[Updated 3/25/23] The number one benefit people in Latvia care about is health insurance. It gives them the security that their health is taken care of and that the employer cares about its employees. When asked to rank three other common employee benefits in order of importance, Latvians will likely say disability, death, and retirement.
The average monthly cost for employee benefits in Latvia is €40 per employee.
Mandatory Employee Benefits in Latvia
Mandatory employee benefits in Latvia include pensions, various legislative leaves, and unemployment benefits. Supplementary employee benefits in Latvia include sickness benefits, as well as maternity and paternity leaves/benefits. Employee perks are not common in the country.
Latvia has a three-tier pension system, and the 2nd level deserves the most attention because employers need to pick their pension fund. Depending on an employee’s age, commissions, yield, and risk combinations will matter.
1st tier: State compulsory unfunded pension scheme, all persons making social insurance contributions.
2nd tier: State-funded pension scheme, which will eventually be mandatory for all citizens, but currently applies to individuals born later than 1971. The participants pick an investment plan appropriate for their age (if you have more than 10yrs until your pension, it is worth considering slightly riskier investment plans).
3rd tier: Private voluntary pension scheme, through which every individual can make additional savings for their pension in private pension funds.
The retirement age in Latvia used to be 62 years but is now increasing by 3 months until 2025 when it will be 64 years and 6 months (for persons with social contributions no less than 15 years).
Paid annual leave
Every employee is entitled to paid annual leave. This leave may not be shorter than 4 calendar weeks, not including public holidays.
By agreement between the employer and employee, paid annual leave for the current year may be granted in installments. However, one annual leave must be an uninterrupted 2 weeks.
Cash compensation for annual leave is prohibited, except in cases where an employment relationship is terminated and an employee has not used up their paid annual leave.
Procedures for granting paid annual leave
Paid annual leave is granted every year at a set time per an agreement between the employer and employee or by a leave timetable. When granting paid annual leave, the employer must consider the employee’s wishes as much as possible.
Employees may ask for paid annual leave for the first year of employment if the employer has continuously employed them for no less than 6 months. The employer is obliged to grant such leave in full.
Additional leave may be granted to employees if:
- They have three or more children under 16 years of age or a disabled child under 18 years of age. The duration of such additional leave is 3 working days.
- Their work involves a specific risk; the additional leave may not exceed 3 working days.
- They care for one or two children up to 14 years of age. In this case, the additional leave may not exceed 1 working day.
The collective agreement or employment contract may stipulate other cases in which additional leave may be granted (for night work, shift work, long-term work, etc.).
An employer may grant unpaid leave at the employee’s request.
Work on public holidays
Employees must not work on official public holidays.
Maternity and childbirth leave
Maternity leave (56 calendar days) and childbirth leave (56 calendar days) are aggregated, and 112 calendar days are granted, irrespective of how many maternity leave days the pregnant woman has taken before the birth.
Leave granted due to pregnancy and childbirth is not counted as part of paid annual leave.
In principle, a woman taking maternity and childbirth leave retains her position. If this is not possible, the employer must provide a similar or equivalent job for the woman with equivalent working conditions and terms of employment.
The father of a child is entitled to 10 calendar days of leave. Paternity leave may be granted immediately after the child’s birth and no later than 2 months after the birth.
Every employee has the right to childcare leave for the birth or adoption of a child. Childcare leave lasts 18 months and may be requested at any time until the child reaches age 8.
The period spent by an employee on childcare leave is counted as part of their total work service.
An employee taking childcare leave retains their previous job. If this is not possible, the employer must provide a similar or equivalent job for the employee with equivalent working conditions and terms of employment.
Employees studying at any educational institution while continuing to work may be granted paid, or unpaid study leave per the collective agreement or employment contract.
Employees sitting state exams or are writing and defending theses are granted paid study leave of no less than 20 working days per year. Employees receiving lump sum remuneration are given study leave with average income or without it.
Employees who lose their job have the right to claim unemployment benefits. Benefits are granted if they have worked for at least 1 year and social insurance contributions have been paid for at least 12 months during the last 16 months.
