Latvia

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.

Asinta Partner
Natalia Zaborovska

MAI CEE

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Country Insight

The influence of trade unions is declining. It’s also important to note that Latvia’s workforce is multilingual, and has an advanced level of education, as well as a culture, which promotes hard work and dependability.

Average Cost

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.

Pension

There is a three-tier pension system in Latvia, and the 2nd level deserves the most attention because employers need to pick their own pension fund. Commissions, yield and risk combinations will matter depending on an employee’s age.

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 who are born later than 1971. The participants pick an investment plan that is 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 has the possibility to make additional savings for his 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 65 years (for persons with social contributions no less than 15 years).

Legislated Leaves

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 instillment of annual leave each year may not be less than 2 uninterrupted calendar 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 in accordance with an agreement between the employer and employee, or by a leave timetable. When granting paid annual leave, the employer is obliged to take the employee’s wishes into account as far as possible.

An employee may ask for paid annual leave for the first year of employment if they have been continuously employed by the employer 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 amount to less than 3 working days.
  • They care for one or two children up to 14 years of age. In this case, the additional leave may not amount to less than 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 an employee 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 prior to 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.

Paternity leave

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.

Childcare leave

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 the age of 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.

Study leave

An employee who is studying at any form of educational institution while continuing to work may, in accordance with the collective agreement or employment contract, be granted paid or unpaid study leave.

Employees sitting state exams, or are writing and defending theses, are granted paid study leave of no less than 20 working days per year. If an employee receives lump sum remuneration, they are granted study leave with average remuneration, or without it.

Unemployment Insurance

If an employee loses their job, they 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 if they have been caring for a disabled child up to 18 years of age. 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 unemployed status by the State Employment Agency (SEA) and they have been socially insured for at least 1 year. Also, social insurance contributions must have been paid for them for at least 12 months during the last 16 months.

If an employee regains work capacity after a disability, to claim unemployment benefits they must obtain unemployed status within 1 month of regaining work capacity. If they are caring for a disabled child, they must obtain unemployed status within 1 month of the child reaching 18 years of age.

If an employee terminates employment relations on their own initiative, or if they were dismissed due to an infringement, unemployment benefits shall be granted and paid not sooner than 2 months after obtaining unemployed 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 average contribution wage
  • from 10 to 19 years 55% of average contribution wage
  • from 20 to 29 years 60% of average contribution wage
  • 30 years and more 65% of 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) prior to 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), and accordingly to the algorithm mentioned above the amount decreases for next months.

 

Supplementary Employee Benefits

Sickness Benefits

Sickness benefits may be claimed by socially insured persons. Benefits are granted if an employee or self-employed person does not show up for work or cannot perform his or her 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 both paid sick days from their employer as well as sickness benefits from the social insurance system.

They are entitled to sickness benefit, if they have 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 last 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 particularly serious cases, the period of benefit payments may be extended 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 a 3-year period.

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 is caring 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

Maternity benefits, paid before and after childbirth, can be requested by expectant mothers who are:

  • Employed and receive a salary
  • Self-employed
  • Spouses of a self-employed person and have voluntarily joined the social insurance

During the postnatal period, maternity benefit can also be obtained by the child’s father or another person who takes care of the newborn at home, but no later than until 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 the maternity leave. The benefit for 70 calendar days is paid to expectant mothers who are undergoing medical supervision from their 12th week of pregnancy.

The second part – for 56 or 70 calendar days – is paid after childbirth. 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. a birth before the start of the maternity leave, the maternity benefit shall be granted on the same terms, not less than for 112 calendar days.

If an employment relationship is terminated due to 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.
  • The average insurance contributions salary of an employee is calculated for a period of 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 in accordance with the average contributions made during the period of the last 12 months ending one quarter (3 months) before the quarter in which the pregnancy leave began.

Paternity Benefit

Employed fathers of a newborn with social insurance are eligible to take a leave paternity leave for the duration of ten calendar days and it taken not 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.
  • The average insurance contributions salary of an employee for the receipt of the paternity benefit is calculated for a period of 12 calendar months ending two months prior to 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-month period ending one quarter before the quarter in which the leave in relation to 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.

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