Key Takeaways 

  • Latvia offers businesses a strategic European location with a highly educated, multilingual workforce, competitive operational costs, and business-friendly tax policies.
  • Companies must adhere to Latvia’s employment regulations, including mandatory written contracts, strict anti-discrimination provisions, and required registrations with the State Revenue Service and Social Insurance Agency before hiring begins.
  • Businesses can enter the Latvian market through three primary methods: establishing a legal entity for long-term operations, using an Employer of Record (EOR) for faster market entry, or engaging independent contractors for flexibility.
  • Employers in Latvia must provide minimum benefits, including a €740 monthly minimum wage, 40-hour workweeks, 20 days of paid annual leave, and severance payments based on employment duration during terminations.

Latvia, a Baltic nation with a population of 1.87 million, boasts a strong digital infrastructure, with one of the fastest internet speeds in Europe and a tech-savvy workforce. Latvia’s employment market has improved significantly since joining the European Union in 2004, with unemployment rates steadily decreasing to 6.9% as of 2024. The country has particularly strong sectors in information technology, manufacturing, and financial services, making it an attractive destination for companies seeking to expand their European operations. This article covers what companies need to know about hiring in Latvia.

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Why Expand Your Business to Latvia

Latvia presents opportunities for businesses looking to establish or expand their presence in Europe. The country provides access to both Scandinavian and Eastern European markets, with well-developed sea ports connecting to major European shipping routes. Companies operating in Latvia benefit from its membership in the European Union and Eurozone, ensuring regulatory stability and simplified trade with other member states.

The Latvian workforce stands out as one of the country’s strongest assets. Latvians are known for their high education levels, with over 30% of the population holding tertiary qualifications. The workforce demonstrates strong language skills, with many professionals fluent in English, Russian, and other European languages. This multilingual capability proves invaluable for companies conducting international business.

Beyond its talented workforce, Latvia offers competitive operational costs compared to Western European nations, with office space, utilities, and labor expenses typically 20-40% lower than in countries like Germany or France. The government has implemented business-friendly policies, including a flat corporate tax rate of 20% that only applies to distributed profits, effectively creating a 0% tax rate on reinvested earnings. Latvia has also established special economic zones offering tax incentives for qualifying businesses.

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Step 1: Define Your Hiring Needs

Companies expanding to Latvia must first clearly define their hiring requirements to build an effective team. This process involves analyzing the specific positions needed, determining whether specialized skills or language proficiencies are required, and establishing appropriate compensation levels based on local market conditions. Businesses should conduct thorough market research to understand salary expectations in Latvia, which can vary significantly between Riga (the capital) and other regions. They should also consider whether they need full-time employees, part-time staff, or project-based contractors.

The role definition process should account for Latvia’s labor market nuances. While the country produces many highly qualified professionals, there may be talent shortages in certain specialized roles.

Step 2: Familiarize Yourself with Compliance Requirements

The Latvian Labour Law is the primary legal foundation governing employment relationships, covering essential aspects like contracts, working hours, minimum wage requirements, and termination procedures. Companies must register with the Latvian Enterprise Register and the State Revenue Service (SRS) before hiring employees. They must also obtain a company registration number and tax identification number to legally operate in the country.

Latvia implements strict anti-discrimination provisions that prohibit unequal treatment based on gender, age, ethnicity, disability, and other protected characteristics throughout the employment process. These protections extend to job advertisements, interview questions, and workplace policies.

Health and safety compliance is also important under Latvian employment law. Companies must conduct workplace risk assessments, implement appropriate safety measures, and provide mandatory safety training to employees. Businesses that fail to meet these requirements face potential fines and legal penalties.

Step 3: Choose Your Hiring Method

Companies entering the Latvian market can select from several approaches to building their local workforce.

Establishing a Legal Entity

Companies planning substantial or long-term operations in Latvia often benefit from establishing a local legal entity. This approach provides the greatest control over business operations and employment relationships but requires navigating the country’s registration procedures.

The most common business structures include the Limited Liability Company (SIA) and Joint Stock Company (AS), with the SIA offering a simpler setup process and lower minimum capital requirements. The entity registration process typically takes three to five business days once all documentation is properly submitted.

Companies choosing this route gain direct employer status, enabling them to build their employer brand in the local market and develop stronger connections with the Latvian business community.

Using an Employer of Record (EOR)

For companies seeking faster market entry or testing the Latvian market before establishing a permanent presence, an EOR service provides an effective solution.

