Employer of record in Latvia: costs, rules and how to hire

The first and last items here are the ones that cost money or create exposure. The middle five are places where a Latvian rule is more specific than its equivalent elsewhere.

Seven checks before making an offer

Ask the provider to answer each of these against the actual role and person.

• Provider: verify the actual employer and its authority to supply staff.
• Contract: sign before work starts and provide Latvian terms with the required translation.
• Pay: distinguish the €780 minimum from the role's market salary and any immigration threshold.
• Payroll: agree monthly payment expressly and keep filing and payment dates separate.
• Working time: record actual hours and apply overtime, night and rest rules.
• Leave: explain which days the employer pays and which benefits the state provides.
• Exit: assess the statutory ground, protections, notice and severance before announcing a decision.

Keep the provider's assessment, the contract, the payroll assumptions and the employee records together, and agree who will turn a reviewed change in an official source into a revised document or a payroll instruction. In Latvia the sources move often enough that leaving it unassigned means it does not happen.

The employment contract must be in writing before work begins, and for a foreign hire it has to exist twice. Draw it up in Latvian, and where the employee does not know Latvian sufficiently, provide the employment terms in writing in a language the employee understands. Both versions are required rather than one or the other.

Put the employment terms in writing

The contract must identify the parties, the start date, the term where applicable, the work location and duties, pay and payday, working time, annual leave, the exit procedure, probation where agreed, and the applicable rules and training or social-security information. Variable part-time schedules need additional details, including guaranteed paid hours, reference days and hours, and the minimum assignment notice. A labour-supply provider must identify its role and notify the worker of the client before the assignment as required.

Record the legal employer, the client assignment, the duties, the approved workplace and the HR contacts, and explain expenses, equipment, remote-work arrangements, the payroll cut-off and how changes will be communicated. The employment contract and the client service agreement serve different purposes and should not be allowed to drift apart.

Fixed terms and probation

Employment is normally indefinite. Fixed terms are allowed for the temporary grounds listed in the Labour Law, including seasonal work, certain temporary work and replacement of an absent employee, with an ordinary maximum of five years including extensions and successive contracts separated by no more than sixty days counted together. Seasonal work has a ten-month limit within one year, and replacement of an absent employee has a specific exception. A project label alone justifies nothing.

Probation is shorter than most employers expect, and it scales with the contract.

A qualifying collective agreement with an employee trade union can permit longer periods within the statutory limits, so the table shows the ordinary rule rather than an automatic six-month probation for every manager. Probation is not allowed for workers under eighteen or repeated on a renewal for the same duties, and during it either party may give three days' written notice, subject to protections against discrimination.

Recruitment and equal treatment

Pay transparency is already law in Latvia rather than a future obligation. A job advertisement must identify the employer or recruitment company and state the gross monthly or annual pay, or the intended hourly pay range. Foreign-language requirements need an objective connection to the work and the advertisement must explain the need, and discriminatory age, gender or interview criteria are prohibited. Do not wait for a future EU implementation date to disclose the required pay information.

For agency hires the comparison is with the client's own staff. An agency employee must receive the working-time, rest, pay and specified protective conditions that would apply if the client employed that person directly for the same work, and during periods between assignments the provider generally owes at least the national minimum monthly wage, proportionate to the interval and regardless of the agreed working time. Both belong in the provider's explanation of its model and in the budget.

Explain the salary range and the objectively necessary language skills early, and agree the working practices and communication with the person you hire from the role's needs and their circumstances.

Contractors and rights in work

Latvian employment involves performing agreed work under the employer's procedures and instructions in return for pay, so assess control, working arrangements and the real relationship before choosing a contractor agreement. Calling a client-managed role an independent service resolves nothing, and the service and employment model should be settled before onboarding rather than after.

A post-employment non-compete must be written, protect a legitimate business interest and have a reasonable scope, place and duration. It cannot last longer than two years and must provide adequate monthly compensation throughout the restriction, and the Labour Law sets no universal minimum of 50% of salary. Have the employer assess the actual duties, the restriction and the compensation before the clause goes in.