Employees can also claim unemployment benefits if they have regained work capacity after a disability or have been caring for a disabled child for up to 18. In these cases, the benefits are granted even if social insurance contributions have not been paid or have been paid for less than 12 months.
Employees can claim unemployment benefits if they have been granted unemployment status by the State Employment Agency (SEA) and have been socially insured for at least 1 year. Also, social insurance contributions must have been paid for at least 12 months during the last 16 months.
If an employee regains work capacity after a disability, they must obtain unemployment status within 1 month of regaining work capacity to claim unemployment benefits. If caring for a disabled child, they must obtain unemployed status within 1 month of the child reaching 18.
If an employee terminates employment relations on their initiative or was dismissed due to an infringement, unemployment benefits shall be granted and paid not sooner than 2 months after obtaining unemployment status.
The unemployed are expected to cooperate with the State Employment Agency and carry out tasks listed in the individual plan.
Amount of unemployment benefits
- Unemployment benefits are granted for 9 months.
- The amount of benefits depends on an employee’s insurance (employment) history and the wage level from which social insurance contributions have been paid.
- The average contribution wage is calculated based on the employee’s earnings for the 12-month period, which ended 2 months before claiming unemployment benefits.
Employment history in years (inclusive)
- from 1 to 9 years, 50% of the average contribution wage
- from 10 to 19 years, 55% of the average contribution wage
- from 20 to 29 years, 60% of the average contribution wage
- 30 years and more than 65% of the average contribution wage
Unemployment benefits are gradually reduced by increments of 3 months.
Period Benefit amount
First 2 months 100% of granted benefit
Next 3rd-4th month 75% of granted benefit
Next 5th-6th month 50% of granted benefit
Last 2 months 45% of granted benefit
If an employee was caring for a child (up to 18 years) before obtaining unemployed status or regained work capacity after having a disability, the employee’s granted benefits will be 60% of the double amount of the state social insurance benefit in effect on the day when the unemployment benefit is claimed. Currently, this is EUR 76.84 per month for the first 2 months (state social security benefit EUR 64,03 x 2 x 60% = EUR 76,84). According to the algorithm mentioned above, the amount decreases for subsequent months.
FROM JULY 1, 2023
Persons with a temporary residence permit and living permanently in Latvia during its, and received alternative status (including family members within the meaning of the Asylum Law) have the right to state social benefits.
Supplementary Employee Benefits
Socially insured persons may claim sickness benefits. Benefits are granted if an employee or self-employed person does not show up for work or cannot perform their job and, as a result, loses income due to the following reasons:
- Loss of work capacity due to illness or injury
- Receiving essential medical treatment or preventative measures
- Isolation in quarantine
- Treatment in a medical institution during the recovery period from illness or injury, if this is required for regaining work capacity
- Caring for a sick child who is younger than 14 years
- Prosthetics or orthotics in a hospital
While an employee is sick, they are entitled to receive paid sick days from their employer and sickness benefits from the social insurance system.
They are entitled to sickness benefits if they had paid social insurance contributions for at least 3 months within the period of the last 6 months or at least 6 months within the period of the previous 24 months before the month when the insurance case occurred.
Sickness benefits are granted based on a work incapacity electronic form issued by a doctor.
An employer must pay an employee sick pay from the second to the 10th day of the illness.
If an employee is sick for an uninterrupted period, the State Social Insurance Agency grants and pays sickness benefits from the 11th day of the illness until the employee regains work capacity for a maximum of 26 weeks. In severe cases, the benefit payment period can go up to 52 weeks based on a ruling by the State Medical Commission for the Assessment of Health Condition and Working Ability (SMCAHCWA).
If, during the illness period, the employment relationship has terminated, but the period of work incapacity continues, the sickness benefit will be paid for 30 calendar days following the end of the employment relationship.
If an employee’s illness is intermittent, benefits are paid for a maximum of 52 weeks over 3 years.
