Expand your organization into Latvia, with or without a Latvian entity
Latvia’s growing economy, membership of the European Union, and convenient location in Europe all contribute to it being an excellent place to do business. The country was recently ranked 14th in the world for ease of doing business by the World Bank Group, reflecting the potential for foreign businesses looking to expand.
But while Latvia is open to foreign businesses, expansion is not always straightforward. The country’s language and cultural differences can present challenges for organizations starting out, and its complex set of regulation, combined with those of the EU, can lead to delays.
At New Horizons, we work to help businesses from any and all industries expand into Latvia. Our professional employer organization (PEO), employer of record, and payroll services can offer you everything you need to start your Latvian expansion rapidly, efficiently, and compliantly.
As the only global PEO with an in-house recruitment team, we can also take care of the sourcing, hiring, and onboarding of your Latvian workforce, along with any ongoing HR and compliance work. Our bespoke services can save you thousands in expansion costs and provide you with a faster route into Latvia.
How can New Horizons help you expand into Latvia?
New Horizons enables your business to expand its operations into Latvia, without needing to set up a legal subsidiary.
Hiring in Latvia: Employment law overview
Employment contracts in Latvia
Employers in Latvia are legally required to provide all employees with formal contracts of employment. All contracts need to include any relevant details of the agreement, such as compensation, entitlement and benefits, and so on, and should be written in Latvian with all references to money in the Euro currency.
Most employment agreements are indefinite-term, with fixed-term contracts only possible in specific situations.
Working hours in Latvia
The standard working week in Latvia is 40 hours, composed of five eight-hour days.
Public holidays in Latvia
Several public holidays are celebrated annually in Latvia. Most workers are given the day off on the following days:
New Year’s Day
Daylight Saving Time starts
Labour Day/May Day, Constituent Assembly Convocation Day
Independence Restoration Day
Special Working Day
Midsummer Day Holiday
12 Jul-13 Jul
Youth Song and Dance Festival Holiday
Daylight Saving Time ends
Republic of Latvia Proclamation Day
Second Day of Christmas
New Year’s Eve
Vacation leave in Latvia
Workers in Latvia are entitled to four weeks (20 days) of paid vacation leave at a minimum. Some employers choose to offer more.
Sick leave in Latvia
Employers in Latvia usually provide ten days of paid sick leave to employees, with the second and third days compensated at 75% of normal pay and the remaining days compensated at 80%. Absences beyond ten days are covered by the government.
Parental leave in Latvia
Female workers in Latvia are entitled to paid maternity leave of 56 days before giving birth and 56 days after (totaling 122 days). The government pays for this leave, so employers are not responsible. Male employees can take ten days of paternal leave before the child is two months old.
Additional parental leave of up to 18 months may also be taken before the child turns eight.
Terminations and severance in Latvia
Unless in a probation period, employees in Latvia are generally entitled to at least ten days of notice of termination and may receive up to one month.
Employees are also usually entitled to severance pay upon termination, with the amount varying depending on length of service. Usually:
- Up to five years with an employer = One month of salary
- Between five and ten years with an employer = Two months of salary
- Between ten and 20 years with an employer = Three months of salary
- More than 20 years with an employer = Four months of salary
Taxation in Latvia
Employers in Latvia generally need to withhold the income tax of employees. The income tax rate in Latvia is between 20% to 31.4% depending on income level.
Employers and employees are required to contribute to Latvia’s social security scheme, paying 23.59% and 10.5% of salaries respectively.
Health coverage in Latvia
Latvia has nationalized healthcare, so employers do not need to provide private medical insurance to workers. However, some companies do choose to offer it as an employment benefit.
Latvia compensations & benefits
Compensation laws in Latvia
The minimum wage in Latvia in 2020 is €430 per month for full-time workers.
Benefit management in Latvia
Building a benefits system for your Latvian workforce can be difficult and complicated to navigate if you are not familiar with the country, its customs, and its employment laws. To set it up independently, it can take several weeks and potentially lead to unexpected delays.
New Horizons can simplify your Latvia benefits management. Our Latvia experts can handle everything for you, helping you focus on a successful expansion operation.