Ownership is the part to settle early, because the defaults do not favour the client. Copyright in ordinary employee-created work generally remains with the author while the employer has the statutory right to use it for the purpose and extent of its creation unless the contract provides otherwise, employee-created computer programs have a different default for economic rights, and patent ownership depends on the duties and agreement with specific notification and employer-response rules. Arrange any assignment or licence the client needs, because the client does not automatically own all work merely because it directs the employee.

If the employee will create valuable software, designs or inventions, confirm the rights your business needs before work begins, and review the transfer from the actual rights holder through both the employment and the service agreements.

Misclassification risk, and the instructions test

Latvia asks whether the person works to your procedures and instructions, and that is the whole question. Latvian employment involves performing agreed work under the employer's procedures and instructions in return for pay, so control, the working arrangements and the real relationship have to be assessed before choosing a contractor agreement, and calling a client-managed role an independent service does not resolve the classification. Source: the approved Latvian contractor guidance, Labour Law via likumi.lv, checked 18 September 2026.

"Client-managed" is the phrase to hold onto. If your managers will set the person's priorities, review their work and decide their hours, the role is managed by you, and an invoice does not change that.

What a hirer does about it, and our own guidance is blunt on the sequencing: agree the service and the employment model before onboarding, not after. Deciding who employs the person once they have already started working to your instructions is deciding it from the weaker position. I have not found a Latvian government source in our registry setting out the penalty that follows a finding, so I am not quoting one. Source: the approved Latvian contractor guidance, checked 18 September 2026.

Agree payday, bonuses and the payroll statement

Wages are payable at least twice a month unless employer and employee agree on monthly payment, which is a point to settle expressly in the contract. If payday falls on a weekly rest day or public holiday, pay before that day. Holiday pay and pay earned before annual leave are generally due no later than the day before leave starts, though the employee can request a permitted later payment in writing, no later than the next payday. Record the arrangement in the payroll calendar.

When paying wages the employer must issue a calculation showing remuneration, taxes withheld, mandatory social-insurance contributions and hours worked, including overtime, night work and public-holiday work, and must explain it if the employee asks. Keep the agreed payday, the payroll cut-off and the approval of variable pay clear.

There is no universal Latvian thirteenth-month salary requirement in the ordinary Labour Law wage rules. A bonus or extra payment may follow the employment contract, the collective agreement or the applicable pay arrangement, so state the conditions, calculation and payment date in the offer and the employment documents, and include guaranteed commitments in the annual budget.

Latvian payroll has one ordinary social rate split between the two sides, plus a small employer fee that is easy to forget and a minimum base that can cost more than the salary suggests.

Employer charges and employee deductions

The ordinary 2026 items sit as follows.

For an employee insured under the ordinary full social-insurance regime, mandatory contributions total 34.09%: 23.59% paid by the employer and 10.5% deducted from the employee. Different insured categories can carry different rates, so apply the correct contribution base and annual threshold and keep the employer charges separate from the deductions.

The 2026 business-risk state fee is €0.36 per employee per month where it applies. The employer pays it and it supports the employee-claim guarantee arrangements, separately from ordinary social-insurance contributions. Check the statutory exclusions and put it in the employer's report and payment calendar.

The minimum base is the part that surprises people with part-time staff. The 2026 minimum social-contribution base is €2,340 per quarter, equivalent to €780 per month, and the State Social Insurance Agency assesses possible employer top-ups using the person's combined covered earnings and employment days, with statutory exclusions and adjustments for protected periods. Paying a pro-rated minimum wage does not always settle the employer's contribution bill.

At the other end, for 2025 to 2027 the annual social-contribution ceiling is €105,300, and covered earnings above it fall within solidarity tax. During the year contributions continue at the applicable social-insurance rate, the final solidarity-tax rate is 25% with statutory annual reconciliation and refund, and where contributions are split between employer and employee the excess-tax refund goes to the employer. It is not a separate 25% charge on each party.

