rights, such as the prohibition of discrimination (Section 91), the freedom of association (Section 102), the right to remuneration (and minimum wage) and the right to weekly holidays and provisions for annual paid leave (Section 107).
When Latvia regained its independence in 1991, a labor law reform was implemented to replace previous laws of the Soviet system. The major features of this reform included the implementation of the rules from international law and, in particular, European Union law.
The below legal acts were adopted:
- Labor Law (in effect since June 1, 2002 and amended on December 12, 2002)
- Labor Protection Law (in effect since January, 1 2002)
- Labor Disputes Law (in effect since January 1, 2003)
- Law On Strikes (in effect since May 26, 1998 and amended on October 16, 2002)
- State Labor Inspection Law (in effect since January 1, 2002)
- Law On the Protection of Employees in the Event of Insolvency of Employer (in effect since January 1, 2003)
- Law On Employers’ Organisations and their Associations (in effect since June 2, 1999)
- Support for Unemployed Persons and Persons Seeking Employment Law (in effect since July 1, 2002)
The reform also established a national consultation mechanism between social partners, the National Tripartite Cooperation Council (NTCC), to promote cooperation between the government, employers’ organizations and employees’ organizations at the national level. The objective is to solve social and economic development problems collaboratively.
An employment contract must be in writing and signed before the commencement of work. However, once employment has started, a verbal agreement maintains the same legal effect as a written employment contract.
The employment contract must be concluded in Latvian, or a Latvian language translation must be provided. The agreement can be temporary or signed for an indefinite amount of time.
The employment contract must include:
- names and addresses for both the employer and employee
- start date
- expected duration of employment
- job description and responsibilities
- remuneration and frequency of payment
- working days and hours
- annual paid leave
- termination notice
- the provisions set by the collective bargaining agreement (if any)
Fixed Term Contracts
Fixed-term contracts are permissible under specific conditions, such as seasonal work, replacement of an absent employee, temporary work not regularly performed, work related to short-term expansion or to complete an increase of production or urgent work. A fixed-term contract should indicate the termination date or when the agreement is to be considered expired. For example, the first-term contract might expire upon completion of a project or task. If no termination date is indicated, the employer must inform the employee, in writing, of the expected termination at least two weeks in advance.
The maximum duration for a fixed-term employment contract is five years. For seasonal work, fixed-term agreements may not exceed 10 months. While there are no limits on having successive fixed-term contracts, there should be 60 days between each fixed-term contract. Without this buffer, the tenure is considered an extension of the initial fixed-term contract.
Probation Period / Trial Period
A probation period (or trial period) can be applied for a maximum three months, which can be agreed upon between the parties. For employees under 18 years of age, there should not be a probation period.
During the probation period, either the employer or employee can terminate the employment relationship by giving three days’ notice. The cause does not have to be indicated.
The maximum working hours are eight hours a day or 40 hours a week. Workers are entitled to at least 12 hours of rest between shifts and a rest break of 30 minutes when they have worked for six hours. For shift or night workers, for work done between 10 p.m. – 6 a.m., the work cannot exceed seven hours a night.
The length of a weekly rest period in a seven-day period must not be less than 42 consecutive hours.
Overtime cannot exceed 144 hours in a four-month period (or eight hours on average within a seven-day period) and must generally be agreed upon in writing by both the employer and the employee. Overtime work should be compensated at a rate not less than 100% of the hourly or daily salary rate, to be specified at a rate for the employee or a set piecework rate for the amount of work done.
Employers are obligated to store documents pertaining to employment, including employment contracts, payslips, timesheets and documents which serve as proof of payment of wages for two years from the date of posting.
Health and Safety in the Workplace
A night worker has the right to perform a health examination before he or she is employed in night work. They maintain the right to perform further regular health examinations at least once every two years. For an employee who has reached the age of 50, this right is enhanced to at least once a year. The costs of such medical examinations shall be covered by the employer.
In order to verify that an applicant is suitable for the intended work, the employer has the right to request a candidate to undergo a health examination.
While a 13th-month salary payment is not mandatory, it is not uncommon for employers to include this payment once a year.
The employee and employer each have the right to terminate the employment agreement. The party initiating the termination must offer the other party one month’s notice in writing.
