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Employer of Record (EOR) in Latvia

Employer of Record in Latvia

Skuad’s Latvia EOR (Employer of Record) solution can support your business expansion in Latvia without setting up a separate entity. Our tech-rich global HR platform will manage hiring in Latvia, contracts, compliances, payrolls, and benefits for you. All you are left with is ample time to focus on your business growth. Our ultimate aim is to offer you a stress-free business expansion experience with our automated, self-serve, and unified HR platform. Connect with Skuad experts to know more.

Latvia At A Glance

Population: 1.9 Million

Currency: Euro (EUR)

Capital city: Riga

Languages spoken: Latvian

GDP: 63.53 Billion (2021)

Employment in Latvia

Latvia employment law applies to both national and foreign employees. Both the employer and employee have to sign a contract of employment if they wish to enter into a professional relationship. An employment agreement in Latvia can be temporary or for an indefinite period. According to The Employment Law, any contract that extends beyond 2 years, becomes an indefinite contract of employment.

Apart from this, The Labor Law, The Ministry of Welfare, The State Social Insurance Agency, and the State Employment Agency offer several employee benefits to the workers working in Latvia. Mandatory employee benefits comprise pension, unemployment benefits, and legislative leaves. Whereas, The Labor Protection Law offers supplementary employee health benefits in Latvia like maternity benefits, sickness benefits, and paternity benefits.

Moreover, The Latvia Labor Laws also prescribe minimum and maximum limits for statutory working hours, annual paid leaves, and employee rest time. Companies should consider partnering with a global HR solution provider to ensure the best trouble-free law compliance. Our in-house professionals at Skuad are well aware of the Latvian laws for both domestic and foreign employees. They can simplify benefits management for you. Click here to know everything about it.

Title Explanation

Statutory Working Hours

According to The Labor Law, the maximum working hours in a day cannot exceed 8 hours. Though the upper limit for weekly working hours is 40 hours.

Rest Time

The Labor Law prescribes that:

  • Every employee should get at least 12 hours of uninterrupted rest in 1-day. In other words, he should be away from work for at least 12 hours a day.
  • However, the weekly rest period, which spans 7 days, should not be less than 42 uninterrupted hours.

Public Holidays

  • New Year’s Day (1st January)
  • Good Friday
  • Easter Monday
  • Labor Day (1st May)
  • Declaration of Independence Day (4th May)
  • Midsummer Eve (23rd June)
  • St. John’s Day (24th June)
  • Latvian National Day (18th November)
  • Christmas (25th and 26th December)
  • New Year’s Eve (31st December)

Pension

The retirement age in Latvia is 62 years. However, as per law, this number is to increase by 3 months annually till 2025. Finally, the retirement age will become 65 years in 2025. Employees who have a social contribution of at least 15 years are entitled to receive pension benefits in Latvia. There is a 3-tier pension system here:

Tier 1 – State mandatory unfunded pension scheme

Tier 2 – State-funded pension scheme

Tier 3 - Private voluntary pension scheme

Legislative leaves

  • Paid Annual Leave – Every employee gets a paid annual leave of at least 4 calendar weeks (excluding public holidays) in a year. Although the law does not allow cash compensation on paid leaves, there is an exception.Employees can receive cash compensation in case the employment contract is terminated and they are left with unused paid leaves.
  • Maternity and Childbirth Leave – Female employees get 56 maternity leave and 56 childbirth leave. It is a mandate to take at least 2-week leave before delivery and 2-week after delivery.
  • Paternity Leave – Male employees can take a leave of 10 calendar days under the category of paternity leave. They can take this leave immediately post childbirth but not later than 2 months of the birth.
  • Childcare Leave – Employees can apply for childcare leaves during the birth or adoption of a child. This leave can last for 18 months. Moreover, the employees are free to take this leave anytime till the child reaches the age of 8 years.
  • Study Leave – Employees sitting in state exams are allowed a leave of 20 days in a year. But, the total number of leaves will be as per their employment contract.
  • Sick Pay Leave – Employees who are sick and on sickness leave shall get 75% of their average income on the 2ndday and 3rdday of sickness absence, from their employer. This limit will go up to 80% from the 4thday up till the 10thday. However, from the 11th day of absence, the employee will get payments from the State Social Insurance Agency.

