To succeed in business in Latvia, it is vital to have a strong understanding of the country’s business culture. Latvian business culture is modernizing and reflects ongoing changes in Western society, placing importance on both the work of management and employees. However, hierarchical business structures are still practiced in some establishments.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Latvian work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Latvia to start your expansion well-informed.
The work culture in Latvia
Preparedness, punctuality, politeness, and commitment are very important to the development of business relationships in Latvia. Latvian businessmen place great significance on their relationships, and the local business community is treated like a ‘clan’ – being quite close-knit but reserved to outsiders. Thus, it is important to both you and your local business partners to treat business dealings with respect and great care.
There has been an increasing awareness around the world in the importance of work-life balance and flexible working times, but Latvia still places significant importance on business etiquette for the smooth operation of businesses. Here are some tips and tricks to use during your first few months:
• Punctuality: Punctuality is important in Latvia. Local businessmen are usually punctual and will appreciate the same courtesy of their business partners or associates. If you are arriving late, it is best to inform your associates.
• Languages: Most Latvians are multi-lingual. There are two main languages, Latvian and Russian (due to the occupation). Most people over the age of 15 are likely to also speak Russian, besides English and Latvian, as it is still taught in schools. In business, Russian is the language of choice for middle-aged professionals, whilst English is preferred if potential partners are younger or from western companies.
• Business Relationships: Latvians are very suspicious of people they do not know. It is best to be initiate a relationship with a business partner through an introduction by a mutual third party. Once an introduction has been established, it is important to keep in frequent contact, as well as make visits to Latvia to keep the relationship going. For important issues, face-to-face discussions, visits, and calls are needed to build trust and create a long-lasting relationship.
• Introductions/Greetings: The traditional greeting in Latvia is a quick, firm handshake with direct eye contact at the beginning and end of meetings. When introducing someone it is common to state their first name and surname wit the honorific titles “kungs” for a man, and “kundze” for a woman. Business cards are exchanged at the beginning of meetings.
• Gift-giving: In Latvia, business partners do not expect gifts at the first meeting. However, small gifts to business associates are generally accepted. It is best to bring something small, a unique souvenir that represents your country or company.
• Dress code: In Latvia, the dress code for meetings is formal wear – men wear suits and a tie, whilst women wear jackets and skirts, or trouser suits. Latvians like to wear expensive clothing, shoes, and accessories.
At the office, employees follow a less formal dress code. In smaller businesses, there is usually no formal dress codes.
• Formality: Method of address is very formal in Latvia. Locals use company positions in their forms of address (e.g., Mr. Director), but you may address your business partner with what is written on their business card, using their company title together with their surname. Academic titles are rarely used. At the beginning of the business relationship, titles are expected – but once you are more familiar with each other, you will be asked to stop using them.
• Meetings: Office meetings are formal affairs and tend to be short, owing to the Latvian’s communication style of being simple and direct. Preparedness is highly valued in meetings, and Latvian businessmen also prefer to do business with partners of the same status as themselves.
• Agreements: Verbal agreements are not legally binding. Agreements, deadlines, and procedures must be set on paper and signed by both parties.
• Socializing: It is also common practice in Latvia to have lunch and dinner meetings, but this is more for socialization than to discuss business – however, this depends on your relationship with them. Latvian businessmen may also invite you to their home, or summer house, if they are interested in developing their relationship with you.
• Hierarchy: Latvian business structures are hierarchical – meetings normally happen with associates that are in similar stations to you, which is then followed with an invitation to meet with the higher levels if the meeting goes well. If you are in the higher levels, however, you can request to meet them (CEO to CEO, for example).
• Communication: Latvians are controlled in their facial expressions and are not quick to smile. They are initially reserved, but warm up as they get to know you. Eye contact also signifies interest. Their verbal communication style is simple and direct, and they speak softly.
Latvia Minimum Wage
In 2021, the Tripartite Cooperation Council (which brings together the government, employers, and trade unions) announced a new national minimum wage of EUR 500 per month in 2021, which increased from EUR 430 in 2020.
Probation in Latvia
In Latvia, according to the Labor Code, the probation period can be established in the employment contract. The probationary period cannot exceed 3 months.
If the probationary period ends with both parties willing to continue the employment relationship, the contract will continue to have effect with no additional actions needed.
However, if the probation period is proving unsatisfactory, the employer or employee can terminate employment with a written 3 business days’ notice, and the employee is not entitled to severance pay.
Working Hours in Latvia
In Latvia, a typical working day is 8 hours, 5 days a week. The working day starts at 8 or 8:30am and ends at about 4:30/65pm. Office hours can vary, and Friday is often a short day with people leaving at about 4pm or earlier. In some cases, the working day is extended to 6 days.
Workers in the private sector commonly stay late at work and may also work on weekends.
Daily lunch breaks shall be no less than 30 minutes.
Overtime in Latvia
Overtime work may not exceed 144 hours within a 4-week period and 200 hours within a calendar year. Overtime work is permitted if the employee and employer have agreed upon it in writing.
However, overtime work can require an employee to work overtime if it is required by urgent public need, under exceptional circumstances, and to complete unexpected work.
Notice period in Latvia
In Latvia, the notice period varies according to the grounds for employee dismissal – it may be immediately, 10 days, or 1 month (depending on the employment contract or collective agreement).
All termination notices must be written.
