A Latvian court in 2024 ruled that an employment relationship existed between a company and a person who had been working there for eight months without a signed contract. The employer was ordered to pay back wages, VSAOI, vacation compensation, and a fine totaling over EUR 14,000. The irony: the monthly salary was EUR 1,200. The absence of a written contract cost the employer more than a year of the employee's gross pay.

Written employment contracts are not a bureaucratic formality in Latvia. They are the legal foundation of every working relationship, and the rules governing them are precise.

The Non-Negotiable Requirements

Every employment contract in Latvia must satisfy these conditions:

Written form. Oral agreements create employment relationships (as the court case above demonstrates), but they violate the Labour Law and expose the employer to penalties.

Language. The contract must be in Latvian. Bilingual versions are permitted (and common for international companies), but in case of conflict between versions, the Latvian text prevails.

Registration with VID. The employer must register the employment relationship with the State Revenue Service before the employee begins work. Not "on the first day." Not "within a week." Before work starts. This is done electronically through VID EDS.

Two copies. One for the employer, one for the employee. Both signed by both parties.

Mandatory Contract Clauses

The Labour Law specifies minimum content that every contract must include:

Employer identification (company name, registration number, legal address)
Employee identification (full name, personal code, address)
Start date of employment
Expected duration (if fixed-term -- see below)
Position/job title and description of duties
Workplace (address or "various locations" if field-based)
Gross salary and payment schedule (date and method)
Working hours (daily and weekly)
Annual vacation entitlement (minimum 4 calendar weeks)
Notice period for termination
Reference to collective agreement (if applicable)

Missing any mandatory clause does not void the contract -- the Labour Law's default provisions fill the gap. But relying on default provisions means the employer has less control over terms that could have been specified differently.

Contract Types

Indefinite-Term (Standard)

The default in Latvia. No end date. Can be terminated by either party following the Labour Law's notice and grounds requirements.

Fixed-Term

Permitted only for specific reasons:

Seasonal work
Temporary increase in workload
Replacement of an absent employee
Specific project with a defined end

Maximum duration: 5 years (including renewals). If a fixed-term contract is renewed more than twice in a row, or if the total duration exceeds 5 years, the relationship automatically converts to indefinite-term.

(We regularly encounter employers who use rolling fixed-term contracts to avoid the protections of indefinite employment. This practice backfires -- the employee can claim indefinite status at any point, and courts consistently support them.)

Probation Period

Either contract type may include a probation period of up to 3 months. During probation:

Either party may terminate with 10 calendar days' notice
No obligation to state grounds for termination
Severance is not required
The probation period must be explicitly stated in the contract -- it is not automatic

An employee on probation has all other standard rights: vacation accrual, sick leave, VSAOI coverage.

Salary Specifications: What Must Be Stated

The contract must specify the gross salary. Net salary agreements are not prohibited, but they create complications -- the employer assumes the risk of tax rate changes, and VID requires gross figures in all reports.

Additional compensation elements that should be specified:

Bonuses (formula or discretionary)
Overtime provisions (beyond the statutory minimum)
Benefits in kind (company car, phone, housing)
Non-compete compensation (if applicable)

The minimum gross salary in 2026 is EUR 780/month for full-time work. Any contract specifying less violates the law, and the employer will be liable for the difference plus contributions.

Working Hours and Schedule

Standard working time in Latvia: 8 hours per day, 40 hours per week. The contract should specify:

The daily schedule (e.g., 09:00-18:00 with 1-hour lunch)
Whether flexible working is permitted
Whether shift work applies
Night work provisions (if relevant)

Part-time contracts must state the exact reduced hours. An employee working 20 hours per week earns no less than EUR 390/month (half of minimum wage), and all benefits (vacation, sick leave) apply proportionally.

Non-Compete and Confidentiality

Non-compete clauses are enforceable in Latvia but with strict conditions:

The restriction period may not exceed 2 years after termination
The employer must pay adequate compensation during the restriction period (court practice suggests at least 50-70% of the prior salary)
The restriction must be reasonable in scope (geographic area, industry)

An unpaid non-compete clause is unenforceable. We advise employers to think carefully about whether the cost of post-employment compensation justifies the non-compete -- for most positions, it does not.

Confidentiality clauses, by contrast, do not require separate compensation and can extend indefinitely.

Amending the Contract

Any change to essential contract terms (salary, position, working hours, workplace) requires mutual written agreement. The employer cannot unilaterally change these elements, even with notice.

If the employer needs to change working conditions and the employee refuses, the employer's only option is to initiate a termination (with notice and severance) and offer a new contract. This is, understandably, both costly and disruptive.

Employment Contracts That Protect Your Business

From drafting compliant contracts to registering employees with VID and managing the ongoing payroll, CORVUS ACCOUNTING & TAX ensures your employment documentation meets every Latvian legal requirement. Our team reviews contracts, advises on clause structure, and handles registration.

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Employment Contracts in Latvia: Types, Requirements, and Key Clauses