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Dear clients and cooperation partners,
This newsflash covers two topical issues in employment law practice – the possible legal consequences of failing properly to follow the procedure for collective redundancy, and the right of employees to protection by several trade unions if the employer intends to terminate the employment agreement. We will look at judgments on these issues by the Latvian Supreme Court (LSC). Likewise we will draw attention to changes in the procedure for removing and electing members of management and supervisory boards, as these changes require timely planning.
Failure to consult before collective redundancy is in itself not a sufficient ground to invalidate an employer's termination notice and to restore the employee to their previous position
This conclusion is included in the Senate judgment in case No SKC-1106/20131. In this case one of the important issues was whether the employer had performed its obligation to inform and consult employee representatives in a collective redundancy and if not then whether this violation of the Labour Law was sufficiently significant to conclude that in that particular situation the employer was not entitled to terminate employment relations on the ground of employee redundancy.
The Riga Regional Court as the court of appeal found that an employer had not performed its obligation to inform and consult employee representatives and indicated that termination of the employment agreement could not be lawfully justified. The Riga Regional Court substantiated this opinion by arguing that otherwise (that is, if it was considered that no actual adverse consequences were caused to the employer if it failed to observe Sections 105-107 of the Labour Law) then the provisions of the Labour Law on collective redundancy would lose their meaning.
Nevertheless the Senate considered that the consequences incurred by an employer that fails to observe the procedure for collective redundancy cannot be so severe if the court finds that the employer's termination notice on the grounds of reduction of the number of employees (Section 101(1)9) of the Labour Law) is substantiated in essence. The purpose of the respective legal norms2 is not to limit the employer's freedom to organise its operations in a manner that it finds to be most suitable for its needs when it cannot objectively prevent employee dismissal or decrease the number of employees to be dismissed.
However, the Senate also indicated that if no consultations had taken place the employee could claim additional remuneration for the period when the consultations should have been taking place between the employer and the employee representatives, so that the employee would have been working.
In practice, employees might find it difficult to substantiate how long a period would have been needed for consultations between the employer and employee representatives and thus also to substantiate the amount of possible remuneration because the law does not regulate the length of consultations.
If an employee is a member of several trade unions, the consent of one trade union is enough for the employer to terminate that employee's employment agreement. The employee can choose the trade union from which the employer should ask for consent.
The Senate3 analysed the so-far contradictory issue whether, where an employee is a member of several trade unions, the employer should really obtain consent from all the trade unions before giving a termination notice to the employee. And, if not, which trade union should the employer apply to?
With reference to the second sentence of Section 10(3) of the Labour Law stating that in negotiations with the employer, representatives of several trade unions express a common opinion, the Senate concluded that the legislator's purpose in choosing this regulation had been to avoid mutual competition between trade unions, as well as different positions in resolving issues that relate to employee rights and interests. Thus, the necessity to express a common standpoint (that is, "yes" or "no") should also refer to a situation where trade unions have different opinions whether they should agree to termination of an employment agreement with an employee who is a member of all those trade unions. Thus in a situation when the employer has obtained consent from one trade union to terminate the employment agreement with an employee who is a member of several trade unions, there are grounds to consider that the position of this trade union complies with the opinion of the other trade unions on this issue.
The Labour Law (Section 101(6)) imposes an obligation on the employer to find out before terminating an employment agreement whether the employee is a member of trade unions. Usually the employer requires this information from the employee because only the employee in person can precisely know how many and which trade unions he has joined.
An employer that detects that an employee is a member of several trade unions should apply for consent to termination of the employment agreement and receive the consent of a specific trade union chosen by the employee in person for deciding this issue.
Under amendments to the Commercial Law that came into force on 1 July 2013, the procedure for dismissing and electing management board and supervisory board members has changed
When a decision is adopted to remove or elect a management board member, then the person's signature on the minutes of a limited liability company's shareholders meeting or a joint stock company's supervisory board meeting or a document derived from the minutes should be approved by a notary. Likewise, when a decision has been adopted to elect or remove a member of a joint stock company's supervisory board, the person's signature on the minutes of the joint stock company's shareholders meeting or a document derived from the minutes must be approved by a notary. In addition, if a decision has been adopted to amend a company's articles of association, for example, if the number of members on the management or supervisory board is decreased or increased, then a notary should approve the signature of the person(s) on the minutes of the shareholders meeting or a document derived from the minutes and on the full new wording of the company's articles of association. The new full wording of the articles of association must be signed both by the members of the management board and by those persons who signed the minutes of the shareholders meeting.
This procedure significantly extends the time to adopt changes because, first, company shareholders must find a notary, second, where company shareholders approve signatures before a notary abroad then it should be taken into account that in some cases the notary's signature needs to be confirmed by an Apostille, while the notarial certification will have to be translated in addition.
1Judgment of 26 April 2013 by the Civil Matters Department of the Senate of LSC in case No SKC-1106/2013.
2Council Directive 98/59/EC on the approximation of the laws of the Member States relating to collective redundancies and Sections 105-107 of the Labour Law.
3Judgment of 26 April 2013 of the Civil Matter Department of the Senate of the LSC in case No SKC-1444/2013. |
