Recruitment can be a tricky business, especially when a company is venturing to unfamiliar countries and exploring new markets. This is where you need a specialist to come in oversee the process for you - Bradford Jacobs’ expertise and over 20 years of experience in international recruitment services is indispensable for expansion into Latvia.
Our comprehensive knowledge of all Latvian employment sectors and understanding of the culture and customs guarantees an untroubled transition. In this guide we will address all aspects of the recruitment process in Latvia.
The Recruitment Process in the Latvia
A foreign company expanding into Latvia does not require the assistance of a local entity to hire their employees. It is, however, vital to your recruitment efforts to know where you can find the right talent, as well as which local and international employment organizations they can collaborate with to access the right talent pools. This, however, does not come easily – and once the right employee is found, the employer must follow thorough staffing and registration procedures. These include:
- Registering employees with the Office of Citizenship and Migration Affairs for a Personal Identification Code (PIC) that will be used for all matters of payroll and compliance.
- Registering employees with the State Revenue Service for tax payments.
- Registering with the State Social Insurance Agency (VSAA) to pay social insurance contributions.
- Registering employees with the National Health Service Fund in Latvia.
- Registering employees with the State Employment Agency (NVA).
- Creating employment contracts and translating them to Latvian.
- Applying for employees’ employment invitations and OCMA decisions.
- Applying for employee’s visas or special expatriation status (if applicable).
- Calculating employees’ monthly salary and creating payslips.
- Researching for any available tax-free allowances or benefits.
- Submitting wage tax returns and national insurance forms.
- Corresponding with the involved parties (organizations, trade unions, etc.).
- Creating annual accounts, financial administration, and year-end statements.
- Creating a payment schedule for wage tax, national and social insurances, and net wages.
The recruitment process requires time and dedication, and how can you find these things in the array of all these complicated tasks? Well, allow us to provide the answer - by engaging an Employer of Record (EOR) such as Bradford Jacobs. By acquiring our services, we can convert your Latvian expansion goals into an action plan with a few simple steps:
1. We step in as an EOR and acquire the right employees, ensuring they comply with Latvian employment contracts, payroll, HR, tax, visa requirements, and work permits (if required).
2. We manage all work-related registration formalities, whilst you have daily control of your employees.
3. The employees must complete their time sheets and expenses claims and we invoice you, the client. Once paid, we deduct all contributions to the Latvian authorities and transfer the balance into employee’s account.
Within a few days, your company has international presence in Latvia – in a prime position to explore further expansion without risking the expense or hassle of setting up your own subsidiary or branch office.
Legal Checks You Can Make on Employees
When commencing the recruitment process in a foreign country, employers should consider their legal obligations. Latvian law follows the EU Law Constitution, which require employers to implement equal treatment in the workplace and protect employees against discrimination based on several characteristics, such as race, nationality, gender, sexual orientation, religion, age, disability, family status or membership in political or public organizations.
This law also includes background checks, which are only considered fair and legal if they relate directly to a job and are necessary for reaching a decision on recruitment. Following the Data Protection Directive 95/46/EC put in place by the EU, these background checks may only be carried out with the consent of the candidate.
Nevertheless, employers recruiting in Latvia may ask for the following checks (following certain conditions):
• Reference and educational checks: Often done in practice, to assess a candidate’s suitability regarding work performance.
• Medical checks/examinations: Employers may ask a candidate to undergo a medical examination to assess whether their health status will affect their work performance.
• Criminal background checks
Basic Facts on Hiring in the Latvia
• An employer’s questions during an interview are regulated and restricted by EU data legislation – they must directly relate to job specifications and requirements.
• Terms and conditions of employment in Latvia are regulated by the Labor Code. Collective agreements may also play a vital role in work conditions, so it is best to check if your industry/sector is covered by one.
• Latvia also has a State Labor Inspectorate, which functions to implement state supervision and management in employment relations and worker protection. It regulates how employer and employees fulfil employment contract and collective agreement obligations.
• Employment relationships must be established in a written employment contract.
• The standard contract type is an indefinite contract. Fixed-term contracts are only admitted in a restricted number of cases.
• The standard length of work hours is 8 hours a day and 40 hours a week, but this can be altered according to the type of employment contract and work.
• Employers must at least meet the minimum wage (currently at EUR 500/month), but the average monthly salary may differ according to the industry and sector.
• Overtime work may not exceed an average of 8 hours in a seven-day period. This is calculated within the accounting period, which should not exceed 4 months. Any employee who works overtime should receive a supplement of no less than 100% of the hourly rate specified for them.
• The length of a one-day rest within 24 hours should be no less than 12 consecutive hours, and the length of a weekly rest period within a seven-day period should be no less than 42 consecutive hours.
• Employers are obligated to withhold and pay employees’ personal income tax and social security contributions monthly.
• The standard notice period for employment termination is one month and must be issued in writing. Before issuing a notice, the employer must receive prior consent of the State Labour Inspectorate. However, the notice period may vary according to the contract or applicable collective agreement.
• The standard probation period cannot be more than 3 months, but this may be specified in the employment contract.
Working with a Recruitment Agency
The primary recruitment and employment body in Latvia is the State Employment Agency (NVA), which advises natural and legal persons in Latvia on available job vacancies, professional suitability, choosing an appropriate profession and obtaining new qualifications, and runs under the Ministry of Welfare.
The agency aims to reduce unemployment and provide support for the unemployed and job seekers through employment services, consultancy, and support such as retraining courses or unemployment benefits. They also aid local authorities and non-governmental organizations.
You can register with The State Employment Agency online or in-person at their office in Riga. Registration and use of their services are free.
Latvia is also a European Employment Service (EURES) member, a platform that ensures free movement for workers within the European Economic Area (EEA), where employees have access to living and working conditions in the EEA, as well as search job availabilities. Employers can use these services to post job advertisements. Access to these services depend on the country’s employer registration requirements.
Employers can also acquire the services of private employment agencies. According to the law, job placement services may only be provided by private companies that are licensed by the State Employment Agency. Information on these agencies can be found on their website.
What are the Benefits of Hiring Outsourcing for Latvia?
Outsourcing recruitment into Latvia provides a major benefit of more efficient, speedy, and cost-effective business expansion. Optimizing this service allows companies to focus on managing their new enterprise and meeting their development goals. Other significant advantages for outsourcing include:
• An extensive talent search done with reduced costs.
• Guarantees local employment compliance requirements are met with no hassle or reprimands.
• Removes the need to set up a subsidiary.
• More control over your company’s capital expenditure.
• Alleviates risks with an easy operation that provides the employer opportunity to explore new markets.
• Improves work flexibility.
• Allows you to focus on your core business operations whilst your administration is taken care of.
At Bradford Jacobs, our Employer of Record (EOR) services take care of employee recruitment, onboarding, payroll, compliance and providing ongoing support. We choose the best-qualified talent to fill the roles you need and use our expansion know-how to guarantee you comply with all Latvian payroll regulations, (including salaries, tax, and social insurance) by the time your new employees are sitting at their desks.
To get started on your recruitment expansion in Latvia, contact us today!