Hiring talent in Latvia may seem like a tall task. Working with an employer of record (EOR)like Borderless, makes hiring efficient, streamlines payroll, and ensures foreign companies meet compliance.
This article will guide you through the reasons and benefits of using an EOR to hire employees in Latvia.
Why Hire Talent from Latvia?
Latvia has become a cultural and economic hotspot of the Baltic nations. Home to highly educated individuals , a skilled, multilingual workforce is one that many employers admire. The location and timezone of Latvia makes connecting with the rest of Europe easy.
Latvia’s significant improvements in IT infrastructure enabled its continually growing business expansion, leading the country to become a trading hub in Europe. Despite its impressive growth, Latvia maintains very low labor costs, in fact,it is among some of the lowest in the European Union. Hiring talent in Latvia, then, has become a go-to for many organizations. Companies are able to recruit skilled workers with a very high return on investment.
How to Legally Hire Employees from Latvia
There are a couple of ways to go about hiring local employees in Latvia. Employers could draft independent contractor agreements. While this may seem like the quickest option, independent contractor agreements don’t grant employee status to the new hires and often come with the risks of misclassification.
To hire new employees in Latvia, employers must already have a local legal entity in place. This requires managing payroll and adhering to ever-changing local employment and tax laws.
A third, popular, and stress-free route involves using an employer of record (EOR) platform. An EOR is a third-party organization that acts as a broker for hiring talent outside employers’ home countries. Essentially, an EOR already has the local legal entity in place for you. Using an EOR, like Borderless, equips employers with local knowledge and facilitates them in meeting compliance.
What Does an Employer of Record Do?
EORs simplify the process of hiring employees in Latvia. Removing legal obstacles by meeting compliance,allows you to instead focus on building a healthy working relationship with new employees. Hiring employees in Latvia comes with new and different challenges compared to hiring in your home country. There may be visas or work permits, and there are salaries, benefits, and tax obligations to manage. EORs handle all of this — and more — from employment contracts, payroll, local compliance, and additional HR services.
Contracts and Documentation
A contract in Latvia has a specific number of criteria and must be translated. Other unique stipulations about Latvian employment contracts is that fixed-term contracts are rare, and if they are used, carry limitations. An EOR will ensure the right contract is in place, outline all necessary information and the tedious administrative tasks involved. This includes employment offers, signed contracts, and banking information, among others.
Insurance and Benefits
Independently providing benefits for Latvian employees is a long, complicated process. Using an EOR to hire employees in Latvia will guarantee that employees are able to provide proper insurance coverage and mandatory benefits required by local laws and regulations. This includes healthcare and unemployment benefits.
An EOR will also take care of supplemental benefits for employees, like dental, vision, life insurance, and retirement savings plans. With global hiring becoming only more competitive, it pays to offer employees discretionary benefits.
Paid Time Off, Leave, and Public Holidays
Employees in Latvia are entitled to four weeks of paid annual leave with conditions. Maternity leave is 112 days, paternity leave is 10 days, and in some cases, parents can take childcare leave. Employees are entitled to partially-paid ten 10 sick days, but in some cases, are able to take up to 17 weeks. Managing paid time off (PTO) and different types of leave in Latvia is challenging. While there are guides and practices for employers to manage PTO on a global team, An EOR will ensure everything is properly calculated and tracked.
Latvia also has 12 national holidays. As of 2023, they are as follows:
- January 1: New Year’s Day
- April 7: Good Friday
- April 10: Easter Monday
- May 1: Labor Day
- May 4: Declaration of Independence Day
- June 23: Midsummer Eve
- June 24: Midsummer Day
- November 18: National Day
- December 24: Christmas Eve
- December 25: Christmas Day
- December 26: Second Day of Christmas
- December 31: New Year’s Eve
Tax Obligations
Employers in Latvia are required to pay a range of taxes and social security contributions, all of which are ultimately based on the employee’s base salary. These contributions include maternity leave, pension, disability and life insurance, and childcare benefits. Complying with the various tax rates and contributions in Latvia is time-consuming and may be complicated. This is where an EOR can provide significant support by handling all the logistics and ensuring that all taxes are filed compliantly.
Employer Responsibilities
While the EOR takes care of all legal and HR procedures, like contracts, payroll, and taxes, the employer retains other responsibilities. The employer needs to take on the same duties as if they were hiring a local candidate; this includes recruitment, interviewing, and onboarding. Once onboarded, it’s the employers’ responsibility for maintaining the subordinate working relationship.
Employers must also ensure that the employee in Latvia is being paid in accordance with regulations. This includes meeting minimum wage standards based on the region of the employee, overtime pay, and any bonuses. In Latvia, overtime cannot exceed more than 48 hours per month, and the standard working week is 40 hours.
It’s also up to the employer to take note of the Latvian working culture and connect with their remote employees. Doing so will create a positive and welcoming work environment that encourages communication and inclusivity.
Advantages of Using an Employer of Record
Using an EOR in Latvia will save time, reduce costs, and minimize compliance risks. Setting up an entity in a foreign country may face many obstacles. An EOR is already set up as a foreign company’s legal employer of record to hire employees abroad, making it a seamless and efficient process.
EORs have local knowledge and extensive experience in maneuvering intricate HR processes, so employers won’t need to worry about any potential issues with compliance and legality. For instance, in Latvia, data privacy laws in the European Union differ from many other countries’. Employers need to adhere to the General Data Protection Regulation (GDPR). Turning to an EOR with advanced and updated local knowledge will guarantee that your organization is meeting compliance with the regulation.
Other than minimizing the stress of global hiring, working with an EOR is cost-effective and encourages a positive employee experience through streamlined HR support.
Choosing the Right Employer of Record
When it comes to choosing the right EOR, employers must do their due diligence in order to find the right partner. Employers’ consideration, of the following will enable them to choose wisely:
- Experience and expertise: When working with an EOR in Latvia, you want to make sure they have rich local knowledge of employment laws and experience of hiring in the country. Working with an EOR with a positive reputation in Latvia helps employers remain compliant.
- Range of services: The range of services offered by EORs should be right for your business. Look for different services related to hiring staff, from administering benefits, filing taxes, compliance and governance, to legal support.
- Data security: In a remote work environment, protecting intellectual property is vital. When choosing an EOR vendor, make sure they have a specific agreement which outlines the ways they aim to keep sensitive information secure.
Borderless — The EOR For You
If you’re looking to hire an employee in Latvia, an EOR is the right solution. Borderless makes the hiring process a breeze. While you connect with your employees, we’ll do the heavy lifting to guarantee you stay compliant to make hiring a seamless, stress-free process.
Book a demo to see how we can streamline hiring employees from Latvia.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