Ask the employer for a calculation for the actual employee, especially for a pensioner, a part-time worker or a high earner. A historical OECD combined tax burden is useful for comparison and useless as a payroll calculation.

Salary tax and the employee's allowance

Ordinary monthly salary-tax withholding is 25.5% of the applicable taxable salary, and the annual progressive rates are 25.5% up to €105,300 and 33% on the excess, with a further 3% on the defined annual income base above €200,000 assessed through the annual return. Residence, reliefs and the composition of income affect the calculation.

The ordinary 2026 non-taxable allowance is €550 per month, or €6,600 per year, applied by the employer where the employee has assigned the electronic salary-tax booklet to that employer and meets the conditions. Employee social contributions and applicable reliefs also affect taxable pay, and pensioners, non-residents and other special cases need their own calculation.

The additional 3% charge uses its own defined annual income base above €200,000, and monthly salary withholding, annual reconciliation and solidarity tax are three separate calculations. Ask payroll to explain the employee's residence status, tax booklet and reliefs before quoting take-home pay.

Registration and the monthly calendar

Under the ordinary electronic procedure, register the employee with the State Revenue Service no earlier than one month and at least one hour before work starts, and report relevant status changes generally within three working days. Have the legal employer confirm registration and payroll readiness before the start date, including leave and termination status reporting where required.

The ordinary monthly employer's report is due by the seventeenth of the following month, mandatory social contributions by the twenty-third, and salary-tax remittance normally follows the twenty-third of the payment month, with statutory cases using the following month. Build the calendar from the actual pay dates and the applicable rules, keeping filing and payment as separate deadlines.

Confirm who files the employer's report and who remits each tax, because the current Latvian revenue-service instructions distinguish the seventeenth-day report from the twenty-third-day contribution payment. Use the actual salary payment dates when setting the income-tax deadline.

Work permission and immigration

Before any of that, the entry question. EU, EEA and Swiss citizens can generally start employment once the employment contract is signed, without the ordinary third-country work-permission procedure, though a stay longer than three months normally requires residence registration, with defined exceptions such as the job-seeking period. Check nationality, residence circumstances and the actual start before applying the third-country checklist.

For an ordinary third-country recruitment route, the employer generally needs the State Employment Agency's opinion before the immigration invitation or sponsorship process. The standard process includes candidate assessment by the eighth working day and an opinion on the tenth, with one month after a positive opinion to submit the immigration request, and exceptions depend on the route. A labour-supply employer must also provide client assignment information, and an EOR contract alone authorises no work and guarantees no visa.

From 1 April 2026 the published monthly gross salary threshold for the ordinary EU Blue Card route is €2,723, or €2,178 for qualifying shortage professions, while other employment routes use their applicable sector or statutory calculation. Check the role, qualifications, employer and current immigration rules, because the general €780 wage floor is not a sufficient visa salary for a foreign hire.

Latvia also offers a one-year remote-work visa for qualifying work for an employer registered in an OECD member state, or qualifying self-employment there, with current guidance requiring at least six months in the qualifying arrangement, income of at least €4,538 per month and the required health insurance. It grants no right to employment in Latvia, so a local EOR hire needs an appropriate separate right to work.

Confirm the permitted employer, occupation, work location and salary before work begins, note that a labour-supply provider's immigration application needs information about the client assignment, and keep expiry dates and any employer-change or reporting duties on the employment record.

Latvia's national minimum monthly wage is €780 from 1 January 2026 for normal working time, with the hourly minimum calculated under the statutory formula for the relevant month and work schedule. Check any higher applicable sector agreement and the treatment of working time and pay components before setting salary.

Set a salary for the role

For comparison rather than compliance, Latvia's Central Statistical Bureau reports mean gross monthly pay of €1,886 and median gross monthly pay of €1,527 for the second quarter of 2026, expressed as full-time equivalents and released on 2 September 2026, unadjusted for season or working days. They describe the whole economy rather than a particular role.

