Employer of Record in Latvia

Like many of its Baltic neighbors, Latvia is well-positioned for strategic access to Russian and Asian markets. This positioning matters to foreign companies in Northern Europe and abroad that want to expand into these regions.

The country is wealthier and more institutionally stable than much of Eastern Europe, but less expensive than Western Europe. This makes it a cost-efficient Northern European operating base with EU infrastructure.

Although Latvia isn’t as well-known as its neighbor, Estonia, for tech startups and deep tech innovation, it also has a rich entrepreneurial innovative culture. Increasingly, foreign companies are using Latvia to establish fintech companies, shared services centers and IT outsourcing firms.

Most of the country's working population is located in and around the capital city, Riga. Riga is the economic and socio-cultural heart of Latvia, and vital industries have their headquarters in the capital. The ICT sector is one of Latvia’s flagship industries, with fintech, cybersecurity, AI development and digital infrastructure accounting for around 6.7% of the country’s GDP.

Foreign companies investing in Latvia find its employment laws highly structured but fair, and its robust tax incentives attractive. These two factors account for the steady growth in foreign investment in Latvia each year.

When speedy and efficient entry into the Latvian labor market is required, an Employer of Record (EOR) is an excellent alternative to establishing your own legal entity. A recognized legal entity in Latvia, like Rivermate will help you hire top Latvian professionals and handle payroll, tax and mandatory employee benefits.

How an Employer of Record (EOR) Works in Latvia

Using an EOR simplifies hiring in Latvia. Here is how it usually works:

1. You Find the Talent. You recruit and choose the best candidate for your team in Latvia.
2. The EOR Hires Them. The EOR uses its own local legal entity to officially hire employees and ensure full legal compliance.
3. Contracts Are Handled. The EOR creates and manages the employment contract. This ensures it complies with all Latvian labor regulations, which you can review on the State Labour Inspectorate's website(https://www.vdi.gov.lv/en/labor-law).
4. Onboard employees. Your new team member is onboarded. The EOR sets up their payroll, enrolls them in benefits, and registers them with the necessary tax and social security authorities. This process takes 5 to 15 days once all documents are in place
5. You Manage Daily Work. You are in charge of your employee's day to day tasks and responsibilities, just like any other team member.
6. The EOR Manages HR. The EOR handles ongoing support, including HR administration and compliance management.

Why use an Employer of Record in Latvia

Using an EOR in Latvia has significant advantages for your business expansion strategy.

• Hire Faster. You can onboard experienced professionals in a matter of days instead of the months it would take to set up local business operations.
• Reduce Costs. Avoid the significant financial investment needed to establish a local legal entity in Latvia.
• Stay Compliant. EORs are experts in Latvian labor law, so they ensure regulatory obligations are met.
• Offer Competitive Benefits. Your EOR can provide local benefits packages that help you attract and retain top talent.
• Focus on Your Business. With HR and compliance handled, you can concentrate on growing your business and managing your team.

A major attraction for foreign companies is that Latvian professionals are more affordable than their Nordic or Western European counterparts, yet they possess similar skills. Latvian workers usually speak Latvian, with English also widely used as a business language. Some minorities can also speak Russian or German.

One challenge affecting the country's talent pool is strong competition for skilled workers. Top IT engineers and specialists often receive offers from abroad or work remotely for international companies and are quick to accept better opportunities for more experience.

The total employment cost in Latvia is still less than in Western Europe, but wage growth has accelerated as more companies compete in a comparatively small talent pool. Skilled professionals increasingly expect health insurance, remote flexibility, mental health and well-being programs, and performance bonuses.

Latvian employees value formal employment contracts with a comprehensive salary breakdown. This simple best practice helps foreign employers to secure top candidates. This is important in highly competitive industries with small talent pools.

Employment contracts & must-have clauses

Global employers must provide a written employment contract in Latvian. Candidates can request bilingual contracts. Full-time employment contracts are drafted for an indefinite term, while fixed-term contracts may not be longer than five years.

Your employment contracts must include:

• Your company's name, registration number, and address
• The employee's personal information
• Job start date and duration (for fixed-term contracts)
• Workplace location
• Job title and a description of duties
• Salary and payment dates
• Daily or weekly working hours
• Amount of annual leave
• Notice periods for termination

Probation periods

You can include a probation period in the employment contract to see if a new hire is a good fit. This period cannot be longer than three months. For fixed-term contracts of up to six months, the maximum probation is one month.

During the probation period, either you or the employee can end the employment relationship with just three days' written notice. You don't need to give a reason for termination during this time.

