How to hire in Latvia through an EOR

Employment contracts in Latvia must be in writing before work begins. They're almost always indefinite-term, because fixed-term contracts come with strict rules and real scrutiny under Latvian labor law.

Contract types

Most companies default to indefinite contracts. They're simpler to manage and you don't have to justify the arrangement every time a term ends.

What has to be in the contract

Latvian law sets out specific details that every contract needs to include. Leave something out and you're looking at potential disputes or terms that won't hold up.

Every contract needs to cover:

• Names and addresses of you and the employee
• Start date and duration (if fixed-term)
• Job title, duties, and workplace
• Pay scale, basic salary, and benefits
• Working hours
• Annual paid leave length
• Notice period for termination
• Probation period details

The contract must be written in Latvian or a language both parties understand. Signatures can be wet ink or qualified electronic.

Probation is up to 3 months for most roles, or 6 months for managers. You can end employment during probation with 3 days' notice, though employees are entitled to the full notice period. There's no probation for fixed-term contracts shorter than 2 months.

Contractor vs employee

Misclassification is one of the most common and costly mistakes when hiring in Latvia. Courts look at things like control over how work gets done, whether hours are fixed, and whether the person gets benefits like paid leave.

Employees have set hours, paid leave, severance rights, and training entitlements. Contractors set their own schedule and don't get any of that. If a contractor gets reclassified, you'll owe back taxes, social security contributions, and potentially damages on top of that.

The State Labour Inspectorate can issue fines of thousands of euros per violation. You may also face retroactive contributions with interest, and the worker could claim unpaid benefits going back to the start of the relationship.

Non-competes can hold up in court if they're reasonable: capped at 2 years, tied to a specific role, and compensated at no less than 50% of the employee's prior salary. IP assignment is enforceable if it's clearly written into the contract. Otherwise, employees own their inventions by default, even for work-related projects.

Latvian employees get a minimum of 20 paid vacation days a year, plus 12 public holidays. That's more time off than many EU neighbors, and local talent will expect you to at least match it.

Time off

Employees qualify for annual leave after six months on the job. The legal minimum is 20 days, or four calendar weeks, not counting public holidays. Leave accrues based on time worked, including sick days, maternity leave, and other justified absences.

At least one portion must be two uninterrupted weeks. You can split the rest by agreement. Up to two weeks can carry over to the following year with written consent. Employees under 18 get a full month.

Some groups get extra days: three additional days for parents of three or more children under 16, a disabled child up to 18, or employees in hazardous roles. Parents of fewer than three children under 14 get one extra day.

Latvia has 12 public holidays, totaling 15 days off. Here's the full list:

All leave types

Here's a breakdown of the key leave types. The law requires job protection for most, with pay outlined below. Percentages are of average earnings.

Mandatory benefits

You're required to contribute to social security, which covers health insurance and pension. The total rate is around 33.09% of gross salary in 2024: you pay 23.59% as the employer, and the employee contributes 10.5%. These rates can adjust each year.

That contribution funds state health care, sickness benefits from day 10, maternity and parental pay, and old-age pension. There are no unusual mandates like meal vouchers or transport allowances in Latvia. Those are optional extras.

What people actually expect

The legal minimums are a starting point, but they won't make you stand out. Offering 25 or more vacation days after a few years of service is common, and longer-tenured employees will expect it.

Private health insurance is high on the list. State coverage exists, but employees want supplemental plans for faster specialist access and dental care. Around 70% of companies in Latvia provide it.

Remote work stipends have become standard, particularly since 2020. If you're running a hybrid setup, expect to offer 50-100 euros a month for home office costs or internet. Meal allowances of around 5 euros per day are also common and tax-free.

Stick to the minimums and you'll find it harder to hire developers or managers. Latvian professionals benchmark against neighbors like Estonia. Adding a few extra vacation days, private health cover, and a small remote work fund will make a real difference to your hiring.

Letting someone go in Latvia without solid grounds can mean court cases, reinstatement orders, and back pay obligations. There's no at-will employment here. You need a documented reason, and you need to follow the process.

Firing someone

Latvian law only allows termination for specific reasons. Valid grounds include misconduct (violating procedures, working under the influence of alcohol, illegal acts at work, breaching labor safety rules), organizational reasons (redundancy, company liquidation, lack of skills), or long-term incapacity confirmed by a doctor.

Personal preference isn't enough. For misconduct, you need to warn the employee first and give them a chance to respond. If the reason isn't misconduct-related, severance applies.

Unfair dismissal can happen if you skip steps like providing written notice with a stated reason. Trade union members employed for more than six months require union consent for unilateral termination. Courts can reinstate workers or award average earnings until the dispute is resolved. Document everything carefully.

Notice periods

Notice must be in writing and include the reason for termination. The required period depends on why you're ending the contract and who's initiating it. Employees typically give one month, but can resign immediately if they're morally unable to continue working.

Severance

Severance is required when termination isn't the employee's fault. It's calculated using average monthly earnings and scales with how long the person has worked for you.

Severance doesn't apply to misconduct dismissals or fixed-term contract expiry. One thing to note from 2025: Russian and Belarusian workers dismissed from essential sectors (hospitals, railways, power) receive no severance, despite termination not being their fault.

Work permits and visas

You can hire foreign nationals through an EOR. The EOR acts as the legal employer and handles work permit sponsorship and compliance. Latvia is part of the EU/Schengen area, so EU/EEA citizens don't need permits. They just register their residence after three months.

For non-EU nationals, the main route is a Type D national visa combined with a work permit from the Office of Citizenship and Migration Affairs (PMLP). The employer applies for the permit first, which requires a job offer and evidence that the role meets local labor market criteria (unless it's a shortage occupation). Expect around 1-2 months for the permit, then 15-30 days for the visa. You'll also need to show the salary meets market rate, along with proof of health insurance and accommodation.

Other options include intra-company transfer visas for managers and specialists (up to 3 years) and the EU Blue Card for highly skilled workers (salary threshold around €1,500/month net from 2026). There's no digital nomad visa in Latvia. An EOR can handle the application process through their local entity.

A few other things worth knowing

Latvia follows EU GDPR strictly. You need employee consent to process personal data, must appoint a Data Protection Officer if you're doing large-scale processing, and have 72 hours to report a breach. Fines can reach 4% of global turnover.

Trade unions carry real weight here. Terminating a union member employed for more than six months requires union consent (clarified in a 2018 amendment). Collective bargaining agreements are common in manufacturing and the public sector and can set terms beyond what the law requires. It's worth checking whether your hire's sector has one.

On recent changes: 2018 Labor Law updates clarified immediate termination rules and introduced a requirement to list salary ranges in job ads. The 2025 restrictions on Russian and Belarusian citizens in essential sectors are being enforced from 2026, with no severance entitlement. No other major shifts have been announced for 2024-2026, but it's worth keeping an eye on PMLP for any visa updates.