Employer of Record Latvia
An overview of employing in Latvia
Salary pay date
Employees should be paid monthly between the 1st to the 5th of each month.
The minimum pay for full time workers should not be lower than 500 EUR per month (2022).
There is no statutory bonus in Latvia.
Any supplementary bonuses should be outlined in the contract of employment.
Social security system
Latvian Social Security is governed by the State Social Insurance Agency of the Republic of Latvia (VSSA) and covers all benefits relating to sickness, maternity, disability, pension, unemployment and workplace compensation.
Monthly contributions are made by both the employer and employee.
Latvia has a state-funded national healthcare system (Nacionalais veselibas dienests) , which provides healthcare to all citizens of Latvia and employees who make social security contributions. Medical care and treatment in Latvia are often subject to a user charge, capped at an annual amount of EUR 569.15.
Employers may choose to offer supplementary private medical insurance for their workers, offering access to better facilities and more comprehensive care.
Social insurance is paid by the employer at a rate of 23.59% of the employee’s monthly wage.
Social Security contributions are capped at EUR 78,100 (2022)
Employees earning more than EUR 78,100 annually are required to pay a solidarity tax. This is paid at the same rate as social security (23.59% for employers; 10.5% for employees).
Employers are entitled to reimbursements for their contributions.
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:
From the eleventh day, all subsequent leave is covered by Social Security for up to 26 weeks at a rate of 80% of the employee’s average salary for the six months prior to leave being taken.
In exceptional circumstances, sick leave can be extended up to 52 weeks upon ruling by the State Medical Commission.
Maternity & Paternity
Employees are entitled to 112 days of maternity leave to be divided between pre- and post-natal leave.
Maternity leave is paid for by Social Security and is calculated as an average of 80% of the average social security contributions the employee has made in the 12 months prior to maternity leave.
Paternity leave entitlement is ten days and can be taken up to two months following the birth.
Parents are entitled to take additional, unpaid childcare leave for a period of up to 18 months. This can be taken at any time until their child reaches the age of eight.
Contract of Employment
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.
Employees are entitled to a minimum of four weeks of paid leave each year; a minimum of two weeks of leave must be taken in an uninterrupted block, chosen by the employee.
The holiday year runs from the employee’s start date and leave may be requested following six months of continuous employment.
Employees may carry forward up to two weeks’ holiday per year; cash compensation is prohibited except in the case of termination.
Latvia observes 12 national holidays and an additional holiday every five years (the closing day of the Latvian Song and Dance Celebration) Employers cannot require their employees to work on these days, unless they are willing to provide financial compensation.
On the days preceding public holidays, the working day is reduced by one hour.
If the holidays on 4th May, the closing day of the Latvian Song and Dance Celebration and 18th November fall on either a Saturday or Sunday, the following Monday is given as an additional public holiday.
All other holidays are observed on the day they fall.
|New Year’s Day||1st January|
|Good Friday||According to Western Calendar|
|Easter Monday||According to Western Calendar|
|Labour Day||1st May|
|Day of Re-establishment of independence of the Republic of Latvia||4th May|
|Midsummer’s Eve||23rd June|
|Midsummer’s Day – St John’s Day||24th June|
|Proclamation Day of the Republic of Latvia||18th November|
|Christmas Eve||24th December|
|Christmas Day||25th December|
|2nd Day of Christmas||26th December|
|New Year’s Eve||31st December|