Unemployment Insurance

Employees are eligible to claim unemployment benefits if they have lost their job. However, only those employees are eligible to get this benefit who have been declared unemployed by SEA – State Employment Agency.

The maximum duration of unemployment benefits last for 9 months. Though, the total amount of benefit depends upon the employment history and the wage level from which social insurance contributions are paid.

Contractors Vs Full-Time Employees

Companies that look forward to diversifying business in Latvia have to decide between hiring contractors or full-time employees. Please note that the Latvian laws treat independent contractors differently from full-time employees.

Hiring an independent contractor can prove to be a wise decision for short-term projects. Furthermore, there will be no over-the-head costs like statutory payments, benefits, and payroll taxes. But, you might run into penalties and fines if you fail to correctly classify a contractor.

On the other hand, companies that have long-term business projects in Latvia should go for hiring full-time employees. Although it increases the liabilities of the employer, it also guarantees an ongoing contribution to the business. Collaborating with a reliable name in the industry can ease this process for you.

Skuad’s EOR Solution sets you free from all the employee-related liabilities and responsibilities. Our in-country teams will handle all the HR functions, giving you excellent exposure to the business opportunities in Latvia. Click here to book a demo today.

Hiring In Latvia

Latvia has a small economy with limited resources. So it might be difficult for you to find the best talent for specific profiles at a rational salary there. Are you looking forward to hiring for narrow specializations? You can either first ascertain the resource availability or provide on-the-job training to the employees, and prepare them for the role.

German, English, and Russian are some of the most common languages spoken in Latvia. It is a plus point for the companies that are planning to recruit remote teams there. Communicating in the dialect of the candidates can make the entire process easier. Companies have two options. They can either connect with hiring companies in Latvia or opt for job portals. 

However, there are certain pros and cons of relying on job search websites. Many fresh graduates upload their profiles on these portals every year. It gives an idea about the quality of the young talent here. But there are also instances where some of the profiles have come out to be misleading. Associating with a professional global HR partner can offer you the safest hiring experience so far.

Skuad is a leading EOR with experts in over 160 countries. They can help you in seamless remote hiring, onboarding, and remote team management. Book a demo with Skuad’s employer of record companies in Latvia today for more details.

Probation & Termination

Probation 

The Labor Law, in its section 46 and following, specifies that all the parties of an employment contract can mutually agree on a probationary period. However, the standard probation period in Latvia is 3 months.

Furthermore, according to Section 47 (2) of the Labor Law, employees whose probation period has expired, but continue to work for the employer, have legally passed the contracted term of probation in Latvia.

Termination

Both the employer and employee have the authority for termination of employment in Latvia by ending their agreement. However, a 1-month written notice has to be given by the party who intends to end the employment collaboration. They can also end the work relations through a mutual agreement. The employee has a right to receive a severance payment if:

  • There is a valid reason for terminating the contract of employment. E.g. mortality of the employee and continuing the employment collaboration is not possible now.
  • The employer terminates the contract of employment as he feels that the employee is medically incompetent to perform the work. Such decisions are taken on the recommendations of the doctor.
  • The employer is in liquidation or is laying off employees.

Companies planning to expand in a foreign land should focus entirely on their scaling-up strategies. They should connect with Skuad’s EOR solutions for a hassle-free business diversification experience. Our in-country experts will provide around-the-clock support for your employee probation and termination functions, under the Latvian laws. Talk to a Skuad expert today for more details.