The median gives another view of the pay distribution, and neither figure is a quote for a specialist role. Keep the statistical period visible and compare the occupation, experience and location, and never present a purchasing-power-adjusted international annual figure as cash pay in Latvia.

Working hours, breaks and rest

The ordinary maximum is eight hours a day and forty hours a week, with shorter limits for employees in qualifying work with special risk and separate rules for specific working-time systems. Record actual hours including remote work and agree how additional work is authorised, because a salary or a managerial title does not by itself remove working-time protections.

Overtime normally requires a written agreement apart from the specified urgent exceptions, and it cannot exceed an average of eight hours per seven-day period over an accounting period of no more than four months, with further restrictions for protected groups. Plan capacity and keep time records: there is no ordinary universal sixty-hour working week that bypasses these limits.

For adult employees, work lasting more than six hours normally requires a break of at least thirty minutes granted no later than after four hours of work, and a restricted break can count as working time where the employee cannot leave and use it freely. Ordinary rest is at least twelve consecutive hours daily and forty-two consecutive hours weekly, with specific exceptions for permitted working-time systems.

Where the nature of the work requires aggregated working time, the employer must follow the statutory consultation and written-information rules. Work cannot exceed twenty-four consecutive hours or fifty-six hours in a week, and average rest protections apply. The ordinary accounting period is one month, an employment contract can allow up to three months and a collective agreement up to twelve, with overtime assessed over the applicable period.

Overtime, night work and holidays

Latvian premiums are high and they are supplements rather than replacement rates.

Overtime and public-holiday work ordinarily attract at least a 100% supplement to the relevant hourly or daily rate, though a qualifying sector collective agreement with substantially higher minimum pay can set a lower overtime supplement, but not below 50%, under the statutory conditions. Night work, defined as more than two hours of work between 10 p.m. and 6 a.m., attracts at least a 50% supplement. Apply the actual schedule and any overlapping entitlements, and note that Saturday or Sunday alone creates no separate weekend premium.

For continuity of work the Labour Law permits public-holiday work with the applicable compensating rest or pay. Agree the actual work calendar and record the hours before calculating the result, and treat proposals to reduce overtime premiums as proposals until they are enacted and commenced.

Employees receive at least four calendar weeks of paid annual leave each year, excluding public holidays, which on an ordinary five-day schedule usually covers twenty working days. If leave is split, one part must normally last at least two uninterrupted calendar weeks, and a new employee can request the full first-year grant after six months of continuous service. Carry-over requires the statutory exceptional circumstances and written agreement, so it should not be the routine plan.

Annual leave and the holiday calendar

Several additions sit on top of the four weeks. Employees with three or more children under sixteen, or a child with a disability under eighteen, receive three additional working days annually. Work involving special risk attracts at least three extra working days, and employees with fewer than three children under fourteen receive at least one additional working day. Other contractual or collective-agreement entitlements may apply.

Latvia's law lists fifteen recurring holiday dates, including 23 June for Ligo, 24 June for Jani, 18 November and 24 to 26 December, along with specific additional and substitute-day provisions. Public holidays are separate from annual leave, and pay and compensatory time depend on whether the holiday falls on the employee's scheduled workday and whether they work it. Not every holiday produces an extra paid weekday for every schedule.

For the specified state-funded institutions on a Monday to Friday week, the 2026 calendar moves 2 January to 17 January and 22 June to 27 June, while other employers need to assess and adopt their own applicable arrangement. Those shifted days are not additional nationwide statutory public holidays. Explain the employee's actual calendar, including the shorter pre-holiday day where relevant.

Agree the work calendar and the leave request process with the employee, and resist converting four calendar weeks into a fixed twenty-day entitlement for every possible schedule.

Sickness and maternity

Latvian sick pay steps up through the first nine days before the state takes over, and the first day is on the employee.

