Latvia

Table of Contents
Latvia PEO & Employer of Record
WeHG provides an International PEO and global Employer of Record service in Latvia to companies willing to enter the Latvian market or hire local/expat employees in this country.
Traditional approach requires establishing a subsidiary in Latvia. However our solution allows you to start the working process in Latvia within days hence save time and money. WeHG would hire candidates on your behalf while you retain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.
Latvia fast facts
Population, million: 1,877,541
Land area: 64,589 km²
Capital: Riga
Local currency: Euro (EUR)
GDP per capita:$ 14500.00
GDP in currency:$ 28.20 billion
Latvia is officially the Republic of Latvia is an independent republic in the Baltic region of Northern Europe. Since gaining independence, Latvia has been considered one of the Baltic states. It borders Estonia in the northern region, Lithuania in the south, Russia and Belarus in the southeast in the east, and shares a maritime border with Sweden in the west.
Hiring, Negotiating, and Doing Business in Latvia: Comprehensive Guide for Employers
Latvia, a vibrant Baltic nation with a growing economy and strategic location, offers an attractive environment for international businesses. However, understanding the country’s labor laws, tax obligations, and employment practices is crucial for success. This guide covers the essentials of hiring, negotiating, and managing employees in Latvia, including legal requirements, benefits, and how WeHireGlobally can support your business.
Necessity of a Written Employment Contract
In Latvia, all employment relationships must be formalized with a written employment contract. Once the contract is signed, employers are required to register it with the State Revenue Service. This step ensures compliance with local laws and safeguards the rights of both parties.
Forms of Engagement: Employment, Contracting, and Entrepreneurship
In addition to standard employment agreements, Latvian labor law allows for collective agreements between employers and employees’ unions or authorized representatives. These agreements set out mutual obligations and often govern working conditions, benefits, and dispute resolution. They are binding for all employees within the organization unless otherwise specified.
Employment Contracts in Latvia
Types of Employment Agreements
Latvia offers two primary types of employment contracts:
- Indefinite Contracts: These have no fixed end date and are the most common.
- Fixed-Term Contracts: Typically used for temporary projects, these contracts can last up to two years.
Employers must ensure that all contractual terms comply with Latvian labor laws to avoid potential disputes.
Working Hours and Overtime
- Standard Workweek: 40 hours.
- Overtime: Limited to 48 hours per month or 200 hours per year. Employers must compensate overtime at an agreed rate, as specified in the employment contract or collective agreement.
Vacation Leave
Employees are entitled to four weeks of paid annual leave, of which at least two weeks must be taken each year. The remaining leave can be carried over to the next year, ensuring flexibility for both employers and employees.
Maternity and Parental Leave
Latvia offers robust maternity leave benefits:
- Maternity Leave: Women are entitled to 112 days of leave.
- Additional Leave: If a woman registers for maternity care by the 12th week of pregnancy and maintains it, she receives an additional two weeks of leave.
- Pay During Leave: Employees on maternity leave receive 80% of their average wage, funded through insurance contributions.
Termination of Employment
Notice Periods
Employees must receive at least one month’s notice before dismissal unless a shorter period is agreed upon in the employment contract or collective agreement.
Grounds for Termination
Termination is allowed under specific circumstances, including misconduct, redundancy, or mutual agreement. Employers must document valid reasons for dismissal to comply with Latvian law.
- Exceptional Cases: Employers may file a lawsuit to terminate an employment relationship if moral or mutual trust issues make continuation impossible. These cases are subject to court approval.
Mutual Termination
Employment relationships can also end through mutual written consent, streamlining the process for both parties.
Taxes and Social Contributions in Latvia
Latvia’s tax system ensures fairness and social welfare for employees:
Income Tax
- Rate: 31.4%.
- Resident Taxation: Residents are taxed on worldwide income, with allowances for educational and medical expenses, social security contributions, and dependents.
- Non-Residents: Taxed only on income sourced from Latvia, with limited deductions unless 75% of income is earned in Latvia.
Social Security Contributions
- Total Rate: 35.09%, divided between employers (24.09%) and employees (11%).
- Special Cases: If the employer is registered outside the EU/EEA or in a non-treaty country, the employee bears the full social tax rate of 33.19%.
These contributions fund pensions, unemployment benefits, and healthcare.
Employee Benefits and Holidays
Health Insurance
Latvia provides universal healthcare funded by government contributions, ensuring basic medical coverage. Many employers also offer supplemental health insurance as an added benefit.
Additional Benefits
Common perks include company cars, annual bonuses, and wellness programs. While there are no restrictions on bonuses, they are often negotiated during employment.
Public Holidays
Latvia celebrates 12 national holidays, including:
- New Year’s Day
- Good Friday and Easter Monday
- Labor Day (May 1)
- Midsummer (June 23-24)
- Proclamation Day (November 18)
- Christmas Eve and Boxing Day
These holidays are paid days off, fostering work-life balance.
Economic Overview of Latvia
Understanding Latvia’s economic landscape can help businesses strategize effectively:
- Population: Approximately 1.9 million.
- Territory: 64,589 square kilometers.
- GDP (2024 estimate): $40 billion.
- Inflation Rate: 6.1% (2023 estimate).
- Key Industries: Information technology, logistics, and manufacturing.
Latvia’s strategic location and skilled workforce make it an attractive hub for businesses looking to expand in the Baltic region.
Why Choose WeHireGlobally?
Navigating Latvia’s labor laws and administrative requirements can be complex. WeHireGlobally simplifies the process with our Employer of Record (EOR) services. We handle:
- Onboarding: Drafting and registering employment contracts.
- Payroll Management: Ensuring accurate tax filings and timely salary payments.
- Compliance: Staying updated on local laws to mitigate risks.
- Termination Support: Managing offboarding processes in line with legal requirements.
Partnering with WeHireGlobally allows you to focus on growing your business while we handle administrative challenges.
FAQs About Hiring in Latvia
1. Is a written employment contract mandatory in Latvia?
Yes, all employment contracts must be in writing and registered with the State Revenue Service.
2. What are the standard working hours in Latvia?
The standard workweek is 40 hours, with strict limits on overtime.
3. How much maternity leave is offered in Latvia?
Women are entitled to 112 days of maternity leave, with an additional two weeks if certain conditions are met.
4. What taxes must employers pay in Latvia?
Employers contribute 24.09% of gross salaries to social security, in addition to withholding income tax and employee contributions.
5. Does Latvia have universal healthcare?
Yes, Latvia provides universal healthcare funded by government contributions, with supplemental insurance often offered by employers.
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