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Eva Berlaus
Office Managing Partner
Andis Burkevics
Lāsma Rugāte
Legal Assistant
Amendments to Labour Law adopted

On 4 March 2010, passing the final reading the Saeima (Latvian Parliament) adopted the most voluminous amendments to the Labour Law since 2004. The amendments came into force on 25 March. Improvements and supplements to the previous wording of the law are expected to facilitate flexibility and security in legal employment relations, as well as to limit illegal and non-registered employment in Latvia. In this Employment Newsflash, we will review what appear to be the most significant amendments.

General and collective agreements

In order to facilitate entering collective agreements in a particular industry or territory (general agreements), thus decreasing differences in social guarantees of one industry, in future general agreements will be binding on all employers in the industry concerned and will also refer to everyone employed by those employers if the employers’ organisation or members of associations of an employers’ organisation that has entered into a general agreement in a particular industry ensure more than 60% of turnover of goods or services in that industry.

The changes also influence the procedure for approving a collective agreement. In future, where a collective agreement is concluded between an employer (enterprise) and a trade union representing at least 50% of employees working at that enterprise, convening a general meeting of employees (conference) to approve the collective agreement is no longer needed.

Entering into an employment agreement

In order to decrease non-registered employment, when individuals are employed without an employment agreement, in future an employer must conclude a written employment agreement with the employee before the employee starts work. If no written employment agreement is entered into before the employee starts work, the presumption will be that the employee has already been working for the employer for three months and that normal working time and minimum salary have been determined unless the employee or employer can prove some other term, working time, and salary. However, in a situation where both employer and employee state that the employee started work, for example, on the previous day, there would be no grounds to apply the presumption.

Employment agreement for a limited time

In order to raise employers’ interest in employing individuals who are studying for professional or higher education, amendments to the law entitle an employer to conclude an employment agreement with these individuals for a limited time on condition that the work to be performed is related to preparation for working in the specified profession or study in the particular field.

Termination of employment agreement

New grounds are introduced for terminating an employment agreement at the employer’s initiative. Further, if an employee is unable to work due to temporary incapacity for more than six months in case of continuous incapacity, or for one year during a period of three years if the incapacity is intermittent, during these periods the employer will be entitled to terminate the employment agreement by one month notice in advance and paying severance pay; however, these periods should exclude pregnancy and maternity leave, as well as incapacity for work if the reason is an accident at work or occupational disease.

An employer who plans a collective redundancy must inform the State Employment Agency 45 days in advance instead of the previous 60 days, so that the collective redundancy procedure is shortened.

When an employer goes into liquidation, an employment agreement with an employee can also be terminated during the employee’s temporary incapacity for work and when the employee is on vacation or does not perform work for other justifiable reasons. It should be noted that previously in case of an employer’s liquidation, the law did not provide an option to terminate an employment agreement if an employee does not perform work due to illness or extended vacation without salary.

Salary and average earnings

Previously the Labour Law required that when average earnings are decreased because the parties continue employment relations with changes to the employment agreement offered by the employer, the employer must pay the employee previous average earnings for one month after the change. Under the amendments to the law, salary in this case is payable for one month after the change instead of average earnings, with average earnings payable if the employee’s salary is a lump sum payment.

As an employee on an official or business trip actually performs work outside the usual workplace rather than not working due to justifying reasons, Sections 53 and 74 of the Labour Law are clarified. Now, Section 53 specifies an employer’s obligation to pay salary (instead of paying average earnings) to an employee who has been sent on an official or business trip during the whole term of the employee’s absence. Average earnings will still be payable if the employee’s salary is a lump sum payment.

Amendments to the law also specify that information on salary, taxes, state social insurance contributions, as well as hours worked, including overtime, hours worked at night and during holidays, must in future be included in calculation of salary.

In future, an employer need not pay salary to an employee who is on study leave.

Additional payment

Taking into account employees’ rights to a safe work environment, the legislator has determined that from now on employers must pay additional sums to employees whose work is related to a special risk. The amount can be determined in a collective agreement or employment agreement or in work regulations or by order: basically the employer is entitled to unilaterally specify the amount of the additional payment – by order.

Part-time work and aggregated working time

The law has also been supplemented by a completely new norm specifying that an employer whose employee works part-time will have to enter into a written agreement with the employee if the employer wishes to employ the employee longer than part-time. Moreover, a separate written agreement will be necessary for each separate case.

Changes are also introduced in relation to aggregated working time. The law now specifies precisely that aggregate working time in a reporting period may not exceed normal working time; furthermore, an employer must inform employees in writing about their work schedule. If a collective or employment agreement does not specify a longer reporting period, the reporting period for aggregate working time is one month. An employee and an employer can agree on the length of the reporting period in their employment agreement, but not exceeding three months; and the specified reporting period in a collective agreement should not exceed 12 months. In any case, within the scope of aggregate working time, it is prohibited to employ an employee for more than 24 consecutive hours and 56 hours weekly.

Transfer of employees

Upon transferring an employee to Latvia, an employer need notify only the State Labour Inspectorate. In addition to the information previously specified by law, the employer must inform about the person (company) who the transferred employee will work for and confirmation that a transferred employee who is a third-country citizen is legally employed by the employer. Likewise the law clearly defines obligations of Latvian employers when transferring an employee to work in another Member State of the European Union, the European Economic Area, or the Swiss Confederation.

Time limits for bringing claims against an employer

To improve protection of employees’ rights, the Labour Law entitles an employee to bring claims in court for compensation of losses when the employer violates the principle of equal payment or prohibition of different treatment. Compensation is to be paid within three months (instead of the previous one month) from the day when the employee discovered the violation of rights.

As a general rule, an employee can claim to invalidate an employer’s notice on employment termination. The time limit for bringing the claim is one month after the notice of termination was served. If there are special grounds why an employee misses this one month deadline, the ex-employee may ask the Court to prolong the term for bringing the claim. This can be done within two weeks after the special grounds for missing the deadline have ceased to exist. However, extension of the term can be asked for only with a timeframe of one year (previously it was 6 months) counting from the day when the original one-month deadline for bringing the claim against the employer expired. However, it seems that this extension will not have any significant influence on the number of claims raised by employees with courts for invalidation of an employer’s termination notice because the reasons for missing the time limit must still be objective (that is, they may not depend on the employee’s will and activities).

Transfer of undertaking

The Labour Law defines a transfer of undertaking as handing over an enterprise or an independent, identifiable part of it (business unit) to another person on the basis of a contract, administrative or regulatory enactment, court judgment or other grounds arisen between the parties outside their contractual relations, as well as merger, division, or restructuring of companies. Presumably this clearer definition of transfer of undertaking will help employers and employees to identify possible cases of transfer of undertaking.

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