Thinking about hiring in Latvia? This guide breaks down everything you need to know to build a compliant, confident team without the headaches.

Table of Contents show

How to Hire Employees in Latvia

Hiring in Latvia for the first time can feel like a challenge, especially when you’re unfamiliar with the country’s labor laws and employment norms. Whether you’re expanding your team, relocating talent, or starting fresh, it’s essential to understand the local hiring options before you begin. This guide walks you through what to expect so you can choose the right path with confidence.

In Latvia, companies typically hire through one of the following three methods:

Setting Up a Local Entity

Setting up a legal business entity in Latvia gives you full control over hiring and operations. However, it involves company registration, tax setup, and ongoing compliance, which can be expensive and time-consuming. This route is often better suited for businesses planning a long-term presence.

Working with an Employer of Record (EOR)

An EOR is a third-party provider that legally employs workers on your behalf. They handle contracts, payroll, taxes, and compliance with Latvian labor laws. This is a fast, flexible option for companies that want to hire quickly without opening a local branch.

Hiring Independent Contractors

Working with contractors gives companies flexibility and often lower upfront costs. However, misclassifying employees as contractors can lead to legal risks and fines, especially if the contractor works under conditions that resemble full employment.

Ready to get started with a Latvia EOR?

Let us handle the complexities of hiring, compliance, and payroll in Latvia while you focus on growing your team.

  • Hire employees in Latvia with a Latvia EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Latvia

👉 Get Your Customized Latvia EOR Proposal Today!

How an Employer of Record Helps You Hire in Latvia

Using an Employer of Record (EOR) in Latvia is one of the easiest ways to expand your team without the hassle of setting up a local entity. The EOR becomes the legal employer on paper, but your team members still work for you day to day. It’s a streamlined solution for companies that want to stay compliant while focusing on growth, not red tape.

Latvia EOR

The EOR handles all the backend logistics, issuing compliant employment contracts, managing payroll and taxes, enrolling employees in mandatory benefits, and staying up to date with Latvian labor laws. If regulations change or audits arise, the EOR takes care of it.

For companies new to the region or scaling quickly, this level of support removes the guesswork and reduces risk. You can hire talented Latvian professionals fast, all while ensuring your business stays on solid legal ground.

Employment and Labor Laws in Latvia

To hire and operate compliantly in Latvia, employers must follow local labor laws that govern contracts, compensation, hours, benefits, and workplace protections. Whether you’re hiring your first employee or growing a regional team, understanding the legal basics is essential.

Employment Contracts

Every employment relationship in Latvia must begin with a written contract signed before the employee starts work. Contracts are typically drafted in Latvian, though if the employee doesn’t understand the language, a version in a mutually understood language must also be provided.

At a minimum, employment contracts should include:

  • Employer and employee identification details
  • Job title, responsibilities, and work location
  • Start date and duration (if fixed-term)
  • Base salary and additional compensation or bonuses
  • Payment schedule
  • Working hours
  • Annual leave entitlements
  • Termination terms, including notice period
  • Probationary period (if applicable)

Failing to issue a compliant contract can result in penalties or disputes, so it’s best to get this step right from the beginning.

Probation Period

Employers in Latvia commonly use a probationary period of up to three months to assess an employee’s fit for the role. In some cases, this can be extended to six months through collective agreements. During this time, termination rules are slightly more flexible, but employees still retain core legal protections.

Learn more about probation period in Latvia

Standard Working Hours

The typical full-time workweek in Latvia is 40 hours, usually spread over five days. That’s eight hours per day, Monday through Friday. Employees are entitled to a minimum of 12 consecutive hours of rest between workdays and a full 42-hour rest period each week.

Overtime Rules

Any time worked beyond regular hours is considered overtime and must be agreed upon in advance by both the employer and employee. Overtime is capped at 8 hours per week and 200 hours per year unless otherwise defined in a collective agreement. Compensation is generous, typically paid at double the regular hourly wage.