In the employer’s case, they must receive consent from The State Labor Inspectorate before sending out the notice. The standard termination notice period is 1 month.
Redundancy, Termination / Severance in the Latvia
When terminating employment, an employee is obliged to send in a month’s notice, unless stipulated in the contract.
For an employer to terminate employment, the notice will depend on the grounds of the employee’s dismissal.
Redundancy, or collective dismissal in Latvia is defined as a larger number of employment terminations in a period of 30 days:
• At least 5 employees in a company of 20-49 employees
• 10 employees in a company of 50-99 employees
• At least 10% of employees in a company of 100-299 employees
• At least 30 employees in a company of 300 or more employees
Severance payments (for termination other than employee conduct) are one-four months’ average monthly salaries, depending on the length of employment.
Severance payments are not eligible in cases of employee misconduct.
Pension Plans in Latvia
Pensions are available to everyone that has made social security contributions in a minimum of 215 years, but pensions are also available through other means. The pension system in Latvia is made up of 3 tiers (trīs līmeņu pensiju sistēma):
First Tier – comprises of mandatory social insurance contributions, in which all payers are participants.
Second Tier – comprises of mandatory social insurance contributions which are invested by an intermediary (a bank) in the financial market, and the profits earned remain as part of the accumulated pension. This tier is mandatory for all social insurance contributors born after 1 July 1971.
Third Tier – comprises of voluntary contributions made by both employer and employee into a private pension fund, which are then further invested in the financial market. The contributor can receive this pension at the age of 55.
Public Holiday in Latvia
Employees in Latvia are also entitled to paid leave for 15 public holidays. The day before the public holiday, work ends an hour early, but employees are still paid for the full day. Employees who work on a public holiday are entitled to double pay. The holidays are as follows:
• January 1st – New Year’s Day
• Good Friday
• Easter Monday
• May 1st – International Workers’ Day and the Annual Convening of the Latvian Constitutional Assembly
• May 4th: Restoration of Latvian Independence Day
• Second Sunday in May: Mother’s Day
• June 23rd-24th – Midsummer Day
• Latvian Song and Dance Festival Closing Day
• November 18th – Latvian Independence Day
• December 24th – Christmas Eve
• December 25th – Christmas Day
• December 26th – Boxing Day
• December 31st – New Year’s Eve
Sick Leave in the Latvia
Employees are entitled to sick leave, which is compensated by both the employer and the social insurance authorities. When returning to work, employees are required to obtain a sick certificate from a medical practitioner.
Employers must pay employees at least 75% of earnings on the first and second days, and 80% on the 4th through the 10th days.
From the 11th day onwards, The State Social Insurance Agency must pay sick leave benefits at 80% of the employee’s salary for a maximum of 52 weeks if the leave is consecutive, and 52 weeks within 3 years if the leave is irregular.
Vacation / Holiday in Latvia
Employees in Latvia are entitled to paid annual leave of no less than four weeks, public holidays not included. By agreement between an employer and employee, annual leave may be taken in parts. However, one part must be at least two calendar weeks, uninterrupted.
A leave schedule is made annually, and the employer must take into consideration the wishes of their employees when setting it. There are exceptional cases, however, when granting leave in the current period may adversely affect business, the employer is obliged to transfer the employee’s leave (with their written consent) to the subsequent year, if at least two consecutive calendar weeks are taken in the current year. This does not apply to pregnant women or women who have given birth in the last year.
Time taken as annual leave must be compensated at the employee’s regular daily rate.
Employees cannot accept additional compensation as an alternative to vacation leave, except on employment termination.
Annual/vacation leave is based on the length of employment, including time in which the employee did not perform work for justified reasons (pregnancy and maternity leave, paternal leave, short-term absence, temporary incapacity, etc.).
Maternity, Paternity and Parental Leave in Latvia
Maternity Leave – pregnant employees are entitled to 112 calendar days, that is divided as evenly as possible between pre-natal and post-natal leave. A woman who is going through these experiences is entitled to an additional 14 days of maternity leave:
• initiated pregnancy-related care by the 12th week of pregnancy and continues the care throughout the pregnancy
• suffers medical complications
• gives birth to two or more children
On return from maternity leave, an employee is entitled to return to their previous position.
Paternity Leave – the father of a newborn child is entitled to 10 calendar days’ leave within the first two months following the birth.
Parental Leave – every employee has the right to parental leave linking with the birth or adoption of a child. Up on one and a half years’ leave may be taken until the date of the child’s eighth birthday. Parental leave may be granted as a single period or in parts.
The employee must notify the employer in writing one month in advance of the beginning and length of the parental leave, or parts thereof.
Time spent on parental leave shall be included in the total length of employment service, and the job of the employee must be retained. However, if this is not possible, the employer shall ensure similar or equivalent work with equal employment conditions and provisions.
Bonus in Latvia
Bonuses in Latvia are common and are typically paid once a year as a 13th month salary.
However, this is at the employer’s discretion, and can vary according to the sector and industry.
Car allowance Latvia (if applicable)
Latvian companies can provide company cars and are obliged to pay special tax on them.
Contact us to learn more about business opportunities in Latvia
To expand into Latvia fruitfully, an understanding of the local business culture is vital for your business’ success. With Bradford Jacob’s expertise and knowledge of employment through our Professional Employment Organization (PEO), as well as our experience with Latvian customs, law, compliance, and tax regulations, we can assure the recruitment of the right people to make your expansion goals a reality.