EOR Solution

Skuad’s Latvia EOR solutions make it easier for businesses to hire and augment their operations in Latvia. Skuad can customize solutions as per the requirements of its client. Collaborate with Skuad’s EOR solutions to get a competitive edge in the international market.

It sets you free from onboarding, payroll processing, visa formalities, legal compliances, taxation laws, and government statutory management. All you’re left with is ample time to concentrate on core marketing operations and boost your ROI. Click here to know everything about Skuad’s employer of record in Latvia.

Types Of Visas In Latvia

There are three types of visas in Latvia; Schengen Visas (Type C), Airport Transit Visa (Type A), and Long Stay Visa (Type D). The maximum duration of stay allowed in a Schengen visa is 90 days in 180 days period. Here is a list of common documents that are required in all types of work visas as per the Latvian Embassy / Consulate. Please note that this list is subject to updates over time.

  • Copy of Latvian visa application form.
  • 2 passport size photographs
  • Original passport with at least 2 blank pages. Copies of previous visas that are valid for at least 3 months from the return date.
  • Europe travel insurance confirmation of a minimum coverage amount of 30,000 EUR within Latvia and Schengen zone.
  • A formal cover letter that states your purpose of travel to Latvia along with an itinerary.
  • Hotel reservation copies for the entire duration you are going to stay in the Republic of Latvia.
  • Complete flight itinerary stating the specific dates or entry and exit from the Republic of Latvia.
  • Proof of civil status like marriage certificate, birth certificate of children, if applicable.
  • Proof of financial viability for the period of stay in Latvia.

Here is a list of special documents required for different types of visas in Latvia, apart from the above-mentioned list.

Visa Category Explanation

Latvian Visitor / Tourist Visa

  • Bank statement for the last 6 months
  • Passport copies
  • Invitation letter from friends or family residing in Latvia along with their contact details.

Latvian Schengen Visa for Medical Purposes

  • A local medical report
  • Payment receipts of the medical bills and fees
  • A medical attestation of the doctor or hospital in Latvia confirming details of current medical condition and date of appointment

Latvian Schengen Visa for Business Purposes

  • A certificate from the employer stating your business travel.
  • Appointment letter or letter of invitation from the employer.
  • Bank statement for the last 6 months
  • Original Memorandum of Association registered with joint-stock companies, Partnership/Proprietorship documents, and Trade License.
  • The letter of invitation must state coverage of expenses of the applicant’s stay in Latvia.
  • Copy of ITR
  • Copy of employment contract.

Latvian Schengen Visa for Culture, Religious, or Sports Purposes

  • Original invitation letter from the concerned authorities along with details of expense coverage and purpose of visit.
  • Travel itinerary
  • Duration of stay
  • Details of the crew/group members

Latvian Schengen Visa for Research, Training, or Study Purposes

  • Original enrolment certificate
  • Financial sustenance
  • Certificate of courses
  • Leave approval letter from the college or university

Latvian Airport Transit Visa / Type A Visa

  • Visa or any other type of entry permit in Latvia
  • Copy of valid visas for the final destination

Work Permits

OCMA – The Office of Citizenship and Migration Affairs handles work permits in Latvia. Any foreign employee who wants an occasional residence in the Republic of Latvia for 90 days within 6 months duration must obtain a visa and a work permit from the Office of Citizenship and Migration Affairs (OCMA). 

Skuad’s EOR solutions can assist you to sponsor work permits and manage the documentation formalities in Latvia. Connect with the expert today to know everything about getting a Latvia work permit for foreigners.

Payroll & Taxes In Latvia

Setting Up Payroll In Latvia

Latvia employer payroll and taxes rules vary from one category to the other. There are many considerations that you need to take care of when operating in Latvia. Every foreign employer must be well-versed with the prevalent business tax, income tax, employee compensation, and social security laws of the land. 