Onboarding and Registration

Before an employee can begin working, the employer must register them with the State Revenue Service of Latvia. The onboarding timeline is relatively fast. In many cases, a new hire can be fully onboarded within a couple of business days, assuming all documents are submitted promptly. If the hire is a non-EU national, additional steps like a Right to Work assessment may add a few extra days.

How an Employer of Record Helps You Hire in Latvia

Expanding into Latvia without setting up a local entity? That’s where an Employer of Record (EOR) becomes a game-changer. Instead of navigating complex legal systems, tax codes, and labor compliance on your own, an EOR handles the heavy lifting, so you can focus on building your team.

An EOR serves as the official employer for your Latvian staff on paper, while you still manage their day-to-day responsibilities. They take care of employment contracts, social contributions, payroll, tax filings, and even employee benefits, ensuring everything aligns with Latvian labor laws.

This approach is ideal for companies wanting to enter the Latvian market quickly, test new regions, or avoid the high cost and time commitment of establishing a legal entity. It also adds a layer of risk protection by ensuring compliance is managed by local experts who stay up to date with evolving employment regulations.

In short, an EOR gives you the speed and simplicity to scale your team without compromising on compliance.

Payroll Management in Latvia

Running payroll in Latvia involves more than just transferring salaries. Employers must navigate a detailed system that includes tax deductions, social security contributions, and strict reporting requirements, all of which must be handled accurately and on time.

Salaries in Latvia are typically paid once a month, and payroll must be processed in euros. Employers are responsible for withholding personal income tax, pension contributions, and mandatory social insurance from each employee’s paycheck. These deductions must then be reported and remitted to the State Revenue Service.

Beyond basic salary, payroll may also include bonuses, sick leave compensation, holiday pay, and severance when applicable. Mistakes in payroll processing can lead to penalties or loss of employee trust, so precision matters.

Many companies choose to outsource payroll or work with an Employer of Record to simplify this process. With local experts managing the technicalities, you reduce the risk of errors and free up your internal team to focus on growth.

Employment Taxes in Latvia

Understanding Latvia’s tax system is essential for staying compliant and keeping your payroll running smoothly. Both employers and employees are required to contribute to the country’s social insurance and tax programs, and the rates are clearly defined by law.

Employers are responsible for contributing a percentage of each employee’s gross salary to social security, covering pensions, unemployment insurance, disability benefits, and healthcare. As of now, the employer’s contribution is around 23.59%. Employees contribute roughly 10.5%, which is withheld from their salary and paid by the employer on their behalf.

In addition to social security, personal income tax (PIT) must be withheld by the employer. Latvia uses a progressive PIT system, with tax rates ranging from 20% to 31%, depending on the employee’s income level.

All tax payments and declarations must be submitted to the State Revenue Service on a monthly basis. Mistakes or delays can result in fines, so staying on top of deadlines is important. For companies unfamiliar with the local tax structure, working with a trusted payroll provider or Employer of Record can make tax compliance easier and far less stressful.

How an EOR Helps You Run Payroll in Latvia

Managing payroll in a new country can be time-consuming and full of legal traps, but an Employer of Record (EOR) makes the process seamless. Instead of figuring out Latvian tax codes, reporting rules, and social contributions on your own, an EOR steps in with local expertise and ready-made systems.

With an EOR, payroll becomes one less thing to worry about. They handle all the moving parts with precision, ensuring you stay compliant and your team gets paid accurately and on time.

Here’s how an EOR can simplify payroll in Latvia:

  • Processes monthly payroll according to Latvian standards and deadlines
  • Calculates and withholds personal income tax based on the country’s progressive rates
  • Handles employer and employee social security contributions
  • Ensures timely tax filings with the State Revenue Service
  • Manages sick pay, bonuses, holiday pay, and severance
  • Provides payslips and transparent documentation to employees
  • Keeps up with legal updates so your payroll stays compliant
  • Reduces risk of penalties from reporting errors or late payments

An EOR acts like your payroll department in Latvia, without the overhead. It’s a reliable way to keep your global team running smoothly, without getting lost in the details.