On the part of an employer, termination can be advanced for the below reasons:
- The employee lacks competence and is unable to deliver the work.
- The employee is unable to perform the work due to his or her state of health.
- An employee previously performing the work has been reinstated.
- The employer is facing economic or organizational restructuring, resulting in a reduction of the workforce.
- The employer is facing liquidation.
Furthermore, the employment agreement can be terminated immediately if:
- The employee has violated the contract of employment or working procedures.
- The employee has participated in illegal acts or violated labor protection regulations to jeopardize the health and safety of himself or herself or other people.
Termination of certain protected employees (such as employees who are pregnant, have recently given birth or are breastfeeding) is only permissible in limited cases.
An employer must notify the employee in writing of the circumstances that are the basis for termination, citing the specific provisions in the employment contract.
An employer is prohibited from giving notice of termination of an employment contract to an employee who maintains membership in a trade union, without prior consent of the relevant trade union.
Both the employer and employee have the right to terminate a labor contract, with a one-month notice, unless a different notice period is specified in the employment contract or the collective bargaining agreement. Subsequently, this notice must be provided in writing by any of the parties wishing to end the collaboration. Alternatively, it is also possible for work relations to end by mutual agreement.
Redundancy / Severance Pay
The necessity for severance payments depends on the length of employment as listed below, with a maximum of four months’ average wage:
- <5 years: one-month average earnings
- 5-10 years: two months average earnings
- 10-20 years: three months average earnings
- >20 years: four months average earnings
Post-Termination Restraints / Restrictive Covenants
Non-competition covenants are only enforceable by compensation paid throughout the duration of the covenant. There must be a written agreement in place and restrictive covenants are only permissible if the purpose is to protect the employer’s commercial interests. The restriction cannot be for more than three years.
For confidentiality restrictions, there is no legal obligation to pay compensation.
Trade Unions / Collective Agreements
The Law on Trade Unions stipulates that the residents of Latvia have a right to form trade unions. Employers and employees also have the right to unite in such organizations. If an employee is affiliated with a trade union, it may not form the basis of an employer’s refusal to enter into a contract of employment with said employee.
Unless they first get consent from the trade union, an employer may not terminate an individual labor agreement with a member of the said trade union.
Tax and Social Security
Personal Income Tax
|Income Band (EUR)||Tax Rate %|
|20,005 – 78,100||23.0|
Severance payments to employees are subject to personal income tax in the amount of 25%.
These rates apply to all residents of Latvia. This category includes those who have declared Latvia as their country of residence, those living in Latvia for a period of 183 days or more in one year as well as Latvian citizens who are employed abroad by an employer registered in the Republic of Latvia.
National social insurance contributions (NSIC) are paid monthly, by both the employee and the employer, to the State Social Insurance Agency (VSAA). These contributions guarantee employees’ health insurance, pensions and unemployment insurance, as well as maternity, paternity and parental leave. The rate for the employee is 10.5% and 23.59%.for the employer.
For FY 2022, the cap on income attracting NSIC is EUR 78,100.
A minimum NSIC for minimum wage (EUR 500 as of July 2021) has been introduced. If an individual earns less from all NSIC taxable income sources, the employer is responsible for making the contributions on the employees’ behalf.
For employees earning more than EUR 78,100 per year, employers and employees are also obligated to contribute to a solidarity tax (ST). This is split into the same rates as social security contributions, with an extra 23.59% from the employer’s side and an extra 10.5% from the employee’s side. However, employers are entitled to reimbursement for their contributions because the effective ST rate is 25%. These refunds will be made by September 2023.
The ST paid is split as follows:
- 1% to healthcare services (0.5% from ER and 0.5% from EE)
- 10% to PIT
The remainder goes into a special budget for state pensions.
*The above rates serve as a broad guideline. Actual rates charged by GoGlobal will vary.
An employer has a duty to pay remuneration at least twice a month, unless otherwise agreed upon by the employer and employee. Payment must be paid in local currency (EUR) and in cash, although non-cash payments are allowed if the employer and the employee have agreed.
The payslip must show the calculation of the remuneration disbursed, taxes and deductions for mandatory social insurance payments. The payslip must detail any hours worked overtime, at night or on public holidays.
