How do you terminate an employee in Latvia in 2026?

Latvia is not an at-will country. An employer can only end an open-ended contract on a ground the Labour Law (Darba likums) recognises. The recognised grounds cover serious breaches of the contract, an inability to do the work, a failure to reach agreed standards, and the genuine elimination of the role. Each ground carries its own evidence requirement and its own notice rule.

Section 125 of the Labour Law is the rule that catches most employers out. In a reinstatement claim, the employer has to prove that the dismissal had a legal basis and that the right procedure was followed. The worker does not have to prove the dismissal was unfair. If you cannot discharge that burden, the dismissal is treated as unlawful.

Protected employees and forbidden reasons

Some workers carry extra protection and some reasons are off-limits. You cannot dismiss someone because they are pregnant, because of trade union membership, or as a reaction to a complaint they have raised. Dismissals touching pregnancy, parental status, and union office are tightly restricted under the Labour Law. Treat any dismissal in these situations as high-exposure and check it before you act.

1. Fix the lawful reason

   Anchor the dismissal to a ground the Labour Law recognises: conduct, capability, standards, or genuine redundancy. A reason outside the list will not survive a reinstatement claim.

2. Build the evidence file

   Document the reason before you act. The burden of proof is on the employer under Section 125, so the file you build now is what wins or loses the case later.

3. Run the procedure

   Follow the steps the law attaches to your chosen ground, including any consultation and any protected-status check. Skipping a step makes the dismissal unlawful even where the reason was sound.

4. Serve written notice

   Give the required notice in writing, or pay it out where the law allows. Notice during probation is shorter than after it.

5. Settle the final pay

   Calculate severance on average earnings, add accrued leave, and issue the itemised written calculation the Labour Law requires. Pay before any rest day or public holiday that lands on payday.

Notice in Latvia is set by the Labour Law and varies with the reason for dismissal. A redundancy carries a longer notice than a dismissal for a serious breach of the contract. The figures below are the kind of structure the Labour Law uses; the precise day count for each ground should be read from the current statute before you act, because the published sources we hold are not fully aligned on the detail.

A contract can set longer notice than the statutory floor. It cannot go below it. Senior and specialist roles in Latvian practice often carry one to three months of contractual notice. You can pay the notice out rather than have it worked, and that payment is treated as ordinary taxable income.

Probation

A probation period lets either side end the contract on short notice while the worker settles in. The Labour Law sets a maximum length for that period. We hold the customary three-month figure as an estimate rather than a confirmed statutory number, so confirm the current cap and the probation notice rule before you rely on them.

When an employer ends an open-ended contract for a business reason, the worker is entitled to severance under the Labour Law. The payment is calculated as months of the worker's average earnings, and the number of months steps up with length of service. Short service earns the smallest payment. Long service earns the largest.

The banding runs from around one month of average earnings at the shortest qualifying service up to roughly four months for the longest-serving employees. We have flagged these per-band figures as estimates in our compliance check rather than confirmed statutory values, so treat the structure as guidance and read the exact months from the current Labour Law before you commit to a number.

What feeds the calculation

• Average earnings: severance is built on the worker's average earnings, not just base pay
• Length of service: the month multiplier rises with continuous service
• Accrued leave: unused statutory annual leave is paid out on top of severance
• Notice pay: any pay in place of worked notice is added separately

There is no statutory 13th-month or 14th-month salary in Latvia, so no compulsory annual bonus rolls into the final calculation. Any annual or holiday bonus is contractual, not a legal entitlement, and it only enters the final pay if the contract created it.

This is the figure that makes Latvia dismissals expensive to get wrong. The remedy is not a fixed number of months. It is the pay the worker lost across the whole stretch they were kept out of work, running from the dismissal to the court judgment. A case that takes a year to resolve produces close to a year of back pay.

Section 126 also covers the variant where the court agrees there is a basis to reinstate but, at the worker's request, ends the relationship by judgment instead. The same uncapped payment for the whole period of forced absence still applies. So you cannot escape the exposure simply because the worker no longer wants their job back.

Because the burden of proof sits with the employer under Section 125, weak paperwork is what loses these cases. A documented reason, a clear procedure, and served written notice are what stand between you and an uncapped back-pay order.

Mutual agreement is the calmest route out of a Latvian contract. Both sides sign, the leaving date is fixed, and the worker gives up the right to bring a later reinstatement claim. That waiver is the point. It is what converts an open-ended uncapped risk into a known, agreed cost.

A workable Latvia mutual exit usually records:

• Agreed leaving date, with notice paid out where the parties choose
• Final pay breakdown, set out line by line as the Labour Law requires
• Accrued annual leave, the unused statutory balance paid in cash
• Severance or an agreed sum, where the parties want to include one
• Waiver of reinstatement claims, which closes off the Section 126 exposure
• Reference wording, agreed in advance and attached

Final pay in Latvia must be itemised. The employer issues a written calculation showing the pay disbursed, the tax deducted, the social insurance paid, and the hours worked. If the normal payday lands on a rest day or a public holiday, the pay must go out before that date, not after. Get the settlement signed before the last working day so the timing of payment is never in dispute.

Real HR and legal experts handle your Latvia hires, from the first contract through every payroll run and statutory deduction. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.

The split of responsibilities under EOR for Latvia terminations:

The reason Latvia dismissals need a real expert is the uncapped reinstatement remedy under Section 126. Weak paperwork is what loses these cases, and the bill is open-ended back pay. Teamed builds the file before the dismissal, not after the claim.

EOR, contractors, and entity employees all live on one platform. A worker hired through Teamed's Latvia network can graduate to your own Latvian legal presence when headcount makes entity formation the right call, until it isn't. Run the Crossover Calculator to see when the model flips. Start from the Latvia hiring overview.

Key sources: Labour Law (Darba likums), the Ministry of Welfare, and the State Labour Inspectorate (VDI).