Guide to employing in Latvia

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XPANDIUM provides complete Employer of Record, Payroll services and solutions for clients who want to hire employees and run a full payroll without establishing a legal entity in Latvia.

Your selected candidates get hired by our local PEO entity. We take care of the compliant onboarding, payroll, tax payments, benefits, so you can focus on assigning employees to specific jobs and projects without further waiting and start to manage their daily work.


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Xpandium - Hire your employees in Latvia

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The following information is a basic guideline for employing in Latvia and the salary calculator can easily help you to understand the basic costs.

Employment Contract

Employment relationships may be concluded for

  • fixed term employment (temporary) or
  • indefinite duration (open-ended, permanent).

Probation period

Maximum 3 months, optional as Employee and Employers can agree upon a probationary period.

Working hours

Full time employment is considered 8 hours per day and 40 hours per week in Estonia. Less hours means part-time work.

Hours worked above 8 hours per day / 40 per week or on public holidays are considered overtime. Overtime hours must be compensated during payroll with 200% allowance pay.

Minimum wage

The current minimum wage is 500 EUR for full-time employment.

13th month salary

Not required.

Benefit package

Not required.

Payroll Cycle

Salaries are payrolled and paid on a monthly basis usually on the last working day of the month.

Health insurance in Latvia

The Latvian healthcare system is a universal programme under which all residents are assured, largely funded through government taxation. It is similar to British NHS-type health system with a purchaser-provider split.

Employee taxes

10.50% State Health Insurance and Solidarity Tax

Personal Income tax varies based on the Annual Salary:

20% up to 20,004 EUR

23% up from 20,005 to 62,800 EUR

31% from 62,801 EUR

Employer taxes

33.8% total employment cost in Latvia


Public Holidays




New Years Day

January 1

Good Friday

April 2

Friday before Easter Sunday

Easter Sunday

April 4

Varies yearly

Easter Monday

April 5

Varies yearly

Labour Day

May 1

Independence Day

May 4

Declaration of Independence of the Republic of Latvia

Mother’s Day

May 14

Varies yearly. 2nd Sunday of May


May 24

Midsummer’s Eve

June 23

Janis Day

June 24

Latvia Day

November 18

Proclamation of the Republic of Latvia

Christmas Eve

December 24

Christmas Day

December 25

2nd Day of Christmas

December 26

New Year’s Eve

December 31


Popular benefits in Latvia

You may offer custom benefits for your employees. As an Employer, you may benefit from offering an attractive compensation package during hiring. This means that in addition to salary, employees may receive one or more non-salary compensation.

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Supplementary medical insurances (private / dental / vision)

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Supplementary Life or other special insurance

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Additional paid holidays

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Flexible work schedule

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Voluntary pension fund scheme

Benefit planning process includes

  • Decide on the Annual Benefit Amount - you may offer and divide it by 12 monthly payroll.
  • Select the benefit items you would like to offer employees
  • Internal policy to be prepared, communicated and provided to monthly payroll.
  • Collect the Benefit statements from employees - on the employee selected elements and respective amounts; written and signed, provided to polish EOR payroll.

Offering individual benefits for one or a selected group of employees needs to be planned and advised to be signed with a side agreement along with an employment contract.


Types of Leaves

Paid leave

Employees are entitled to 20 days. This leave may not be shorter than 4 calendar weeks, not including public holidays.

By agreement between the Employer and Employee, paid annual leave for the current year may be granted in instalments; however, one instalment of annual leave in a given year may not be less than 2 uninterrupted calendar weeks.

Cash compensation for annual leave is prohibited, except in cases where an employment relationship is terminated and an employee has not used up their paid annual leave.

Public holidays

There are 15 public holidays in Latvia.

Sick leave

An employee is entitled to employer paid 10 days yearly.

Payment is 75% of the employee’s average salary, but for the 4th - 10th days of sickness it is 80%. After the 10 days the State Health Insurance takes over the payment and for up to 52 weeks.

Pregnancy and maternity leave

Expecting women can have a total 112 (56 + 56) days.

Maternity leave may start 56 days prior to giving birth.

Government covers maternity leave with 80% payment.

Paternity / paternal leave

The father is entitled to 10 working days off for paternity leave.

Not-Paid leave

An employer may grant an employee unpaid leave at the employee’s request.

Other leave

If a parent has 3 or more children under the age of 16 years or a disabled child under 18 years. The duration of such additional leave is 3 working days.

If an employee's work involves a specific risk, the additional leave may not be less than 3 working days.

If a parent takes care for 1 or 2 children up to the age of 14 years, the the additional paid leave may not be less than 1 working day.


Employment termination

Employers have the below options to terminate an employment contract in Latvia:

Termination under probation period

Termination by the Employer is immediately effective.

Resignation by Employee

Employees may freely terminate their employment contract with a written notice of minimum 1 month notice.

Termination by Employer with notice

An employment agreement may be terminated by the Employer by notice but must be with a cause. Employers must inform the Employee in writing of the reason for termination and the Employee has 1 month to challenge such decision.

Notice period can not be less than 1 month.

Termination of fixed term contract

If termination is due to Employer’s redundancy, the employee is entitled to the salary that they would have received from the date of termination to the expiry date of the contract.

Termination by mutual consent

The termination by mutual consent allows the Employer and Employee to agree freely but in written agreement with each other on the conditions of termination.

Expiry of employment contract

When the employment contract expires then such employment is automatically terminated.

Severance pay

Employee is entitled to severance pay if the Employer terminates the contract due to redundancy In Latvia.

Employees are entitled to receive higher amounts of redundancy pay depending on the length of employment with the Employer:

  • Up to 5 years of employment: +1 month
  • From 5 to 10 years: +2 months
  • From 10 to 20 years: +3 months
  • Over 20 years: +4 months salary pay