Employer of Record in Latvia

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

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.

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.

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 refers to any work performed beyond the standard 40-hour workweek. Overtime compensation in Latvia is structured as follows:

• Standard Overtime: Overtime work is compensated at a rate of at least 100% of the regular hourly or daily wage.
 
• Holiday Night Overtime: Overtime work during holiday nights must be compensated at no less than 2.5 times the regular wage.

Employers are also required to maintain detailed records of working hours for at least three years.

Growing your team in Latvia is exciting, but it’s not without challenges. Local labor laws are often nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

This gives you the freedom to scale at your own pace, whether you're adding one employee or building out an entire function, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported. It's a strategic way to expand globally without spreading your internal team too thin or exposing your business to legal liabilities in unfamiliar markets.

Employers in Latvia must navigate a structured payroll tax system. The key payroll taxes include personal income tax (PIT), which is progressive with rates of 25.5% for annual incomes up to €105,300 and 33% for higher incomes, and social security contributions, split between employers (23.59%) and employees (10.5%).

These contributions fund pensions, health insurance, and other social benefits, with a combined rate of 34.09%. Employers are responsible for withholding these taxes and contributions from employees' wages, ensuring they are submitted accurately and on time to the State Revenue Service (SRS).

Adhering to deadlines and ensuring accurate submissions are vital to maintain compliance. Using payroll management software, such as Playroll, can streamline processes, reduce errors, and help employers stay compliant with Latvian regulations.

Employees expect to be paid accurately, on time, and in full compliance with local standards. When you're hiring in Latvia, providing a smooth payroll experience is critical to retention and trust. An Employer of Record ensures that employees receive what they’re owed, without errors, delays, or confusion about taxes or benefits.

Key Ways an EOR Supports Payroll in Latvia:

• Reliable Salary Payments: Ensures employees are paid promptly in local currency.
• Clear Payslips & Documentation: Provides employees with compliant, understandable records.
• Correct Benefits & Contributions: Delivers legally mandated contributions and any changes in compensation, like bonuses.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Boosts Employee Confidence: Builds trust with compliant, consistent payroll operations.

In Latvia, work permits and visas are essential for employers hiring foreign workers. Non-EU/EEA nationals require a work permit and an appropriate visa to work legally in the country. The key visa types include the Type D Long-Stay Visa, EU Blue Card, and Seasonal Work Visa. The process involves registering job vacancies, obtaining sponsorship approvals, and ensuring employees have valid residence permits. Fees and processing times vary depending on the visa type, with application fees approximately €100-150 and processing typically taking 10 to 15 days but extending up to 60 days in some cases.

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 50% of the benefit granted.

In Latvia, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there’s no confusion around what’s offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in Latvia is running as it should.

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