Employ Candidates Compliantly in Latvia

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  1. Overview: Latvia
  2. Global HR Compliance
  3. Global PEO and payroll
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  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Latvia

If you hire an international workforce, or plan to hire, then Hiring and Firing Workforce in Latvia Guide below will help you understand the nuances of labor legislation in the country.

When the company is planning to enter a new foreign market of Latvia and has a need to employ a local national there, the first question to answer is how it is going to make local hires.

We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.

This solution helps you employ your global sales force in Latvia as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.

Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.

So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Latvia instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.

Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.

Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Latvia .

We are experts in global workforce employment in Latvia, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Latvia.

See Hiring and Firing Workforce in Latvia Guide below for a general overview of labor rules and regulations in the country. Or contact us if you need to employ workers in Latvia or would like to get more details.

Hiring and Firing Workforce in Latvia Guide

# Employment Agreements

There are 2 types of employment contract in the Republic of Latvia:

  • Permanent employment contracts – employment contract for an indefinite period – the deadline until which the employment contract is valid is not specified.
  • Fixed-term contracts – concluded only in certain cases, for example, working on individual projects, seasonal work, performing casual work, replacing colleagues and others. It is mandatory to indicate the term when the employment contract or the circumstances of termination of employment will end.

Collective agreement

The Latvian Labor Law provides for the possibility of concluding collective agreements and determines the procedure for concluding them. The law in Latvia allows for agreements at industry, regional and company/organization level. Company and organization level collective agreements must be approved by majority vote in a meeting of the employees. Several general agreements have been concluded in Latvia and there are two branch collective agreements in force in the private sector (Railway sector and Construction sector).

#Employment Termination and Severance Pay (Dismissal)

If an employer intends to give a written warning or reprimand to the employee or to terminate the employee’s employment, it must first inform the employee in writing of the reason for the potential action and ask the employee to provide a written explanation. Employers must consider the explanation given and the facts and circumstances in general, along with any consequences of the employee’s breach or misconduct, the employee’s previous work and his or her personality.  Generally, employers must give notice of termination to an employee no later than one month from the date of detecting the violation. Therefore, employers must also consider when the breach or misconduct occurred and whether too much time has passed for disciplinary action to be taken.   An important procedural obligation is that the employer, prior to giving a termination notice, must request that the employee provide information on whether he or she is a member of a trade union. If the employee is a member of a trade union, the employer is obliged to request consent from the trade union before giving a notice. If such request is rejected, the employer may bring a claim in court requesting termination of the employment contract.

#It is prohibited to dismiss

An employer is prohibited from giving a notice of termination of an employment contract (except in cases where the employee has grossly violated the work) to a pregnant woman, as well as to a woman during the period following childbirth up to one year, but if a woman is breastfeeding – during the whole period of breastfeeding, but no longer than until two years of age of the child,  In cases specified in the Labor Law an employer is prohibited from giving a notice of termination of an employment contract to an employee if he or she has been declared to be a person with a disability.  An employer does not have the right to give a notice of termination of an employment contract during a period of temporary incapacity of an employee, as well as during a period when an employee is on leave or is not performing the work due to other justifiable reasons.   An employer is prohibited from giving a notice of termination of an employment contract until recovery of ability to work or determination of disability, if the reason of incapacity is an accident at work or occupational disease.

#Notice period

If the grounds for dismissal are based on behavior of the employee, the employer shall give a termination notice no later than within a one-month period from the date of detecting a violation, excluding the period of the employee’s temporary incapacity, or the period when the employee has been on leave or has not performed work due to other justified reasons, but no later than within a 12-month period from the date when the violation was committed. Prior to giving notice, the employer is obliged to request from the employee a written explanation.  In cases of lack of professional competence, disability, reinstatement of former employee and reduction of number of employees (redundancy), the employer is entitled to give a termination notice only if the employer cannot employ the employee with his or her consent in another position in the same or another undertaking of the employer.  An employee has the right to give a written notice of termination of an employment contract one month in advance, unless a shorter time period for giving the notice of termination is provided by the employment contract or the collective agreement. Upon the request of the employee, a period of temporary incapacity shall not be included in the time period of a notice of termination.  An employee who is employed in paid temporary work or other work in relation to his or her participation in active employment measures has the right to give notice of termination of an employment contract in writing one day in advance.