The first thing that you need to ascertain is whether you want to go ahead with the local or foreign workforce.Ideally, a company cannot hire employees in Latvia, add them to the payroll, or start functioning in Latvia without having an incorporated entity. It is a mandate to have a registered subsidiary before beginning the payroll setup process in Latvia. 

But Skuad can help you in managing Latvia payroll tax rates without an entity setup. With the help of its cloud-based global payroll technology, Skuad has streamlined global operations and payroll management. Click here to know more about it.

Taxes In Latvia

Latvia’s tax regulations apply to both employees and employers. The nation uses a PAYE – Pay As You Earn system here. Companies that do not have a permanent establishment in Latvia, need to pay taxes only on sourced income from Latvia. Here are the details:

Tax and Contribution Information

Corporate Tax

Corporate Tax in Latvia 15%. But if you are operating in a special zone, the tax rate comes down to 3%.

Standard Income Tax

Standard Income Tax remains flat 23% irrespective of the employee income. The employer has to withdraw this amount from employee paychecks.

Incorporation

To begin with, you need to choose the best location to set up a subsidiary unit in Latvia. Why is that important? Because subsidiary laws here differ from region to region. Companies that are not aware of the subsidiary laws should partner with a consultant to finalize the best and incorporation-friendly location.

The Latvian laws allow you to set up a limited liability company, joint-stock company, representative office, or a branch office in its country. Every subsidiary has its restrictions, laws, and timeframes. Picking the right entity can play a significant role in scaling up your business operations. Here is a general procedure for incorporating a holding company in Latvia:

  1. Selecting a unique entity name for your subsidiary. It must contain only Latvian or Latin letters.
  2. Drafting Memorandum of Association and Articles of Association.
  3. Opening an in-country bank account in the name of the company and depositing minimum balance into it.
  4. Registering the entity with the Commercial Register.
  5. Obtaining special licenses and permits as per your industry.

Do you want to scale up operations in Latvia without setting up a subsidiary? If yes, you should consider associating with Skuad. Our experts will take all the Latvia employment laws and local tax responsibilities off your shoulders. Talk to a Skuad expert today.

PEO

Professional Employer Organization (PEO) is a service arrangement in which the vendor offers HR benefits to mid and small-scale employers. PEOs enter into a co-employment relationship with the employer. It handles functions like HR, benefits, and regulatory compliances for the clients. However, all the employment responsibilities and liabilities lie largely with the employer.

An Employer Of Record (EOR) offers more or less similar solutions to that of a professional employer organization in Latvia. But in addition to it, EOR also becomes the official entity that does hiring for you. As a legal employer, it holds all the responsibilities and liabilities of the employees. Right from hiring, onboarding, payroll, taxes, and termination, an EOR handles everything for you.

Companies that want to focus majorly on business scale-up strategies should always opt for EOR solutions. It offers a perfect mix of hiring and compliance adherence and increases their competitiveness in the market. Skuad’s Latvia EOR (Employer of Record) is a leading global HR platform. It can help in scaling up your business operations with a 360° approach. Find out more about Skuad here.

Conclusion

Advanced infrastructure, competitive tax rates, and highly productive markets make Latvia a lucrative investment destination in Europe. It offers a highly affordable business environment, ensuring excellent returns on investment. Do you also want to earn compelling profits by diversifying your business in Latvia? If yes, you should partner with a reliable EOR solution provider.

Skuad’s Latvia EOR (Employer of Record) solution allows you to build an outstanding remote team without setting up a local entity. Our professionals will handle your cross-border payments, payroll, compliances, benefits, and taxes, ensuring your complete focus on your business scale-up. That’s not all, Skuad will also handle all your legal issues and help in avoiding penalties.

What differentiates Skuad from others? Skuad not only onboard employees for you but also helps in exploring the best talent on a global scale. Our tech-rich HR platform and in-country experts mitigate challenges and remove every roadblock that comes in the way of your business augmentation strategies. Skuad can be your perfect companion in every possible way.

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