An EOR partner legally employs workers on a company’s behalf, handling payroll processing, tax compliance, benefits administration, and employment contract management. This arrangement enables businesses to hire Latvian employees without establishing a legal entity, significantly reducing setup time and administrative complexity. The EOR assumes responsibility for compliance with local employment regulations, reducing legal risks for the client company.

While this approach involves service fees, these costs often prove lower than establishing and maintaining a legal entity, especially for smaller teams or short-term projects.

Learn more about using an EOR in Latvia

Hiring Independent Contractors

Companies with flexible staffing needs might consider engaging independent contractors in Latvia. This approach offers maximum flexibility with minimal administrative requirements, working particularly well for project-based work, specialized tasks, or roles requiring specific expertise.

However, companies must ensure their contractor agreements and working relationships satisfy the necessary requirements to avoid potential reclassification, which could result in back taxes, penalties, and mandatory employee benefits payments.

Step 4: Develop a Recruitment Strategy

Companies must create targeted recruitment strategies to attract qualified candidates in Latvia’s competitive labor market. The capital city, Riga, serves as the primary talent hub, hosting most job seekers with international experience and advanced qualifications. However, other cities like Daugavpils, Liepāja, and Jelgava offer additional talent pools with potentially lower salary expectations. Many Latvian job seekers use job boards like CV.lv, CV Market, and LinkedIn. For specialized or senior positions, working with local recruitment agencies that understand the nuances of the Latvian market can prove particularly valuable.

Companies should craft job descriptions that communicate role responsibilities, required qualifications, and company culture to attract suitable candidates. Highlighting growth opportunities, work-life balance, and specific benefits beyond salary can help positions stand out in the competitive market. Employers should recognize that Latvian professionals value workplace flexibility, professional development opportunities, and company stability when evaluating potential employers. 

Step 5: Conduct Interviews and Assessments

A well-structured interview helps companies identify candidates who possess both the technical skills and cultural fit needed for success. Latvian professionals typically expect a structured interview process that might include initial phone screenings, technical assessments, and in-person or video interviews. Interviewers should prepare questions that assess both technical competencies and soft skills like communication, problem-solving, and teamwork. 

Latvian business culture tends to be direct but respectful, with candidates appreciating clear communication about expectations and next steps. Companies should remain mindful of anti-discrimination laws when structuring interview questions, avoiding inquiries about personal circumstances, family planning, or other protected characteristics.

Step 6: Perform Background Checks

Background verification helps companies make informed hiring decisions while minimizing potential risks. In Latvia, employers commonly verify educational credentials, professional qualifications, and employment history as part of their due diligence process. Criminal background checks require candidate consent and must follow data protection regulations. The verification process should remain transparent, with candidates informed about which aspects of their background will be checked and how the information will be used in hiring decisions.

Latvia’s Personal Data Protection Law, which implements the EU’s General Data Protection Regulation (GDPR), places strict requirements on how companies collect, process, and store personal information. These regulations mandate that employers only gather information directly relevant to employment decisions and maintain appropriate security measures to protect sensitive data.

Step 7: Draft Employment Contracts

Employment contracts form the foundation of the employer-employee relationship in Latvia and must comply with specific legal requirements. While verbal agreements technically have legal standing, written contracts provide greater clarity and protection for both parties.

Latvian law requires employment contracts to include certain mandatory elements: employee and employer identification information, work location, position description, start date, working hours, salary details, and notice period requirements.

Additional provisions addressing confidentiality, intellectual property ownership, and non-compete clauses may be included when relevant to the position.

Step 8: Register with Authorities and Set Up Payroll

Employers must complete several registration steps before onboarding employees in Latvia. Companies need to register with the SRS as employers and obtain necessary tax accounts. Each new employee must be registered with the SRS at least one day before their start date. This registration process requires submitting specific documentation, including the employee’s personal identification information and employment contract details. Companies must also register with the State Social Insurance Agency (SSIA) to manage mandatory social security contributions.

Payroll processing in Latvia requires careful attention to tax withholding requirements and social contribution calculations. Employers must withhold personal income tax and employee social security contributions from employee wages. Monthly tax reports and payment deadlines must be strictly observed to avoid penalties and interest charges.

Step 9: Onboard Your New Employees

Effective onboarding helps new employees integrate into the organization and become productive more quickly. The process should begin before the employee’s first day, with clear communication about start time, location, required documentation, and what to expect during the initial period.

A comprehensive onboarding program typically includes orientation to company policies, introduction to team members and key stakeholders, explanation of role expectations, and familiarization with tools and systems. Companies should recognize that effective onboarding extends beyond the first few days of employment. Regular check-ins during the first months help identify and address potential challenges early.