After six months of continuous work, employees must be granted four weeks (20 working days excluding public holidays) or one month for young persons under 18 years of age. This annual leave can be taken in parts but at least one series of the leave cannot be less than two continuous calendar weeks. A maximum of two weeks of the current year’s leave may be carried over to the next year, with the employee’s consent.
Employers must pay their employees for up to ten days of sick leave at the following rates:
- Day 2-3: 75% of average earnings
- Day 4-10: 80% of average earnings
- Day 11 – 52 weeks of absence: the employee’s compulsory health insurance usually pays 80% of the employee’s average pay, as calculated for the purposes of social insurance contributions
*Effective April 2022, the employer’s liability for paid sick leave will be for up to nine calendar days (instead of the current 10 calendar days). State benefits will be payable from Day 10 onwards.
Maternity & Parental Leave
An employee is entitled to a total of 112 days of maternity leave, to be split between 56 days of pre-natal leave and 56 post-natal leave. However, if less than 56 days of pre-natal leave were taken, the employee can then take post-natal leave as long as the total amounts to not more than 112 days. Supplementary maternity leave of 14 days is granted for women who experience complications in pregnancy or childbirth or multiple births.
Paternity leave is 10 days to be taken in the first two months after the birth of the child.
Supplementary paternity leave is granted up to 70 days after birth in certain circumstances, such as death or illness of the mother.
Employees are entitled to 18 months of parental leave, which can be taken until the child reaches eight years of age. This can be taken in a single period or in parts. The employee must inform the employer in writing one month before the start date of the leave, outlining the duration.
One adoptive parent of a child up to 18 years of age is entitled to 10 days of leave.
Nursing Care Leave
An employee with a child under 18 months old is entitled to additional breaks for feeding the child under the following provisions:
- Each break must be at least 30 minutes and be granted every three hours.
- The break must be at least one hour for employees with two or more children under 18 months old.
- Feeding breaks can be added to the end of the working day, effectively shortening the length of the employee’s working day.
An annual paid supplementary leave of three working days is granted to employees with three or more children under the age of 16 years and those who are parents to a disabled child and or a child with special risks.
There are 13 public holidays in Latvia.
Benefits to the Employee in Latvia
The pension system in Latvia is supervised by the State Social Insurance Agency (SSIA). There is a three-tier pension system in Latvia as follows:
- First-tier: state compulsory unfunded pension scheme
- Second-tier: state-funded pension scheme
- Third-tier: private voluntary pension scheme
The larger the contributions made, the larger an employee’s pension will be.
A sickness benefit at 80 % of the average wage of the beneficiary is granted to a person if social insurance contributions have been made for at least three months during the last six months (or not less than six months in the last 24 months).
In addition to statutory entitlements, employees often enjoy contractual customary benefits such as:
- extended annual paid leave
- variable pay clauses (bonus clauses), linked to the achievement of personal or company targets
- company phone
- health and life insurance
- paid parking
Visas and Foreign Workers
Individuals, who are not nationals of the European Economic Area (EEA), the EU or the Swiss Confederation, require a residence permit and work visa before they can commence employment. However, there are exceptions to this.
An employer must initiate the immigration process by submitting the information of the candidate to the Office of Citizenship and Migration Affairs in Latvia. The prospective candidate can either submit the permit application to the Latvian Embassy in his or her home country or at the Office of Citizenship and Migration Affairs in Latvia, which is the government agency that will issue the residence permit with the right to employment.
Nationals of the European Economic Area (EEA), the EU or the Swiss Confederation must receive a registration card in Latvia if their stay exceeds three months. Certain exceptions apply.
Public Holidays in 2022
|1||New Year’s Day||January 1st|
|2||Good Friday||April 15|
|3||Easter Sunday||April 17|
|4||Easter Monday||April 18|
|5||Labour Day||May 1|
|6||Satversme (Constitution) Day||May 4|
|7||Lìgo Day (Midsummer Night’s Eve)||June 23|
|8||St. John’s Day (Midsummer Day)||June 24|
|9||Independence Day||November 18|
|10||Christmas Eve||December 24|
|11||Christmas Day||December 25|
|12||2nd Day of Christmas||December 26|
|13||New Year’s Eve||December 31|