Working hours & overtime

The standard workweek in Latvia is 40 hours, usually split into eight-hour days from Monday to Friday. Employees must have at least 12 hours of rest between workdays and a continuous rest period of 42 hours each week.

Any work done beyond the standard hours is overtime. You must pay employees double their normal rate for overtime hours. Overtime is limited to eight hours per week and 200 hours per year.

Public & regional holidays

Your employees are entitled to paid time off for public holidays. If a holiday falls on a weekend, the following Monday is often observed as a day off.

Here are the public holidays for 2025:

Date	Day	Holiday
January 1	Wednesday	New Year's Day
April 18	Friday	Good Friday
April 20	Sunday	Easter Sunday
April 21	Monday	Easter Monday
May 1	Thursday	Labour Day
May 4	Sunday	Restoration of Independence Day
May 5	Monday	Restoration of Independence Day Holiday
June 23	Monday	Midsummer's Eve
June 24	Tuesday	St. John's Day (Midsummer)
November 18	Tuesday	Proclamation Day of the Republic of Latvia
December 24	Wednesday	Christmas Eve
December 25	Thursday	Christmas Day
December 26	Friday	Second Day of Christmas
December 31	Wednesday	New Year's Eve

Hiring contractors in Latvia

Independent contractors in Latvia are classified as self-employed workers (Pašnodarbinātā persona) and are clearly separated from full-time, part-time, and temporary workers.

Employers hiring contractors in Latvia must ensure that they are registered with the State Revenue Service (VID). For someone to be classified as a contractor, they must:

• Get paid by submitting a business invoice.
• Not receive any wages, benefits or work resources from the client company.
• Pay their own taxes.
• Have the right to accept or decline work based on their schedule.

The lines between a normal employee and a contractor must remain clear to avoid worker misclassification. For example, a software developer who works remotely but receives a set monthly income from the employer and some benefits is not an independent contractor.

An Employer of Record (EOR) helps you avoid these risks. An EOR can properly classify your workers in accordance with Latvian regulations. This allows you to work with talented contractors in Latvia without the risk of misclassification.

In Latvia, handling payroll means understanding and following local laws for paying your employees correctly and on time. You need to consider things like minimum wage, working hours, and taxes. Staying compliant is key, as there are penalties for not following the rules.

Payroll cycles & wage structure

You must pay your employees twice a month. If you and your employee agree in writing, you can switch to a monthly payment schedule. Each payment must come with a payslip that details all earnings and deductions.

Every employee needs a formal employment contract. This contract should be in Latvian and clearly state the employee's salary and other compensation details.

Overtime & minimums

A standard workweek in Latvia is 40 hours, based on an 8-hour workday. Any work done beyond these hours is overtime. You must pay employees 200% of their normal wage for any overtime hours worked.

As of January 1, 2026, the minimum wage in Latvia is €780 per month for full-time work.

Employer taxes and contributions

As an employer, you are responsible for making social security contributions on behalf of your employees.

Contribution	Rate	Notes
National Social Insurance	23.59%	This is the standard rate.
Business Risk Fee	€0.36 per employee	This is a monthly fee paid to the state budget.

Employee taxes and deductions

Employees also contribute to social security and pay income tax. You will withhold these amounts from their paychecks.

Deduction	Rate	Notes
National Social Insurance	10.5%	This is the employee's share of social security contributions.
Personal Income Tax	25.5% to 33%	This is a progressive tax based on income level.

In Northern Europe, benefits are split into two models: The Baltic model (Latvia, Estonia, Lithuania) and the Nordic model (Sweden, Denmark, Norway, Finland). The Baltic model relies heavily on state-administered frameworks, which provide excellent social security benefits but with lower financial thresholds. The Nordic model relies on collective bargaining agreements that set higher monetary caps.

In practice, this translates into lower total employment costs for Latvian employers. However, companies that offer higher annual leave, maternity and sick leave benefits are preferred by top talent.

Statutory leave

Here is a breakdown of the legally required leave entitlements in Latvia.

• Annual Leave: You must provide employees with at least four weeks of paid annual leave per year after they have worked for you for at least six continuous months.
• Sick Leave: Employees can take up to 10 paid sick days. You pay for the second and third day at 75% of their regular salary, and days four through 10 at 80%. From the 11th day, the state's social security system takes over payments.
• Maternity Leave: Female employees get 112 calendar days of maternity leave. Typically, they take 56 days before the birth and 56 days after. The state pays this benefit at 80% of the employee's average wage.
• Paternity Leave: Fathers are entitled to 10 working days of paid leave. They must use this within six months of the child's birth.
• Parental Leave: After maternity leave ends, one parent can take parental leave until the child is 18 months old.