For ordinary certified sickness the first day is normally unpaid, the employer pays at least 75% of average earnings for the second and third days and 80% from the fourth through the ninth calendar day, calculated for the days or hours the employee would have worked, and eligible state sickness benefit normally starts on day ten at 80% of the insured earnings basis. Ordinary continuous benefit can run up to twenty-six weeks with an approved extension to fifty-two, and occupational cases follow different rules.

Maternity leave normally comprises fifty-six days before and fifty-six days after birth, with qualifying early medical care adding fourteen prenatal days and complications or multiple birth adding fourteen postnatal days, giving up to 140 days. Eligible state maternity benefit is 80% of the calculated insured earnings basis, which is not an employer obligation to pay full salary throughout leave.

That sickness table covers ordinary illness with days counted from the start of incapacity, while occupational accidents and diseases follow different rules. Record the medical certification and explain any company top-up separately from the state payment.

Birth, adoption and parental leave

The child's father is entitled to ten working days of leave within six months after birth, and in specified circumstances where the father is not recognised, has died or has lost the relevant custody rights, another person designated by the mother can take the right. Eligible state paternity benefit uses 80% of the insured earnings basis with its working-day calculation, and for multiple births in 2026 the benefit can cover ten working days per child if the employer grants the corresponding leave, which is worth checking separately from the Labour Law's basic leave wording.

For adoption of a child under eighteen the Labour Law gives one adoptive parent ten calendar days of leave, while the state paternity-benefit scheme separately refers to ten working days of granted leave for a qualifying adopted child previously in out-of-family care. Coordinate the leave dates and the benefit eligibility with the employer and the State Social Insurance Agency rather than describing every adoption as ten days of employer-funded full pay.

An employee can take up to one and a half years of parental leave before the child turns eight, in parts of normally at least one uninterrupted calendar week each, with one month's written notice of the start and duration. The employee retains the previous position or, where that is impossible, an equivalent position on no less favourable conditions. That leave right is separate from the state benefit period.

Parental benefits in 2026

Parents choose between two arrangements, and the choice sets both the rate and the duration.

Eligible parents choose a total parental-benefit arrangement of thirteen months at 60% or nineteen months at 43.75% of the insured earnings basis, including two reserved months for each parent, with the basic nine-month or fifteen-month part counting from birth and including the postnatal maternity period under the coordination rules. Reserved portions can normally be used before age eight and require the applicable leave or no-income conditions, and the benefit does not automatically pay both parents throughout eighteen months of employment leave.

Through 31 December 2026 a qualifying parent who continues working without parental leave receives 75% of the awarded parental-benefit amount, which is 75% of the benefit rather than of salary. From 1 July 2026 the child's registration and permanent residence in Latvia also matter, subject to EU, EEA and Swiss social-security coordination, and a September 2026 proposal for changes from 2028 remains a proposal rather than current law.

Benefit duration, leave from employment and payment while working are three different questions. Confirm the employee's eligibility and chosen arrangement with the State Social Insurance Agency before promising a payment schedule.

Care, study and working arrangements

An employee can request up to five working days of unpaid carer's leave in a year for a qualifying relative or household member who needs significant care for a serious medical reason, and the Labour Law also provides paid absence of up to two working days after the death of a spouse, parent, child or other close family member. Check the actual relationship and circumstances, along with any more favourable company policy.

Study leave is granted under the applicable employment contract or collective agreement, and for a state examination or the preparation and defence of a diploma paper the Labour Law provides twenty working days, which may be paid or unpaid under the applicable arrangement. Check the purpose and the pay terms before promising twenty paid days for every course.

Employees with a child under eight and qualifying carers can request an adaptation of working time or remote work, and the employer must assess the request and respond within one month. It is a right to request and receive an assessment rather than a right to any proposed schedule. Employees feeding a child under one and a half also have specific paid-break rights.

Explain the request deadline, the supporting information and the pay treatment for each absence, and put any more favourable benefit in the employment contract or collective agreement into both the employee's package and the employer's budget.