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Latvia – Employer of Record

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Country Introduction – Latvia

Capital – Riga
Currency – Euro (EUR)
GDP – 39.85 billion USD (2021)
People/Nationality – Latvian
Language – Latvian
Major Religion – Christianity
Population – 1,817,172 as of (February 23, 2024)

Latvia has transitioned from a centrally planned economy to a market-oriented one since gaining independence from the Soviet Union in 1991. Its economy has experienced significant growth and transformation over the years. Latvia has embraced a market economy model, with an emphasis on trade, investment, and privatisation of state-owned enterprises.

Latvia became a member of the European Union in 2004 and adopted the Euro as its official currency in 2014. Being part of the Eurozone has facilitated trade and investment.

It’s economy is diverse, with key sectors including services, industry, agriculture, and tourism. Service industries such as finance, IT, transportation, and tourism contribute significantly to GDP. Latvia has a strong focus on exports, particularly in sectors like timber and wood products, machinery and equipment, foodstuffs, and pharmaceuticals. Its strategic location on the Baltic Sea makes it a gateway for trade between Europe, Russia, and Asia.

Latvia boasts beautiful natural landscapes, including forests, lakes, rivers, and the Baltic Sea coastline. Outdoor enthusiasts can enjoy activities such as hiking, camping, fishing, and skiing during the winter months. Riga, the capital city, offers a vibrant urban lifestyle with its historic architecture, cultural attractions, restaurants, cafes, and nightlife. Other cities like Daugavpils, Liepaja, and Jelgava also has their own unique charm and amenities.

The job market in Latvia is diverse, with opportunities in sectors such as IT, finance, manufacturing, tourism, and agriculture. Proficiency in English and other languages can be an advantage in certain industries. Overall, Latvia’s economy continues to evolve, driven by efforts to enhance competitiveness, promote innovation, and foster sustainable development.

Contract of Employment

An employment agreement in Latvia is established between an employer and an employee, encompassing guidelines and expectations the employee must follow in return for compensation and a secure working environment.

The contract must be documented in writing and subsequently registered by the employer. It may be either temporary or of indefinite duration. Employment contracts are typically drafted in Latvian or a language mutually comprehensible to both parties.

Probation Period

The duration of the probation period is determined by mutual agreement between the employer and the employee, and it cannot exceed three months.


The minimum notice periods generally depend on the duration of employment:

– For employees with less than one year of service, the minimum notice period is one month.
– For employees with one to five years of service, the minimum notice period is two months.
– For employees with over five years of service, the minimum notice period is three months.

 Working Hours

The standard working week in Latvia consists of 40 hours, typically spread over five days, from Monday to Friday.


According to Latvian labor laws, the maximum duration of overtime work that an employee can perform in a single day is four hours. In addition to the daily limit, there is also a weekly limit on overtime hours. Employees are generally not allowed to work more than 24 hours of overtime in any given week.

Overtime work must be compensated at a higher rate than regular working hours. Typically, employees are entitled to receive at least 1.5 times their regular hourly wage for each hour of overtime worked.

13th Month Pay

In Latvia, the concept of a “13th month pay” is not a common practice as it is in some other countries. However, some employers may offer additional bonuses or incentives to employees during certain times of the year, such as at the end of the calendar year or during holiday seasons.

Annual Leave

As per Latvian labor laws, employees are entitled to a minimum annual leave of at least four weeks (20 working days) per calendar year.

Sick leave

In Latvia, employees are entitled to receive partially paid sick leave for up to 52 weeks. However, if an employee has been on sick leave continuously for six months or has accumulated a total of one year of sick leave within the past three years, the employer has the right to terminate the employee’s contract.

Maternity and Paternity Leave

In Latvia, maternity leave typically lasts for 16 weeks (which is also called “prenatal” and “postnatal” leave). This period can be extended under certain circumstances, such as in the case of complications or premature birth.

