Payroll and HR
Administration in Latvia

Latvia – Payroll and HR administration services

Global Expansion Plus provides payroll and HR administration services in Latvia. Use our solutions to take care of your people in Latvia. We make sure that your people are being taken care of, and your entity is safe from violating local legislation. The Labor Code governs the Latvian labor relationship.

Hiring and onboarding employees in Latvia

If you are hiring a foreign employee, you need to consider obtaining the work permit first. Please see below. Once you agreed on the job offer with your future employee, you need to start the onboarding process.

Onboarding Process

The procedure of onboarding is established and regulated by the Labor Law.
The employer and employee establish mutual labor legal relations by concluding an employment contract. Under an employment contract, an employee undertakes the responsibility to perform a dedicated job, comply with a specified labor schedule and internal policies. An employer undertakes the responsibility to pay the wage and salary established under the contract and ensure fair, safe, and environmentally friendly working conditions.
An employment contract is prepared in writing before the start of employment. A fixed contract can be signed only for two years after this period it is considered indefinite.
It is a common practice in Latvia to prepare internal employment request by an employee and Director to issue the internal order for the start of the employment.

Probation Period

The probation period can be established only for three months. An employer can use the trial period tp determined the ability of the employee to perform the required job.

Work permits and Visas in Latvia

Visa Types

Latvia is part of the Schengen agreement. Schengen visa is an entry visa application for the territory of the Schengen States. Schengen visa holders allowed to stay in the Schengen Area for up to 90 days in 180 days.
Single entry visa. A visa grants the traveler a longer time frame. The travelers are expected to make sure that the intended trip is within the stated period. While exiting the Schengen zone, border control checks the visa dates for overstaying. Travelers must have a valid travel medical insurance policy.

Multiple entry visa.A visa allows the holder to enter and exit the county multiply time within 180 days for 90 days in total. Travelers must have a valid travel medical insurance policy.

The following documents are required to apply for the Schengen visa:
  • A travel document, like an international passport;
  • An application form;
  • A 35x45mm colored photo;
  • A valid travel medical insurance policy
  • Payment of the visa application fee;
  • Prove of the accommodation in the country (hotel bookings or apartment rents)
  • Bank extract that provides that applicant have sufficient funds for the round trip;
  • Information that proves the intention of the applicant to return to the home country.

Work Permit

The Office of Citizenship and Migration Affairs (OCMA) provides work permits accordingly to long-stay visa D. For requiring the work visa, and it is necessary to receive an invitation approved by OCMA.
Work permits can be granted without the application of the employer is the following cases:
  • a student of a certified educational institution to perform field research;
  • a distinguished consultant to government bodies and institution;
  • a board member of a corporation to represent the interest of this organization in Latvia;
  • an investor who invested EUR 421,680 in a company in Latvia;
  • a founder that has established a company in Latvia;
Work permits are granted based on the employment in Latvia:
  • Scientist in the government institution;
  • Director at the recreational centers of Latvia;
  • Lectors and teacher of an educational institution;
  • Testers, who works in assessment laboratories and other certification centers;
  • Highly qualified IT specialist,

Working hours and leaves in Latvia

Working hours and overtime

Regular working hours, as set by the Lithuanian Labor code, is an employee can work no more than 8 hours every working day or 40 hours a week. Besides, the Labor Code sets a normal shorter working day is established for employees at jobs with risk for health and safety, shall work under 7 hours a day or 35 hours a week or a 50% of the duration of a normal working day or work week
The Labor Code defines the notion of overtime as the work that an employee performs at a time that is exceeding regular working hours. Overtime is only acceptable under the written consent of an employee.
The maximum limit of overtime is set at 144 hours in four months. Some people like under the age of 18, pregnant women, people with disabilities cannot work overtime. Overtime is paid at 1,5 of employee’s salary.

Vacation leave

Annual leave shall not be less than four calendar weeks (28 calendar days), excluding holidays. Workers under the age of 18 are entitled to a month of vacation.
If any of the vacation leave is a public holiday, the vacation is extended by the number of days on public holiday. If an employee is sick during the vacation leave, the vacation break is prolonged by the number of days of sickness.
Vacation can be split into parts only within the current year. Besides, one of the parts of the break cannot be less than 14 days. The rest of the leave can be divided into smaller pieces by mutual agreement of the employer and employee.

Sick leave

Sick leave type A

  • The employer pays the first ten days, and the Social Security Fund reimburses the rest;
  • The second and third day is paid at 75% of the average salary;
  • From the fourth day to the tenth, at least 80% of the average wage;

Sick leave type B

  • From the 11th day of sickness, the Social Security Fund provides sick leave pay in the amount of 80% of the wage;
  • The average salary is calculated for a period of 12 months, which ends two months before the start of the sick leave;
  • The average wage per calendar day for the calculation of the compensation cannot exceed 1/365 of the maximum size of the Cap for the social security contribution. The annual maximum size is EUR 62,800 in 2020.

Taxes

  • With the payment of sick leave-type (A), social and income taxes are paid regularly.
  • With sick leave sick leave-type (B), only income tax is withheld.

Maternity and paternity leave

Women are entitled to maternity leave of 112 days: 56-days before the childbirth and 56 days after delivery. The maternity leave cannot be shorter than 14 days before and after 14 days.
In case of the birth of two or more children or complications in pregnancy, the employee is granted an additional 14 days of maternity leave.

Holidays in Latvia 2020

  • 01 January 2020 - New Year
  • 10 April 2020 - Good Friday
  • 13 April 2020 - Easter Monday
  • 01 May 2020 - Labor Day
  • 04 May 2020 - Declaration of Independence Day
  • 10 May 2020 - Mother's Day
  • 22-23 June 2020 - Midsummer Eve
  • 24 June 2020 - St. John's Day
  • 13 September 2020 - Father's Day
  • 18 November 2020 - National Day
  • 24-25 December 2020 - Christmas
  • 26 December 2020 - Second Day of Christmas
  • 31 December 2020 - New Year's Eve

Remuneration & Benefits in Latvia

Minimal wage salary is set onсe per year and equal to EUR 403 in gross.

Employee termination and severance in Latvia

There are different reasons for employee termination:
  • An employee violated the labor contract;
  • An employee violated the job description;
  • An employee violated the generally accepted moral and code of conduct;
  • An employee was intoxicated being on duty;
  • An employee has neglected health and safety instructions;
  • An employee lacks the expected qualification;
  • A number of employees being reduced;
  • A company is being liquidated;

Notice period

An employer shall notify an employee a month in advance of termination. An employee has the right for a month in advance to give notice to the employer. A longer notification period should be stated in the labor agreement as well.

Payroll related taxes in Latvia

Employee taxes

Employees are paying a Personal Income Tax of:
  • 20% in gross salary up to EUR 20,004 per year;
  • 23% on income between EUR 20 004 and EUR 62 800 per year;
  • 31.4% on income over EUR 62 800 per year;
  • A gross salary below EUR 300 per month, it does not apply to the compensation over EUR 1,200;
  • The Personal Income Tax for ex-pats is 25%;
  • The incentive for the dependent people is EUR 250;
The base for calculation is gross salary minus the social payments. The social payments consist of Social Social Insurance Tax of 11%.

Employer taxes

Employers are paying to two funds:
  • Pension Fund at 24.09% of gross salary;
  • Business Risk Fund payment of EUR 0.36;
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