Public holidays & regional holidays

Your employees in Latvia are entitled to a paid day off for the country's public holidays.

Holiday	Date in 2025
New Year's Day	January 1
Good Friday	April 18
Easter Monday	April 21
Labour Day	May 1
Restoration of Independence Day	May 4
Midsummer's Eve	June 23
St. John's Day	June 24
Proclamation Day of the Republic of Latvia	November 18
Christmas Eve	December 24
Christmas Day	December 25
Boxing Day	December 26
New Year's Eve	December 31

Typical supplemental benefits

To be a competitive employer, you should consider offering more than the legal minimums.

Statutory Benefits	Non-Statutory (Supplemental) Benefits
Social Security Contributions	Private Health Insurance
Paid Annual Leave	Contributions to a Private Pension Plan
Sick Leave	Company Car or Transportation Allowance
Maternity, Paternity & Parental Leave	Bonuses and Performance-Based Incentives
Severance Pay	Meal Allowances
Pension Contributions	Dental Care

How an EOR can help with setting up benefits

Navigating another country's employment laws and benefit expectations can be a challenge. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in Latvia, so you don't have to set one up. We handle the complexities of payroll, taxes, and benefits administration, ensuring you comply with all local regulations. We can also advise you on what supplemental benefits are common in your industry to help you attract the best local talent. This lets you focus on managing your team and growing your business.

In Latvia, terminations must be handled in accordance with a set offboarding process. Valid reasons are required for terminating employment, and employers must make a final or severance payment. Any company letting go of a group or team of employees must formally file a record with the State Employment Service.

Notice periods

When you, the employer, decide to terminate a contract, the notice period usually depends on the reason for termination.

• 10 days: This applies in cases of contract violations or long-term sickness.
• 1 month: This is required for redundancies, company liquidation, or if the employee lacks the necessary skills.

If an employee resigns, they must provide one month's written notice, unless your contract states otherwise.

Severance pay

Employees may be entitled to severance pay if you terminate their contract for reasons not related to their misconduct. The amount is based on how long they have worked for you.

Length of Service	Severance Pay
Up to 5 years	1 month's salary
5 to 10 years	2 months' salary
10 to 20 years	3 months' salary
Over 20 years	4 months' salary

How Rivermate handles compliant exits

Navigating employee exits in another country can be complex. We make sure every termination is handled correctly and in compliance with Latvian labor laws.

Here is how we simplify the process:

• Legal Compliance: We ensure every step, from notice to final payment, follows the correct legal procedure.
• Clear Documentation: We handle all the necessary paperwork, providing clear, written notices that state the legal grounds for termination.
• Calculations: We accurately calculate severance pay and any other final payments due to the employee.
• Guidance: We provide you with clear guidance throughout the process, so you understand your obligations and the employee's rights.

We manage the details so you can focus on your business.

For a foreign national to work in Latvia, a visa and a work permit must be obtained from the Office of Citizenship and Migration Affairs (OCMA). Under its guidance, long-stay visas and corporate employer invitations are reviewed to ensure they meet national quotas.

Citizens of the European Union (EU), the European Economic Area (EEA), or Switzerland do not require a work visa but must obtain a registration certificate if staying for more than 90 days.

An Employer of Record (EOR) can sponsor work permits for foreign employees, but they must have a legally registered entity in Latvia. This is the most common path for companies hiring full-time international talent. Independent contractors, however, typically handle their own visa applications and do not require employer sponsorship.

Here are some practical routes for working in Latvia:

• EU Blue Card: This is for highly skilled professionals. To qualify, you need a university degree or at least five years of professional experience. Your salary must also be 1.5 times the national average. An advantage of the Blue Card is that you don't need to register the job vacancy with the State Employment Agency.
• Digital Nomad Visa: If you work remotely for a company registered in an OECD country, you may be eligible for Latvia's digital nomad visa. This visa allows you to live in Latvia for up to one year, with the possibility of extending for another year. You'll need to prove a minimum monthly income to qualify.

Business travel compliance

For short business trips, you will likely use a Schengen (Type C) visa. This visa allows you to stay in the Schengen Area, which includes Latvia, for up to 90 days within a 180-day period.

Keep these points in mind for business travel:

• A work permit is not required for business visits that do not exceed 14 days within a 180-day period.
• For stays longer than 14 days, you will need a visa that grants the right to employment.
• When you apply for a short-stay visa, you will need to provide several documents, including proof of your travel arrangements, accommodation, and the purpose of your visit.