Fathers in Latvia are entitled to paternity leave for a period of 10 calendar days following the birth of their child. This leave is provided in addition to maternity leave.


Rate Type Goods or Services
21% Standard All other taxable goods and services
12% Reduced Food products for infants; pharmaceutical products; medical products for disabled persons; domestic passenger transport; books (excluding e-books); newspaper and periodicals; hotel accommodation; district heating
5% Reduced A range of locally produced vegetables and fruit
0% Zero Intra-community and international transport

Income Tax

20% – for income up to EUR 20 004 per year
23% – for income exceeding EUR 20 004 but not exceeding EUR 78 100 per year
31% – for income exceeding EUR 78 100 per year

Employer / Employee Contributions

In Latvia, social insurance contributions cover pensions, healthcare, unemployment benefits, and parental benefits. Employers withhold and remit these contributions on behalf of employees. Health insurance contributions fund the public healthcare system, with employers responsible for withholding and remitting them.

Unemployment insurance contributions, also handled by employers, support those temporarily out of work. Employers withhold income tax from employees’ salaries and remit it to tax authorities. Both employers and employees may voluntarily contribute to private pension funds for retirement income supplementation.

Public Holidays

Here is a list of the main public holidays observed in Latvia:

January 1 – New Year’s Day
Good Friday – The date varies each year according to the Christian calendar.
Easter Sunday – The date varies each year according to the Christian calendar.
Easter Monday – The date varies each year according to the Christian calendar.
May 1 – Labour Day
May 4 – Restoration of Independence Day
June 23 – Midsummer Eve
June 24 – Midsummer Day
November 18 – Independence Day
December 25 – Christmas Day
December 26 – Second Day of Christmas

Severance Pay

In Latvia, severance pay, also called “compensation for dismissal,” isn’t legally mandated in most cases. However, there are scenarios where it may be provided:

Collective Agreements or Contracts: Severance pay terms can be negotiated in collective agreements or employment contracts.

Redundancy or Mass Layoffs: Employers may offer severance pay or compensation during redundancy or mass layoffs, per labor laws or collective agreements.

Employment Termination: Severance pay isn’t obligatory upon employment termination unless specified in contracts. Employers must adhere to notice periods and termination regulations.

Legal Resolutions: Courts might order severance pay or compensation in cases of wrongful termination or unfair dismissal.

Severance pay depends on negotiated terms, redundancy situations, contractual agreements, or legal resolutions.

Work and Residence Permits (Expatriates)

In Latvia, expatriates who wish to work and reside in the country typically need to obtain both a work permit and a residence permit. Here’s a brief overview of the process:

– Work Permit: Before an expatriate can work in Latvia, their prospective employer must apply for a work permit on their behalf from the Latvian Office of Citizenship and Migration Affairs (OCMA). The work permit is typically tied to a specific job and employer.

– Residence Permit: Once the expatriate has obtained a job offer and a work permit, they can apply for a residence permit. The type of residence permit required may vary depending on factors such as the length of stay, the purpose of residence, and the applicant’s nationality.

– Temporary Residence Permit: Expatriates planning to reside in Latvia for longer than 90 days must apply for a temporary residence permit. This permit is typically valid for up to five years and can be renewed.

– European Union Blue Card: Highly skilled expatriates may be eligible to apply for the EU Blue Card, which allows them to work and reside in Latvia and other EU member states.

– Application Process: Expatriates must submit their residence permit application to the OCMA along with required documents, including proof of accommodation, health insurance, financial means, and a clean criminal record.

– Family Members: Expatriates’ family members (spouse and dependent children) may also be eligible to apply for residence permits based on family reunification grounds.

– Renewal and Extension: Residence permits must be renewed before they expire. Expatriates must ensure they meet the renewal requirements and submit their applications in a timely manner.

– Integration Requirements: Expatriates may be required to fulfill certain integration requirements, such as language proficiency and knowledge of Latvian culture and society, especially for long-term residence permits.

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