If a foreign company is looking to hire resident employees as part of their expansion into Latvia, they must comply with recruitment regulations such as tax, social security contributions and local employment laws. You probably also have to collaborate with or adhere to any collective bargaining, trade unions or work council agreements. Our PEO-services with various solutions to support your plans, can provide compliant employment contracts for your new employees.
In this guide we will address the most pressing issues of employment contracts in Latvia to help your global expansion go as smooth as possible.
How Do You Hire Latvia Employees?
In Latvia, employment contracts must be presented to employees in writing. An indefinite contract is the standard, with fixed-term contracts admitted only in certain conditions.
National legislation and the Labor Code govern employment conditions, benefits, and health and safety regulations in Latvia, and must be adhered to. However, this may according to the industry and sector, and it is best to confirm with the Labor Inspectorate on what regulation applies.
Labor law in Latvia is based on both employer and employee protection. The employment relationship and its terms are hierarchically determined by the Constitution, international treaties, the local labor law, collective bargaining and agreements, employment rules and business practices, with the individual contract being last in the order.
To be fully aware of what you can and cannot apply to your employment practices in Latvia, it is important for the employer to know the existing labor laws and employee entitlements, as well as collaborate with the appropriate local employment organizations.
Our guide will explain employment contract guarantees and limits for both employers and employees according to Latvian legislation.
Employment Contracts in Latvia
In Latvia, there are two main types of employment contracts that can used:
Open-ended employment contract – the standard type of employment contract in Latvia, which is used for indefinite employment.
Fixed-term employment contract – this contract type is used in cases of seasonal work, work where contract length must be specified, replacement of an absent employee, casual work not performed in the company, emergency work, and special industries, amongst other specific occasions.
A fixed-term contract cannot exceed 5 years.
All employee contracts, irrespective of type, should contain the following conditions:
• the place of work
• the employee’s specific occupation and its corresponding functions
• the salary
• the probation periods
• the working hours
• the required notice periods
• the conditions of the collective agreement or work procedure regulations that apply to the employment relationship
• the start date and duration of the employment relationship (for fixed-term contracts only)
Collective bargaining in Latvia is essential to the labor regulations in the public sector, (including large state-owned companies), rather than in the private sector. Most industry-level collective agreements are also formed in the public sector, but they are still used in private sectors, such as the transport industries. Small and medium-sized companies typically do not have unions and are thus unaffected by collective bargaining.
What Laws About Employment Exist in the Latvia?
Latvian employment law is regulated by a Labor Code, as well as national legislation, collective bargaining, and trade union agreements, besides the individual contracts between the employer and employee. Thus, companies and employers must be aware of the laws and agreements that apply for their sector’s and/or industry’s working conditions, pay, and benefits. Latvia’s employment law has undergone recent revisions.
The Labor Code governs the employment processes, with certain forms of legislation that must be followed. These include:
• National Minimum Wage
The Minimum Wage is set by the National Tripartite Cooperation Council (NTSP). In 2021, the wage was increased to EUR 500 per month.
• Working Hours
Section 131 of the Labor Law states that the regular daily working time for an employee is 8 hours, and the weekly working time may not exceed 40 hours, 5 days a week. However, if the daily working time on one weekday is less than the regular working time, the working time of another weekday can be extended.
In cases of six-day working weeks, daily working time shall not exceed 7 hours, and work on Saturdays shall end earlier than on other days.
• Healthy and Safety
Health and safety conditions must be guaranteed to employees at work. The law also requires employee representation to enforce these issues – they are known as “trusted representatives” (uzticības personas). They are specially elected individuals who train in health and safety and participate with employers in a range of tasks concerning these issues.
• Sick Leave:
Sick leave is provided by both the employer, and The State Social Insurance Agency. The first 10 days of sick leave is paid by the employer. Employers must pay at least 75% of an employee’s daily earnings during this time. On the eleventh day and afterwards, an employee is eligible to receive sick leave pay from The State Social Insurance Agency.
• The Second EU Data Protection Act
The act affects the data rights of EU employees.
• Leave Entitlement
Employees are entitled to at least 28 days of paid annual leave. Leave is normally granted at a specified time according to a schedule that created by the employer in consultation with employee representatives. However, the employer is also obligated to consider an employee’s request as much as possible.
• Maternity Leave and Protection
Pregnant employees are entitled to receive a total of 112 days of maternity leave. In the event of birth complications or other medical issues during pregnancy or after, the employee is also entitled to an additional 14 of maternity leave.
The law also prohibits the employment of pregnant women, women after giving birth (for about a year), and breastfeeding women from working overtime or at night. These employees also cannot be sent on work trips without their consent.
In an employment contract, a probationary period must be provided and agreed upon by both the employer and employee. The maximum length of a probationary period is 3 months.
• Termination Notice
An employment contract can be terminated at the initiative of the employer or the employee. In either case, a written notice is required. An employer, when giving a termination notice shall comply with different time periods, depending on the grounds of dismissal – immediately, 10 days or 1 month (depending on the contract or collective agreement). However, the standard termination notice is 1 month. Termination may also be given upon retirement.
During a probationary period, the standard notice time is 3 days.
• Severance Pay
Employees are also entitled to severance pay, which starts at one month’s average salary and goes up to four months’ average salary, depending on the length of employment.
How Do You Onboard Latvia Employees Internationally?
Considering whether to move existing employees into Latvia or recruit new staff in-country is the first phase of a parent company’s plan to onboard employees in a new territory. You must then deal with acquiring the right visas and work permits and ensure compliance with all local laws and regulations at the risk of attracting fines and sanctions from Latvian authorities.
The most efficient and effective method of onboarding employees into Latvia is through a global recruitment company such as Bradford Jacobs. Our Professional Employer Organization (PEO) and Employer of Record (EOR) services will manage every stage of the employment process from finding the employee to seeing that their first cheque is paid on time. We can ensure the right people in the right time to help you get the ball rolling on your business expansion plans.
Translating Latvian Employment Contracts
When translating contracts, one must consider the nature of law and legal language, and their accompanying complexities in legal translations. Employers must deal with two legal systems, as well as the cultural and linguistic differences between the source and target languages.
Legal systems have their own cultural, social, and linguistic structures. Incompatibility of these structures between the source and target languages are where the difficulties lie in translating legal documents.
Translating a document without an understanding of the similarities and differences between both systems, the intention behind the translation, the knowledge of the legal writing style of the target language, and the correct legal terminology can be risky and might lead to serious consequences and proceedings.
Contact us to find out how we can benefit your goals!
Bradford Jacobs’ comprehensive knowledge of all aspects of Latvian employment laws make us the ideal partner for your expansion into the strongest economy in the Baltics.
The global reach of our Professional Employer Organization (PEO) recruitment platforms combined with the in-country knowledge of our Employer of Record (EOR) specialist teams guarantee a successful and smooth transition of your employees into your new territory (including onboarding plans, resources, and guides on local culture, customs, and business etiquette).
To learn more about our PEO and EOR packages, contact one of our sales specialists today!