If an employee is looking after a sick child under 14 years (at home), sickness benefits are granted and paid from the first to the 14th day of the child’s illness. If an employee cares for a sick child in the hospital, sickness benefits are paid until the 21st day.
Amount of sickness benefits
The employer must pay sick pay from the second to the 10th day of the illness period (no payment for the first day). For the second and third day of illness, the amount is not less than 75% of the employee’s average daily earnings, and for the fourth to the 10th day, not less than 80% of the employee’s average earnings.
From the 11th day of illness, the State Social Insurance Agency grants sickness benefits amounting to 80% of the employee’s average earnings from which social insurance contributions have been paid. The average contribution wage is calculated over the 12-month period, which ended 2 months (for self-employed persons 3 months) before the onset of the illness.
Maternity benefits, paid before and after childbirth, can be requested by expectant mothers who are:
- Employed and receive a salary
- Spouses of a self-employed person and have voluntarily joined the social insurance
During the postnatal period, maternity benefits can also be obtained by the child’s father or another person who takes care of the newborn at home, but no later than the child’s 70th day of life. This applies to cases where:
- The child’s mother is unable to take care of the baby until the 42nd postnatal day due to sickness
- The child’s mother has refused to take care of the child
- The child’s mother has died during childbirth or before the 42nd postnatal day
- The child is a foundling
The benefit will be paid in two parts – before and after childbirth. The first part is paid for 56 or 70 days of maternity leave. The benefit for 70 calendar days is paid to expectant mothers undergoing medical supervision from their 12th week of pregnancy.
The second part is paid after childbirth for 56 or 70 calendar days. The benefit for 70 days can be obtained if:
- The mother has had health problems during her pregnancy, childbirth, or postpartum period
- Two or more babies are born
- The maximum period for which the maternity benefit can be obtained is 140 days
In the event of a preterm birth, i.e., delivery before the start of the maternity leave, the maternity benefit shall be granted on the same terms, not less than 112 calendar days.
If an employment relationship is terminated due to the winding-up of the workplace, the maternity benefit shall be granted if the maternity leave has started no later than within 210 days after the termination of the employment relationship.
The rates of the benefits
- The benefit shall be granted in the amount of 80% of the average insurance contributions salary of the applicant.
- An employee’s average insurance contributions salary is calculated for 12 calendar months ending two months before the month in which the pregnancy leave began.
- For self-employed women, the average insurance contributions salary shall be calculated per the average contributions made during the last 12 months ending one quarter (3 months) before the quarter in which the pregnancy leave began.
The amount of parental benefit for working recipients of parental benefit will increase. The parental benefit will be increased to 50 percent of the amount of the granted benefit, instead of the current 30 percent, if one resumes employment while still having the right to receive the parental benefit. The changes will apply to those employed parents who are not on parental leave or are self-employed.
From now on, the parental allowance payment period will be extended by one month. From this period, each parent will have the individual right to be on paid childcare leave for 2 months, which cannot be transferred to the other parent – this will be the non-transferable part of the parental allowance per the European Parliament and the Council of 20.20.2019. requirements of the June Directive 2019/1158 on work-life balance for parents and carers. The non-transferable part of the parental benefit will be paid, it can be used flexibly in installments until the child is 8 years old, and both parents can use it simultaneously. The mentioned conditions will apply to those parents whose children will be born starting January 1, 2023.
Employed fathers of a newborn with social insurance can take paternity leave for ten calendar days no later than two months after the child is born.
Other stipulations include:
- The benefit shall be granted in the amount of 80% of the average insurance contributions salary of the applicant.
- An employee’s average insurance contributions salary for the receipt of the paternity benefit is calculated for 12 calendar months ending two months before the month in which the leave in relation to the child’s birth has begun.
- For a self-employed person, the average insurance contributions salary shall be calculated for the 12 months ending one quarter before the quarter in which the leave concerning the child’s birth begins.
Related Government Websites
This information about employee benefits in Latvia is provided by MAI CEE, Asinta’s employee benefits consulting partner in Latvia.