#Severance payment

The employer is obligated to pay severance pay if the grounds for termination notice are not related to misconduct of employee. The employer is also obliged to pay severance pay if the termination notice is given by employee on the basis of considerations of morality and fairness that do not allow continuation of legal employment relationships. The amount of severance pay depends on the length of service with the respective employer:

  • One month’s average earnings if employee has been employed by the relevant employer for less than 5 years.
  • Two months’ average earnings if employee has been employed by the relevant employer for 5 to 10 years.
  • Three months’ average earnings if employee has been employed by the relevant employer for 10 to 20 years.
  • Four months’ average earnings if employee has been employed by the relevant employer for more than 20 years.

Monthly average earnings are calculated by dividing the total amount of work remuneration for the previous six months by six.

#Employee Benefits and Contributions

Mandatory benefits required by law to be provided by an employer: public holidays entitlement, annual leave, sick leave, maternity leave, paternity leave.

Non-mandatory benefits that are offered by an employer

The Latvian law does not provide any mandated bonuses and payment of bonuses may vary greatly from company to company. Some of the customary bonuses that may be provided include a health insurance policy, company telephone and/or company car, depending on the employee’s seniority or the type of work performed. Those may be considered as fringe benefits to the employee and are subject to certain taxation requirements.

#Probationary period

When entering into an employment contract, a probationary period may be specified in order to assess whether an employee is suitable for performance of the work entrusted to him or her. If an employment contract does not specify a probationary period, it shall be regarded as entered into without a probationary period. A probationary period shall not be determined for persons under 18 years of age. The term of a probationary period may not exceed three months. The said term shall not include a period of temporary incapacity and other periods of time when the employee did not perform work for justifiable reasons.

#Overtime

Overtime work shall mean work performed by an employee in addition to regular working time. Overtime work is permitted if the employee and the employer have so agreed in writing. Overtime work may not exceed eight hours on average within a seven-day period, which is calculated in the accounting period that does not exceed four months. It is prohibited to employ in overtime work persons who are under 18 years of age.

#Work hours

Regular daily working time of an employee may not exceed eight hours, and regular weekly working time – 40 hours. Daily working time means working time within a 24-hour period. If daily working time on any weekday is less than the regular daily working time, the regular working time of some other weekday may be extended, but not more than by one hour. In such case the provisions of the length of weekly working time shall be complied with. A working week of five days is specified for an employee. If it is not possible to determine a working week of five days due to the nature of the work, an employer, after consultation with the representatives of employees, shall specify a working week of six days.

#Annual leave

Every employee is entitled to a paid annual vacation of at least four calendar weeks (one month for persons under the age of 18), excluding public holidays. In general, the annual leave should be uninterrupted, but it may be divided into parts upon mutual consent of the employee and the employer. However, one part of the annual leave must be at least two uninterrupted calendar weeks. The Labor Law entitles employees having three or more children under the age of 16 years or a disabled child, as well as employees exposed to a special risk, to a supplementary annual leave of three additional days. For an employee having at least one child under the age of 14 an additional one day of a vacation must be granted.  An employee may demand an annual paid leave once he or she has been employed with the employer for at least six consecutive months.

#Sick leave

The employee is entitled to sick pay if he or she is absent from work and thereby loses paid labor income due to the following reasons:

  • Loss of capacity due to sickness or injury.
  • A need to receive medical assistance of therapeutic or prophylactic nature.
  • Isolation is necessary due to quarantine.
  • Treatment in a medical treatment institution during the period of recuperation after.
  • Sickness or injury if such treatment is required in order to restore capacity for work.
  • Nursing of a sick child aged up to 14 years.
  • Prosthetics or orthotics in a hospital.

#Parental leave

Maternity leave

The Labor Law provides that a female employee is entitled to a parental leave of 56 calendar days and maternity leave of 56 calendar days. The term of the above leaves is calculated together and 112 calendar days of leave are granted irrespective of the number of days of prenatal leave used prior to childbirth. A woman who has initiated pregnancy-related medical care at a preventive medical institution by the 12th week of pregnancy and has continued it for the entire period of pregnancy, is entitled to a supplementary leave of 14 days, adding it to the prenatal leave and calculating 70 calendar days in total. In case of complications during the pregnancy, childbirth or postnatal period, as well as if two or more children are born, a woman is entitled to a supplementary leave of 14 days, adding it to the maternity leave and calculating 70 calendar days in total. Leave granted in connection with pregnancy and childbirth shall not be included in annual paid leave.

Paternity leave

Every employee has the right to parental leave in connection with the birth or adoption of a child. Such leave shall be granted for a period not exceeding one and a half years up to the day the child reaches the age of eight years. Parental leave, upon the request of an employee, shall be granted as a single period or in parts. The employee has the obligation to notify the employer in writing one month in advance of the beginning and the length of the parental leave or parts thereof.

Acumen International can help you fast-track your possibilities of entering and expanding your business in Latvia by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.

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