An Overview of the Main Statutory Benefits
The state-funded pension is granted to all citizens, upon reaching pensionable age, who have accrued the required social security contributions.
The retirement age in Latvia 64 years and is set to rise to 65 by 2025.
Latvia operates a three-tier pension system, combining mandatory and voluntary payment plans for Latvian citizens. Employers may opt to enrol their employees in a private occupational pension plan as part of the third pillar, voluntary payment scheme.
Employees are entitled to sick leave pay upon presentation of a medical note.
The first ten days of illness are covered by the employer:
- The first day of leave is unpaid
- 2nd and 3rd days of illness – not less than 75% of employee’s average salary
- 4th to 10th day of illness – not less than 80% of employee’s average salary
In exceptional circumstances, sick leave can be extended up to 52 weeks upon ruling by the State Medical Commission.
Contractual Provisions
Contracts of employment must be written and executed in Latvian or dual language.
The Latvian Labour Code recognises both temporary and indefinite contracts of employment.
Temporary contracts cannot exceed two years and are only accepted in specific circumstances.
Upon signing a contract, employers must register the employee in the local Electronic Declaration System (EDS) of the State Revenue Service within three days.
Prior to this, the employee must complete a mandatory medical examination and provide the employer with their Payroll Tax Book (ANG).
Employers may choose to include a probationary period of up to a maximum of three months; this must be stated in the contract of employment.
Should the employee not pass the initial probationary period, extensions are not permissible and the employee must be informed of their termination at least three days prior to the end of the probation date.
A regular working week consists of 8 hours per day and 40 hours per week.
For any employment associated with special risk this is reduced to 35 hours per week.
An employee must not work more than 56 hours in one week, inclusive of overtime.
It is a legal requirement to record hours worked.
All overtime must be agreed in writing with employee’s consent. The maximum overtime is restricted to 8 hours per week and must not exceed 24 hours in succession or the 56-hour maximum.
All overtime hours must be paid at a minimum rate of 100% of the employee’s daily hourly rate.
Employees are entitled to 18 months of childcare leave until their child reaches the age of eight. Time taken during childcare leave counts towards work service.
The Latvian Labour Code stipulates the terms of cause for termination by an employer. This includes circumstances related to the performance or conduct of an employee and economic and organisational measures related to the company.
It is advised that all terminations are discussed with TopSource Worldwide.
Notice of termination must be provided in writing by both parties.
Dependent on the cause of termination, employers are required to give between ten days to one month’s notice.
Employees are required to give one month’s notice upon resignation.
Employees are entitled to severance pay after five years of employment, equal to one month’s wages.
This is increased to remuneration of two months’ wages for any employment exceeding five years.