Employer of Record (EOR) services in Latvia provide a comprehensive solution for businesses looking to expand or hire in the country without establishing a legal entity. The EOR becomes the official employer, handling all HR responsibilities, payroll, taxes, and compliance with local labor laws. It manages employment contracts, benefits, and termination procedures, ensuring full compliance with Latvian labor regulations. This alleviates the administrative burden from the company, allowing it to focus on its core business functions. EOR services in Latvia are particularly useful for companies aiming to test the market, initiate operations quickly, or navigate complex employment legislation.

An EOR in Latvia helps navigate complex labor laws which can be challenging for foreign businesses. 

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For instance, Latvia has specific laws around vacation, parental, and sick leave, among others. Employees are entitled to paid annual leave and such leave may not be less than 4 calendar weeks. By the employer-employee agreement, the leave may be granted in parts. Further, Latvia also has strict work visa rules that must be complied with. For instance, if you hire a non-EU/EEA country individual who works in Latvia, ensure that there is a valid work visa for the same. 

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EOR services in Latvia help companies navigate through the complex labor and employment laws. They look after the work permit processes and other legal compliances, ensuring smooth operations in the new country. 

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Employer of Record (EOR) pricing in Latvia is typically based on a percentage of the employee's gross salary. This percentage, usually ranging from 5% to 20%, depends on various factors, including the number of employees, the complexity of employment arrangements, and the specific services required.

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The fee generally includes services like payroll management, tax administration, and compliance with local labor laws. Extra services, such as benefits administration or HR support, might incur additional charges.

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Although EOR fees seem like extra costs, they can save businesses money in the long run by reducing the overheads associated with setting up a legal entity and maintaining compliance.

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Gloroots’ has a fairly transparent pricing model that provides optimum investment returns. We manage admin tasks and legal compliances associated with employment. Also, we offer a live dashboard that helps you track your Latvia workforce expenses in real-time. It also offers HR support and benefits management to the employees hired through EOR.

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Key Metrics For Foreign Employers

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Latvia.

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‍Source: The Global Talent Competitiveness Index 2022

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Latvia.

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Misclassifying workers can have serious consequences for businesses, leading to legal and financial risks. In Latvia, it is essential to accurately classify employees according to local labor laws to ensure compliance and avoid potential pitfalls. Suppose a company in Latvia hires individuals to provide services on a regular basis, but incorrectly classifies them as independent contractors rather than employees. This misclassification can lead to several issues. For instance, the company might not provide the contractors with statutory benefits such as paid leave, health insurance, or pension contributions, which they would be entitled to as employees under Latvian labor laws.

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Don't let the risks of misclassification hinder your success in Latvia. Partner with Gloroots to ensure compliance, mitigate risks, and focus on what matters most – driving your business forward.

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Employment Contract

In Latvia, employment contracts are usually established without a specific end date due to close regulation of fixed-term contracts allowed under Latvian labor laws. The circumstances for using fixed-term contracts are strictly governed by the law.

If a definite period of employment is permissible, the contract duration must not exceed 5 years. Should the employment relationship continue beyond the agreed-upon expiry date, the contract automatically converts into a permanent agreement.

All employment agreements must be documented in writing before the employee commences work for the company. The contract must be written in Latvian, the required language. However, if the employee is unable to understand Latvian, the employer is responsible for providing the terms and conditions of the employment relationship in a language that is mutually understood.

The following mandatory information must be specified in the contract:

• Identification of both parties involved
• Date of commencement (and employment duration for temporary contracts)
• Workplace location
• Job description, duties, and responsibilities
• Basic salary, as well as any additional compensation or benefits
• Pay date 
•  Working hours
• Total number of holidays
• Notice periods required for employment termination
• Probationary period

This might sound overwhelming, but it doesn't have to be. Gloroots eliminates these barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.

Get an overview of what you need to know when hiring in Latvia. Contact us.

Working Hours 

The standard workday is 8 hours long and the workweek is 5 days (40 hours) long. 

Overtime:

Any work performed beyond the regular hours or on a public holiday in Latvia is classified as overtime and requires prior mutual agreement before commencement. Overtime hours are compensated at a rate of 200% of the regular salary rate.

Minimum Wage:

The minimum monthly salary in Latvia is established by the Cabinet. Currently, the minimum wage stands at 740 EUR per month.

Maternity Leave and Paternity Leave

In Latvia, maternity leave benefits come in two parts. The first part is for 70 consecutive calendar days, but to get this, you need to be medically registered as pregnant within the first 12 weeks of pregnancy. If you meet this condition, you'll get 70 days of benefits. The second part of benefits covers either 56 or 70 consecutive calendar days after the child is born.

Benefits for 70 calendar days are applicable if the employee has encountered health issues during pregnancy, childbirth, or the postnatal period, or if the birth resulted in the arrival of two or more babies. The maximum duration for receiving maternity benefits is 140 calendar days.

Annual leave

In Latvia, employees have the right to a minimum of 4 weeks of paid annual leave, which can be taken in segments if desired. Nevertheless, it is obligatory for employees to take a minimum of 14 consecutive (calendar) days of leave continuously. Additionally, the country recognizes and observes 12 public holidays.

Sick Leave:

The initial day of sickness is not compensated and is unpaid. The employer provides compensation at a rate of 75% of the salary for the second and third sick days, and at a rate of 80% of the salary for the fourth to tenth sick days. Starting from the eleventh day of sickness and onwards, sick pay is covered by the state.

Employer Payroll Contributions

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Employee Payroll Contributions

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Income Tax

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‍Termination and Severance

Termination Process:

Employers have the authority to terminate a fixed-term contract based on specific grounds, which include business-related factors, personal reasons, or misconduct by the worker. The termination process necessitates providing notice and a written explanation for the decision. In cases where the reason for termination is misconduct, the employee must be given a warning and an opportunity to provide an explanation for their actions.

Notice Period

The legally mandated notice period must be a minimum of one month. However, during the probationary period, the notice period is reduced to three days, requiring written notice.

Severance Pay

Probation Period

In the case of an open-ended employment contract, the probationary leave period is usually limited to three months. However, if a collective agreement is in place, the parties involved can mutually decide on a probationary period that exceeds three months but does not compromise the overall level of employee protection.

For fixed-term contracts, it is permissible to include a probationary period as follows:

Up to one month for employment contracts lasting up to six months.

Up to two months for employment contracts lasting up to one year.

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

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Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

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Expanding your team is a crucial step in company growth, and finding the right employees in Latvia can be a game-changer. With Gloroots' global Employer of Record (EoR) service, you can streamline your operations and focus on what truly matters: nurturing your team and driving company growth. Gloroots takes care of payroll, tax management, benefits administration, and compliance, ensuring that you stay in full compliance with employment laws in Latvia.

By partnering with Gloroots, you can confidently grow your team, knowing that the administrative burden is taken care of. This allows you to invest your time and resources in building a strong workforce and driving your company's success.

Unlock the potential of Latvia's talent pool and let Gloroots simplify your expansion process. Grow your team effortlessly and focus on what matters most – the growth and prosperity of your employees and your company.

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