In Latvia, labor law permits several types of employment agreements, each designed to cater to different employment needs.

Indefinite-Term Employment Agreement (līgums uz nenoteiktu laiku)

The Indefinite-Term Employment Agreement is the standard employment contract in Latvia. It offers long-term employment without a pre-defined end date. This type of agreement provides stability for both the employer and the employee. The terms and conditions of this agreement are governed by the Latvian Labour Code.

Fixed-Term Employment Agreement (līgums uz noteiktu laiku)

The Fixed-Term Employment Agreement sets a specific duration for employment, typically up to two years. This type of agreement can be beneficial for project-based work or seasonal positions. However, after two years, the contract automatically converts into an indefinite-term agreement unless both parties agree to terminate it.

Part-Time Employment Agreement (nepilna laika darba līgums)

The Part-Time Employment Agreement allows employees to work fewer hours per week than the standard 40-hour workweek. This type of agreement caters to those seeking flexible work arrangements or balancing work with other commitments.

Collective Agreement (nozares līgums)

The Collective Agreement goes beyond individual employment contracts. It's a formal agreement between a trade union representing employees and one or more employers. This agreement outlines working conditions, compensation, and other employment-related aspects that apply to a particular industry or sector.

These are the main types of employment agreements used in Latvia. Regardless of the agreement type, Latvian labor law offers various protections and regulations for employees. Employers are required to comply with health and safety standards, minimum wage requirements, and provide paid vacation time.

Latvian employment agreements must adhere to specific legal requirements outlined in the Labour Law. These essential clauses ensure clarity and protect the rights of both employers and employees.

Parties to the Agreement

This section identifies the employer and the employee by name and address.

Position and Duties

This section details the specific job title, profession, or specialty of the employee, aligning with the Latvian Classification of Occupations. It should also outline the key duties and responsibilities associated with the position.

Remuneration and Benefits

This section specifies the employee's wage or salary, including details on payment frequency and scales. It should also address any additional benefits offered, such as bonuses, health insurance, or transportation allowances.

Working Time and Leave

This section outlines the employee's working hours, adhering to the standard 40-hour workweek unless otherwise agreed. It should also specify details on overtime pay, breaks, and paid leave entitlements, including annual leave and sick leave.

Termination Clauses

This section details the grounds and procedures for terminating the employment contract by either party. It should adhere to the notice periods mandated by law, which vary depending on the employment duration and type of agreement.

Intellectual Property

This clause clarifies ownership of any intellectual property rights arising from the employee's work performed during their employment.

Applicable Law

This section specifies that the Latvian Labour Law governs the interpretation and enforcement of the employment agreement.

In addition to these essential clauses, employers may also include additional provisions specific to their company or industry.

The Latvian Labour Law permits employers to incorporate a probationary period in employment agreements. This initial phase serves as a trial period for both the employer and the employee to evaluate suitability for the role.

Key Aspects of Probation Periods in Latvia

• Maximum Duration: The probationary period must not exceed three months. This duration is applicable to both fixed-term and indefinite-term employment agreements.
• Ineligibility for Probation: Probationary periods are not applicable to employees under 18 years old.
• Objective: The probation period enables employers to assess the employee's skills, performance, and compatibility within the company culture. Similarly, employees can determine if the job responsibilities and work environment meet their expectations.
• Termination During Probation: During the probation period, both the employer and the employee can terminate the agreement with a written notice of only three days, without the need to provide a reason.

Crucial Considerations

• Automatic Conversion: If the employment continues beyond the probation period without termination, it's understood that the employee has successfully completed the probationary phase, and the full protections of the Labour Law apply.
• Limited Dismissal Protection: During probation, employees have limited protection against unfair dismissal compared to after the probationary period. However, this doesn't eliminate all protections; employers cannot terminate based on discriminatory reasons like ethnicity or religion.
• Collective Agreements: Collective agreements negotiated between trade unions and employers may supersede some aspects of the standard probation period rules, including potentially extending the maximum duration in specific sectors.

Latvian employment agreements often include confidentiality and non-compete clauses to safeguard the employer's legitimate business interests. However, these interests are balanced with the employee's right to work and earn a living under Latvian labor law.

Confidentiality Clauses

Confidentiality clauses are designed to protect sensitive employer information, such as trade secrets, customer lists, or proprietary data, from unauthorized disclosure by employees.

• Employee's Duty: Even without a specific clause, Latvian labor law implies a duty on the employee to keep confidential any information they become privy to during their employment that isn't publicly known.
• Specificity is Key: Confidentiality clauses should clearly define the type of information considered confidential. This helps avoid ambiguity and potential disputes.

Non-Compete Clauses

Non-compete clauses limit an employee's ability to work for a competitor or engage in similar business activities after leaving the company.

• Strict Limitations: Latvian law strictly regulates non-compete clauses to ensure they don't unreasonably restrict an employee's ability to find new employment.
• Justification Required: Employers must demonstrate a legitimate business interest to justify a non-compete clause, such as protecting unique trade secrets or confidential client relationships.
• Maximum Duration: Non-compete clauses cannot exceed two years after employment termination.
• Financial Compensation: During the non-compete period, the employer must compensate the employee at least 40% of their average salary at the time of termination. This financial obligation incentivizes the employee to comply with the restriction.

Key Considerations for Both Clauses

• Enforcement: Breach of confidentiality or non-compete clauses can lead to legal action by the employer, potentially including seeking financial compensation or an injunction to prevent further breaches.
• Reasonableness Test: Latvian courts will ultimately assess the reasonableness of these clauses in case of disputes. Clauses deemed overly broad or unfair to the employee may be struck down.

Incorporating confidentiality and non-compete clauses requires careful consideration of Latvian legal requirements and striking a balance between protecting legitimate business interests and employee rights. It is recommended to consult with legal counsel when drafting these clauses for Latvian employment agreements.