Work Permits and Visas in Latvia

Hiring foreign nationals in Latvia requires navigating the country’s immigration and work authorization system. While EU and EEA citizens can work in Latvia without a visa or work permit, non-EU nationals must obtain the appropriate documentation before they can legally begin employment.

For non-EU hires, the process usually involves securing a residence permit with work rights, often tied to the employment contract. Employers must provide proof of job offer, salary, and justification for hiring a foreign worker over a local candidate. The application is submitted through the Office of Citizenship and Migration Affairs (OCMA) and typically takes 1-3 months to process.

Some roles that require highly skilled professionals may qualify for the EU Blue Card, which offers faster processing and extended work rights.

To ensure a smooth process, companies must:

  • Verify whether a permit or visa is needed based on the candidate’s nationality
  • Offer a valid employment contract that meets Latvian labor standards
  • Assist with paperwork and legal documentation required by OCMA
  • Factor in additional time for Right to Work checks and approvals

Partnering with an Employer of Record can streamline the visa process. EORs understand the legal landscape and can manage permit applications, renewals, and compliance, ensuring your new hire is fully authorized and ready to work from day one.

Time Off and Leave in Latvia

Time off isn’t just a perk in Latvia; it’s a legal right and a cultural expectation. The country values work-life balance, and employees are entitled to generous leave and protected downtime.

By law, every full-time employee is granted at least four weeks (20 working days) of paid annual leave each year. This does not include public holidays, which are separate and fully paid. In some industries or through collective agreements, additional days may be offered as part of standard company policy.

Leave must be scheduled in agreement with the employer, but Latvian labor law encourages companies to make it easy for workers to take time off regularly, not just save it up. Employees also have the right to carry over unused leave for up to one year, but they’re encouraged to use it sooner rather than later.

Beyond annual leave, companies often set internal policies around sick leave, parental leave, training days, and flexible work hours. These are usually outlined in the employment contract or company handbook and must align with Latvian labor standards.

In short, if you’re hiring in Latvia, build a company culture that respects rest. Paid time off isn’t just a checkbox; it’s part of what keeps your team happy, healthy, and performing at their best.

Terminations and Severance in Latvia

Ending an employment relationship in Latvia must be handled carefully to stay compliant and respectful of employee rights. Whether it’s a mutual separation or an employer-initiated dismissal, the process is guided by the Latvian Labor Law and skipping steps can lead to legal complications.

In most cases, employers must provide written notice and a valid reason for termination. Acceptable grounds can include things like company restructuring, poor performance, or serious misconduct. The standard notice period is one month, but it can vary depending on the contract or collective agreement.

Employees who are terminated for business-related reasons, such as downsizing or liquidation, are typically entitled to severance pay. The amount depends on the length of service:

Length of ServiceSeverance Pay
Less than 5 years1 month’s salary
5 to 10 years2 months’ salary
More than 10 years3 months’ salary

Termination during the probation period or by mutual agreement usually follows a simpler process, with shorter notice or none at all, provided both parties agree in writing.

An Employer of Record can be a valuable partner during offboarding. They’ll ensure every step meets Latvian legal standards, from issuing final pay to filing termination documents, helping you avoid risk and protect your company’s reputation.

Using an Employer of Record to Administer Benefits in Latvia

Offering competitive, compliant benefits in Latvia isn’t just a nice touch. It’s key to attracting and keeping top talent. But figuring out what’s required, what’s customary, and how to administer it all can get complicated fast.

That’s where an Employer of Record comes in. An EOR doesn’t just handle payroll and contracts. They take care of benefits administration too. From enrolling employees in mandatory social insurance to helping you offer extras like private health coverage, meal allowances, or wellness perks, they know what works in the local market.

They’ll also keep track of evolving labor laws, ensuring your benefit packages stay compliant without burdening your internal team. And because the EOR is already plugged into local systems, setup is smooth, and employees get what they need from day one.

In short, partnering with an EOR means your team in Latvia is taken care of legally, financially, and culturally, so you can focus on scaling your business with peace of mind.