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The labour market in Latvia

Each labour market has some peculiarities. It may be tricky for foreigners to fully understand the payment methods, the taxes and other benefits related to them. In TalentUp, we are starting a series of different blog articles, one for each country. This article analyses the labour market in Latvia.

General data about the Latvian labour market

Minimum wage and maximum working hours disclosure in Latvia. Data for January 2024. Source: https://www.papayaglobal.com/countrypedia/country/latvia/

Payroll taxes in Latvia

Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.

Share of contingencies applied to the gross salary. Data source: https://www.papayaglobal.com/countrypedia/country/latvia/

Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries. 

Example of net salary in Latvia

As a reference, we use the average salary of a software engineer. In Latvia, on average, software engineers earn 37,100€ annually.

From gross to net salary of a software engineer in Latvia.

The employer contributes from 7705.67€ to 8751.89€ to social security, and the employee contributes from 3431.75€ to 3895.5€.

After paying the income tax, the employee has a net salary of 22910.95 to 26563.5€, coming from a gross salary of 37100€. 

Unemployment regulation in Latvia

Contracts can be terminated due to business, personal, or worker misconduct (with a previous warning). The notice period is at least 1 month.  

Severance pay in Latvian contracts. Data source: https://www.papayaglobal.com/countrypedia/country/latvia/

Contracts can also have probationary periods of:

  • Up to 1 month for employment contracts for up to 6 months.
  • Up to 2 months for employment contracts for up to 1 year.
  • From 3 to 6 months for permanent contracts.

Different kinds of leaves in Latvia

If employees have been employed for at least six consecutive weeks, they are entitled to annual leave. It consists of not less than 20 days (4 calendar weeks), not including public holidays. Employees under 18 are entitled to annual paid leave of one month.  

The leave can be granted in parts. But one part of the leave in the current year shall be at least two uninterrupted calendar weeks. 

There are 12 national holidays.

Employees with a one-month minimum tenure are eligible for sick pay for the first ten days of leave, which the employer will pay for at a rate of 75.00% of regular pay for the first three days and 80.00% for the fourth through tenth days.

If the employee is sick for more than ten days, the salary payment will continue to be paid by the government as Sick Leave Benefit for up to 52 weeks. 

Paid parental leave

Employees who are female have a right to maternity leave of 56 days before and 56 days after the birth of a child, with the government paying 80.00% of their regular salary.

There is a supplementary leave of 14 days in case of complications in the pregnancy, childbirth, or postnatal period if two or more children are born and if the woman has initiated pregnancy-related medical care at a preventive medical institution by the 12th week of pregnancy and has continued for the whole period of pregnancy. 

Fathers are entitled to 10 working days’ leave no later than 6 months after the birth.

Other common Latvian benefits

Top 5 benefits offered by Latvian companies. Datasource: TalentUp’s database.

How to employ a Latvian worker

The main work authorization categories are the Residence Permit with Work Authorization, available to many foreign national workers. 

The EU Blue Card is suitable for highly skilled, locally hired employees who meet a salary threshold. The (EU) Intracompany Transferee (ICT) Permit is available for intracompany transfers of managers, specialists, or trainees from outside the EU.  

The application process always requires an in-country application with the Office of Migration and Citizenship Affairs (OCMA). If the intended stay is under 90 days, foreign nationals may also request a residence permit, thereby choosing between a visa and a residence permit.