Understanding the Latvian Employment Landscape

The Latvian employment environment requires certain considerations that companies should understand to effectively manage their local workforce.

Minimum Wage & Working Hours

Latvia’s minimum wage is €740 (about $832) per month. Standard working hours in Latvia consist of 40 hours per week, typically distributed across five working days. The law mandates at least one rest day per week, usually Sunday. Daily work should not exceed 8 hours under normal circumstances, though certain industries allow for schedule variations with appropriate compensatory arrangements.

Employers must compensate overtime at a minimum rate of 150% of the regular hourly wage. Night work (between 10 PM and 6 AM) similarly requires additional compensation, typically an additional 50% of the regular rate. Latvian law guarantees employees regular rest breaks during the workday, including a lunch break of at least 30 minutes for shifts exceeding six hours.

Social Security and Employee Benefits

Latvia’s social security system is funded through employer and employee contributions. This system provides coverage for retirement pensions, healthcare, unemployment benefits, and disability support. Employers contribute approximately 23.59% of gross salary to social security, while employees contribute an additional 10.5%. These mandatory contributions form a significant part of the total employment cost that companies must factor into their budgeting.

Beyond mandatory benefits, companies typically offer additional perks to attract and retain talent. Many employers provide meal allowances, transportation benefits, or mobile phone allowances as tax-efficient benefits. 

Learn more about social security and employee benefits in Latvia

Tax Obligations

Latvia implements a progressive personal income tax system. For annual income up to €105,300, a rate of 25.5% applies, while income exceeding this threshold attracts a rate of 33%. Additionally, individuals with total annual income exceeding €200,000 face an extra 3% tax on the portion above this amount. This supplementary rate encompasses employment remuneration, taxable income from capital, royalties, capital gains, and certain exempt income like dividends. Employers must withhold these taxes from employee salaries and remit them to the SRS monthly. 

Leave Policies

Latvian employees receive a minimum of 20 working days (four weeks) of paid annual leave after completing six months of employment. This leave cannot be replaced by financial compensation except upon employment termination. Public holidays (approximately 14 days annually) provide additional time off, with employees entitled to premium pay if they work on these days.

Sick leave benefits begin with employer-paid compensation for the second through tenth day of illness (the first day is unpaid). From the eleventh day onward, the social security system covers sick leave payments at 80% of the employee’s average salary. Maternity leave extends for 112 calendar days, with benefits paid by the social security system. Paternity leave provides 10 calendar days immediately after childbirth. Parents can also access childcare leave until the child reaches eight years of age, though this extended leave typically comes without salary continuation.

Termination Rules

Employers must provide written notice with specified notice periods based on employment duration: 10 days during probation, one month for general employment, and up to one month plus additional weeks based on years of service for longer-term employees. The law requires employers to provide valid reasons for termination, such as role elimination, performance issues, or policy violations.

Certain employee categories receive additional protection against dismissal, including pregnant women, new parents, and employee representatives. Severance payments apply in redundancy situations, with amounts based on employment duration. These payments range from one month’s salary for employees with less than five years of service to four months’ salary for those employed more than 20 years. 

Cultural Sensitivities

Latvians generally maintain a direct communication style but might show initial reserve with new colleagues or business contacts. Building trust takes time and consistency. Once established, work relationships tend to be stable and reliable. Professional relationships often remain somewhat formal compared to more casual American or British workplace cultures, with appropriate use of titles and last names until closer relationships develop.

Latvians value punctuality and thorough preparation for business meetings. Work-life balance is also important, particularly among younger professionals. While Latvians demonstrate a strong work ethic and commitment to quality, they typically expect employers to respect personal time and family responsibilities.

How to Hire Employees in Latvia — Our Take

Building a successful team in Latvia offers substantial opportunities for companies seeking to expand their European operations. The country’s strategic location, skilled workforce, and business-friendly environment create favorable conditions for growth across various industries. Companies that follow compliance requirements, develop thoughtful recruitment strategies, and build culturally appropriate workplace policies position themselves for success in this dynamic market.

For businesses looking to expand into Latvia, Remote People offers specialized support services that simplify the hiring process. Our team provides expert guidance on compliance requirements, connects you with qualified candidates, and helps develop effective employment strategies tailored to your specific needs. As a trusted recruitment partner with extensive experience in Baltic markets, Remote People helps companies overcome the challenges of international expansion while building high-performing teams. Contact us today to learn how we can support your growth in Latvia and beyond.