Navigating Employee Termination in Latvia: A Guide for International Employers

Understanding the legal framework for terminating employment in Latvia is essential for any business operating in the country. The Labour Law provides clear guidelines to ensure dismissals are handled fairly and legally. This guide outlines the key procedures, notice periods, and severance requirements to help you manage the process effectively and avoid potential disputes.

Notice Period Requirements in Latvia

Under Article 98 of the Latvian Labour Law, employers must provide a minimum notice period of one month when initiating termination, provided the employee has not engaged in misconduct or is medically unfit for the role. This standard applies unless specific exceptions are in place.

Key exceptions to the standard notice period include:

Employee-Initiated Resignation: Employees are not legally bound by a statutory notice period when resigning. However, individual contracts or collective agreements may stipulate a notice requirement for the employee.
Probationary Period: During a probation period, as defined by Article 47, either party can terminate the contract with just three days' written notice. Employers are not required to state a reason for termination during this phase.
Collective Bargaining Agreements: A collective agreement may specify a different notice period that supersedes the statutory minimum.
Mutual Agreement: Employers and employees can mutually agree to shorten the notice period, provided it complies with national labour standards.

Severance Pay Obligations

Article 112 of the Labour Law mandates severance pay in cases of redundancy, health-related dismissals, or company liquidation, unless a collective or employment contract specifies a higher amount. The statutory severance is calculated based on the employee's length of service:

Years of Service	Severance Pay
Less than 5 years	1 month's average salary
5 to 10 years	2 months' average salary
10 to 20 years	3 months' average salary
Over 20 years	4 months' average salary

For example, a company restructuring that leads to the redundancy of an employee with 12 years of service would require a severance payment equivalent to three months' wages.

Step-by-Step Termination Process

Following a structured process is critical to ensuring compliance and minimizing legal exposure. The key steps are:

Establish Valid Grounds: Dismissal must be based on legitimate reasons, such as performance issues, redundancy, or serious misconduct.
Issue Written Notice: Provide the employee with a formal, written termination notice, adhering to the required notice period. Immediate dismissal may be permissible in cases of gross misconduct.
Calculate and Pay Severance: If applicable, determine the severance amount based on tenure and ensure timely payment.
Execute a Termination Agreement: Draft and sign a termination document that outlines the reasons, final date, and any financial settlements.
Fulfill Final Payments: Settle all outstanding wages, accrued vacation pay, and severance before the employee's last day.
Notify Relevant Authorities: In cases of collective redundancies, inform the State Employment Agency and/or employee representatives as required by law.
Maintain Documentation Keep detailed records of the entire process, including correspondence and calculations, for at least the statutory retention period.

Consider a scenario where an employee is dismissed for consistent underperformance. The employer should document performance reviews, provide a written warning, and follow the notice period requirements to mitigate the risk of an unfair dismissal claim.

Unemployment Benefits for Dismissed Employees

Employees who lose their jobs may be eligible for state unemployment benefits if they meet specific criteria. Eligibility generally requires at least one year of unemployment insurance contributions and 12 months of contributions within the 16 months preceding unemployment. Special provisions apply to individuals returning to work after disability or those caring for disabled children.

Benefit amounts are calculated as a percentage of the average social insurance contribution salary, based on the insurance period:

1-9 years: 50% of average salary
10-19 years: 55% of average salary
20-29 years: 60% of average salary
Over 30 years: 65% of average salary

Benefits are funded through the state social insurance budget. It's important to note that benefits may be withheld or reclaimed if the dismissal is deemed voluntary without just cause.

Partnering for Compliance

Navigating Latvian employment law can be complex, especially for international firms. SailGlobal offers expert guidance on termination procedures, ensuring your actions are fully compliant with local regulations. Our team helps you manage risks, from drafting termination agreements to calculating severance, allowing you to focus on your core business operations.

Latvia Employee Termination Guide: Notice Period, Severance & Process