Latvia

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 officially the Republic of Latvia is an independent republic in the Baltic region of Northern Europe.Since its independence, Latvia has been referred to as one of the Baltic states. It is bordered by Estonia in the northern region, Lithuania in the southern, to the east is Russia, and Belarus to the southeast, as well as sharing a maritime border with Sweden to the west.

Work permits are issued by the Office of Citizenship and Migration Affairs on the basis of visa or residence permits. If employers intend to employ a foreign national, they must register a job vacancy with the State Employment Agency (SEA) at least one month before applying to the SEA for approval of invitations for visas or sponsorship for residence permits. Foreign nationals must receive separate work permits if they will work for more than one employer or in several positions. Where the employment of foreign nationals relates to short-term stays in Latvia that do not exceed 90 days in a six-month period, work permits can be issued in accordance with the validity of visas.

Hiring, Negotiating and Doing Business in Latvia

Necessity of written employment contract

The employment contract in Latvia is concluded between an employer and an employee and contains rules and regulations the employee must abide in exchange for a salary and a safe and good working environment. A labor contract must be concluded in writing. Once the work contract has been concluded, the employer is required to register it.

Different forms of engagement: employment, contracting, work with private entrepreneur

A collective agreement may be concluded in writing between the employer and employees’ trade union or by the employees authorized representatives. A collective agreement is binding to all employees who are employed by the particular employer unless established otherwise in the collective agreement. The parties to a collective agreement may agree upon those provisions which govern the content of employment relations, especially the organization of remuneration and labour protection, the establishment and termination of employment relations, improvements in the qualifications for employees, work regulations, employees’ social security and other matters connected with employment relations,and may establish mutual rights and obligation.

Latvia Employment Contract

Types of employment agreements

The employment contract can be temporary or signed on indefinite amount of time.

The Latvian temporary contract may be concluded for two years at most. After this period, the contract will be considered as a contract for an indefinite period of time.

Latvia working hours

The regular daily work time for the employee cannot exceed eight hours, but the regular weekly work time – 40 hours.

Overtime

The overtime work cannot exceed 48 hours during the four-week period or 200 hours during a calendar year.

Employer has the right to employ the employee at the overtime jobs without his consent in the following exceptional cases:

  • if so required by the most urgent needs of the society;
  • in order to eliminate the consequences caused by the force majeure, accidents or other extraordinary circumstances which are unfavourably affecting or can affect the regular work process in the company;
  • for the completion of an urgent, previously not foreseen work within a definite period of time.

Vacation leave in Latvia

Each employee is entitled to a paid annual vacation of no less as four calendar weeks. By employee and employer agreeing the paid annual vacation for a current year can be granted in portions, however, one of the portions of the vacation for the current year can not be shorter as two subsequent calendar weeks. In exceptional cases when the granting to the employee of the paid annual vacation for the current year in it’s full extent can unfavourably affect the usual work process in the company, with a written consent of the employee it is permissible to transfer the vacation to the next year. In such event the portion of the vacation during the current year cannot be shorter as two subsequent calendar weeks. The transferred portion of the vacation as possible must be added to the next year’s vacation. The portion of the vacation can be transferred for one year only.

Latvia Maternity Leave

Women workers are entitled to maternity leave of 112 days (56-day parental and postnatal leave). The compulsory leave is two weeks prior to the expected date of birth and two weeks after childbirth, as certified by a doctor’s opinion. If a 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, she is granted a supplementary leave of two weeks (14 days) adding it to prenatal leave (70 calendar days in total).

In case of multiple birth or complications in pregnancy, childbirth or postnatal period, a woman is granted a postnatal leave of two weeks (14 days) and thus making postnatal leave 70 calendar days in total.
sources: §37(7) & 154 of Labour Law 2001, last amended in 2014
Maternity benefit is paid for the entire duration of maternity leave (112 or 126 or 140 days). Maternity benefit is granted to a woman who is covered by the Maternity and Sickness Benefit Act with the condition that woman is not working and hence losing the work remuneration.

Self-employed women who lose income are also covered.
Maternity benefit is granted to the father or to another person who is actually taking care of the child at home, for the entire period of childcare, which however cannot be longer than 70 days after the birth of child only under the following conditions: If the mother of the child has died during delivery or until the forty-second day of postnatal period and if the mother has refused from taking care and raising of a child.

If the mother is not able to take care of the child until the 42nd day after childbirth due to her illness, injury or other reasons related to her health condition, the father of the child or other person that is actually taking care for the child at home is granted maternity benefit for those days when the mother herself is unable to take care of the child.
During the term of maternity leave, workers (including self-employed women) are paid 80% of the average insurance contribution wage.

