Employer of Record in Latvia: The complete 2026 guide to hiring without a local entity

Latvia sits at the intersection of Scandinavian precision and Eastern European cost efficiency. As a full EU and Eurozone member, Latvia offers foreign companies a stable legal environment, a skilled professional workforce, and a capital city, Riga, that has grown into a significant technology and financial services hub over the past decade.

For companies looking to build teams in the region, Latvia presents a genuine opportunity. But hiring Latvian employees from abroad, without a registered local entity, requires managing the Latvian Labour Law with care. Payroll contributions are among the more complex in the Baltics, with a notably higher employer contribution rate than Lithuania or Estonia. Getting this wrong can result in significant underpayment or compliance failures.

An Employer of Record removes this complexity. Go-EOR operates its own legal entity in Latvia and handles all employment obligations directly, without relying on local partners.

Why Latvia Is a Strong Hiring Market in 2026

• Riga technology and fintech hub: Latvia, and Riga in particular, has established itself as a significant centre for software development, IT outsourcing, and financial technology services.
• Strategic location: Latvia’s position in the Baltic region makes it attractive for companies that also hire in Lithuania and Estonia, enabling a single regional EOR partner to manage a consistent team structure.
• Competitive salaries: Latvian salary levels for technology, finance, and business operations roles are materially below Western European equivalents, offering meaningful cost advantages.
• EU regulatory alignment: As an EU member state operating in euros, Latvia provides a familiar regulatory environment for European companies, including full GDPR compliance.
• Language capability: English proficiency is high among professional-level employees in Latvia, with Russian and German also commonly spoken.

Latvian Employment Law: Key Requirements for Foreign Employers

Latvian employment law is governed primarily by the Labour Law (Darba likums). The law has been updated periodically and foreign employers must make sure their employment arrangements meet current requirements.

Employment Contracts in Latvia

Latvian employment contracts can be concluded for an indefinite term or a fixed term, subject to statutory limits on duration and renewal. Indefinite contracts are the norm for ongoing employment. All contracts must be in writing, signed before the start of work, and specify position, remuneration, working hours, place of work, and annual leave entitlement.

Probationary periods are permitted for up to three months (excluding periods of justified absence from work). During probation, either party can terminate the employment relationship with three days’ written notice.

Working Hours and Annual Leave in Latvia

Standard working hours are 40 hours per week and eight hours per day. Overtime is permitted subject to statutory working-time limits, employee consent requirements, and mandatory rest-period rules. Annual leave entitlement is a minimum of four calendar weeks (20 working days). Additional leave entitlements apply to employees with disabilities, workers in hazardous conditions, and employees with children under 14.

Public holidays are paid. Latvia observes a number of national holidays, and employees who work on public holidays must receive compensatory time off or an additional payment at the rate of double pay.

Payroll and Social Security Contributions in Latvia

Latvia has one of the more complex contribution structures in the Baltic region. Employer social security contributions are approximately 23.59% of gross salary in 2026. Employee contributions are approximately 10.50% of gross salary. These contributions fund Latvia’s social insurance system, including pension, unemployment, disability, and parental benefits.

Personal income tax in Latvia is progressive, with different rates applying at different income levels. Additional solidarity-tax obligations may apply above certain income thresholds. Monthly payroll declarations must be submitted to the State Revenue Service (VID). An EOR handles all of this on your behalf, so filings are accurate and remittances are on time.

Notice Periods and Termination

For most employer-initiated terminations under Latvian Labour Law, one month’s written notice is required unless a specific statutory exception applies. Different procedures may apply depending on the legal ground for termination. Severance pay is required in many involuntary dismissal scenarios and may range from one to four months’ average earnings, depending on the legal basis for termination and the employee’s length of service.

Latvia has specific requirements for collective dismissals (when a certain threshold of employees are dismissed within a set period), including notification obligations to the State Employment Agency. An EOR meets all procedural requirements.

The Step-by-Step EOR Hiring Process in Latvia

1. You select your candidate in Latvia.
2. Go-EOR prepares a Latvian Labour Law-compliant employment contract in Latvian and English.
3. The employee is registered with the State Revenue Service (VID) and the State Social Insurance Agency (VSAA).
4. Payroll is set up under Go-EOR’s Latvian entity, with the correct contribution rates applied.
5. The employee starts work. Go-EOR manages monthly payroll, VID filings, and VSAA contributions on an ongoing basis.

EOR vs. Setting Up a Latvian Entity: Key Considerations

Why Choose Go-EOR for Latvia?

Go-EOR operates its own legal entity in Latvia, a key differentiator from global EOR platforms that may use local partner networks in Baltic markets. Direct entity ownership means faster response times, more consistent compliance, and clearer accountability when employment questions arise.

Latvia’s higher employer contribution rate (23.59%) compared to Lithuania (approximately 1.77–3.18%) makes accurate payroll calculation particularly important. Errors in Latvian payroll can lead to VID penalties and VSAA enforcement actions. Go-EOR’s locally owned infrastructure calculates and remits contributions correctly every cycle.