How to Hire Remote Employees In 


The Basics

Euro (EUR)
Employer Taxes
Payroll Frequency
Official Language

Employment in 


Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 


A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Latvia can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Latvia, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Latvia.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Latvia  is not the same as paying workers in your own country. Employees have to be paid using Latvia’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.


 Specific Information

Working Hours

In general, Latvians work 40 hours per week with 5, 8-hour days.  


Work exceeding the daily working time of 8 hours is considered to be overtime.

It is interpreted restrictively and, for instance, where the duration of working time is reduced by agreement, overtime is still computed only after 8 hours of work.

The limit of allowed overtime hours is laid down in Section 136 (5) of the labor Law stipulating that overtime work may not exceed 48 hours within a four-week period and 200 hours within a calendar year.

Payroll Tax



  • National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (split rate)
  • National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (employee eligible for retirement-split rate)


  • up to 20,004 EUR - 20%
  • 62,800 EUR +       - 31%

Minimum Wage

The national minimum wage in Latvia remained fixed at €500 per month, that is 6,000 euros per year, taking into account 12 payments per year.


Pay Cycle

In Latvia, the payroll frequency is generally monthly. However, the employer must make payment no less than twice a month unless the employee and employer have agreed on payment once a month.

13th Salary

There is no statutory requirement to provide a 13th salary.


Paid Time Off (PTO)

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 installment 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.

Public Holidays

There are 11 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • Employees are generally eligible for 10 days of employer paid sick leave.
  • The second are third days should be paid at least 75% of regular wages, and the 4th through 10th days at least 80%.
  • The State Social Insurance Agency pays for sick leave from the 11th day through 26 weeks at 80% of the regular wages.

Maternity Leave

Female employees are generally entitled to 112 days of maternity leave: 56 before the birth and 56 after, although the employee may use all 112 days regardless of how many she used before the birth.

Social insurance covers the employee’s wages during leave if she is insured.

Paternity Leave

Fathers are generally entitled to 10 days of paternity leave to be taken with two months of the child’s birth.

Parental Leave

There are no provisions in the law regarding paternity leave.

Other Leave

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.

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.

Marriage Leave


Bereavement Leave



Termination Process

A contract of employment can be terminated either at the initiative of an employer or an employee.

A contract of employment may also be terminated by expiry of a fixed-term contract, by mutual consent of employer and employee, or pursuant to the request of a third party.

Pursuant to Section 101 of the labor Law, an employer has the right to give a written notice of termination of a contract of employment only on the basis of circumstances related to the conduct of the employee, his or her abilities, or of economic, organizational, technological measures or measures of a similar nature

Prior notice is required to terminate a contract of employment concluded for an indefinite period as well as a fixed-term contract where an employer intends to terminate such contract before the expiry of the term.

An employer, when giving a notice of termination of a contract of employment, shall comply with different time periods, depending on the grounds of dismissal.

The notice of dismissal will take effect either immediately, or 10 days after the notice, or one month after the notice, accordingly to Sections 103 and 101 of the labor Law

In all cases when giving a notice of termination, an employer has a duty to notify an employee in writing those circumstances that serve a basis for the notice of termination of the contract of employment.

The employer has to pay severance pay in accordance with the law.

Notice Period

The notice period in Latvia is:

One month unless the employment contract or collective bargaining agreement provides for a longer period.

Severance Pay

Employees are generally eligible for severance payment as follows:

  • up to 5 years’ service: one month’s wages
  • 5-10 years’ service: two month’s wages
  • 10-20 years’ service: three month’s wages
  • 20+ years’ service: four month’s wages

Probation Period

The maximum term of probationary periods is three months.