Latvian Severance Laws

Employer has the right for no later than a month in advance to give a notice to the labour contract with the proviso that the labour relations will be terminated if the employee disagrees to continue them in compliance with those changes in the labour contract offered by the employer. Giving of such notice is permissible if it is justified by employee’s behaviour, his abilities or by the performance of economical, organizational, technological or similar undertakings within a company.

Employee has the right for a month in advance to give a notice to the labour contract in writing, unless a shorter period for giving notices is established in the labour contract or in the collective agreement.

Employer has the right to in writing give notice to the labour contract if based only upon below circumstances which are connected with employee’s behaviour, his abilities or the performance of economical, organizational, technological or similar undertakings within a company in the following cases:

  • employee without a valid reason has substantially violated the labour contract or the established working regulations;
  • employee, when performing the work, was acting unlawfully and therefore has lost employer’s confidence;
  • employee, when performing work, was acting in contravene with good morals and such actions are not compatible with the continuation of legal labour relations;
  • employee was under the intoxication of alcohol, narcotics or toxins when performing the work;
  • employee was grossly violating the provisions of the labour protection and was threatening the safety and the health of other persons;
  • employee does not have sufficient vocational skills to perform the chartered work;
  • employee is incapable to perform the chartered work due to the state of his/her health and it is certified so by the physician’s opinion;
  • that employee who previously was performing the corresponding work has been renewed to the position;
  • the number of employees is being reduced;
  • the employer (an entity) is being liquidated.

If important reasons exist, under exceptional procedure the employer has the right to within a month to raise a claim to the court on the termination of legal labour relations in those cases, which are not mentioned above. As such a reason is deemed every circumstance which, based upon considerations of moral and mutual honesty, does not permit to continue the legal labour relations. The matter on the existence of the important reason is resolved by the court upon its opinion. Here the legislature is virtually leaving the decision to the courts.

Upon giving a notice to the labour contract the employer is obliged to inform the employee in writing about those conditions which were the basis for the notice to the labour contract.

Employee and employer can terminate legal labour relations by agreeing mutually in writing.

Employer is obliged to prove that the notice to a labour contract is legally justified and corresponds to the established procedure for giving notices to the labour contracts. In other cases when the employee has raised the claim on the renewing to work the employer is obliged to prove that it, when dismissing employee, has not violated employee’s rights to continue legal labour relations.

Latvia Tax

Personal income tax 31.40%
Since 2020 tax rate for Personal income tax (PIT) in Latvia is 31.40 %.
Individual persons who are resident for tax purposes in Latvia are taxed on their worldwide income. Certain expenses are allowed: (e.g. educational and medical) as well as social security contributions, personal allowance (monthly EUR 75) and allowance on dependents (for each registered dependent 165 EUR).
A non-resident person is taxed on his Latvian-source income and is not entitled to any deductions or allowances, except when he/she (resident of EU/EEA member state) has derived more than 75% of his total income in Latvia in the tax year. Deduction may apply if similar relief has not been applied in his/her residence country.
An individual is considered a Latvian tax resident if he resides or stays in Latvia for 183 days or more during 1 year.

Social Security contributions 35,09%
The social tax or social insurance contribution rate of 35,09 % which consists of Employer’s part 24,09 % and Employee’s part 11%.
The social tax must be calculated for all Latvia’s residents and foreigners employed by Latvian or EU/EEA employer
If the employer is a company registered outside the EU/EEA or in a country that does not have a tax treaty with Latvia, then the responsibility to settle Social Tax in Latvia lies on the employee (Social Tax rate in this case is 33,19%).

Health Insurance Benefits in Latvia

Latvia has universal healthcare funded by the government, with pay for fee service subject to an annual cap.

Additional Benefits in Latvia

Common employee benefits include supplemental health insurance and a company car.

General market practice benefits/additional allowances

There are no restrictions or guidelines on the type or size of bonuses that can be awarded to employees.

Latvia Holidays

Latvia celebrates 12 national holidays:

  • New Year’s Day
  • Good Friday
  • Easter Sunday
  • Easter Monday
  • Labor Day
  • Restoration of Independence
  • Midsummer
  • Proclamation Day of the Republic of Latvia
  • Christmas Eve
  • Christmas Day
  • Boxing Day
  • New Year’s Eve

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

 

FAQ Latvia

  • Working hours in Latvia

    The regular daily work time for the employee cannot exceed eight hours, but the regular weekly work time – 40 hours.

  • What are the main holidays in Latvia?

    Latvia celebrates 12 national holidays:

    • New Year’s Day
    • Good Friday
    • Easter Sunday
    • Easter Monday
    • Labor Day
    • Restoration of Independence
    • Midsummer
    • Proclamation Day of the Republic of Latvia
    • Christmas Eve
    • Christmas Day
    • Boxing Day
    • New Year’s Eve
  • What are payroll taxes in Latvia?

    Personal income tax 31.40%

    Social Security contributions 35,09%

  • Subscribe to blog post updates