The latest legislative changes and developments in case law
Gundega LV[1] Amendments to the Whistleblowing Act
On 1 March this year, amendments to the Whistleblowing Act entered into force. The amendments are primarily aimed at addressing practical deficiencies identified three years after the Act came into force.
- Previously, the establishment of an internal reporting system was mandatory for undertakings with more than 50 employees. The threshold has now been set at 50 or more employees. While this is technically a minor change, in practice it means that undertakings with exactly 50 employees now fall within the scope of the regulation and must implement an internal reporting system.
- The whistleblower contact point functions will be transferred from the State Chancellery to the Corruption Prevention and Combating Bureau (KNAB). KNAB will henceforth also have the authority to verify and supervise compliance with the Act and to issue binding recommendations. Previously, no such active supervisory function existed.
- The new wording also prohibits conduct that was not previously explicitly defined: intimidation of a whistleblower, workplace ostracism, causing of losses, and inclusion in informal industry “blacklists”. Importantly, the definition of adverse consequences now also covers threats and attempts to cause such consequences – this broadens the scope of the employer’s liability even where the actual consequences have not yet materialised.
- A new Article 16.1 has been introduced: a person who has suffered harm as a result of a knowingly false whistleblowing report will henceforth be entitled to claim compensation. In addition, a monetary penalty may be imposed for bringing an unfounded claim in court against a whistleblower.
- The new wording also provides that criminal liability may arise for the unlawful disclosure of a whistleblower’s identity. Previously, no such provision was included in the Act
[2] Equal Pay Act
The Ministry of Welfare has drafted a Pay Transparency Act, which aims to transpose into Latvian law the requirements of the EU Directive on pay transparency. The draft act is currently with the Cabinet of Ministers, where its progress stalled in April 2026. Consequently, it has not yet been approved or submitted to the Saeima for consideration.
The Directive must be transposed by Member States by 7 June 2026. Given the current situation, the act is unlikely to be adopted by the prescribed deadline. At the European level, certain Member States and employer organisations have called for the implementation of the Directive to be postponed or revised; however, the European Commission has made it clear that the transposition deadline of 7 June 2026 will not be extended.
Employers need not wait for the act to be adopted, as the direction of the Directive is clear. Practical steps can already be taken by reviewing remuneration systems, evaluating the criteria to determine remuneration, and implementing measures to ensure that remuneration system is transparent and comprehensible.
Employers can take the following steps now in preparation:
- Conduct a remuneration audit across all positions to identify differences in salary, allowances, bonuses, or other work-related payments between equivalent position.
- Establish written remuneration criteria based on objective, gender-neutral factors such as qualifications, experience, performance, and level of responsibility.
- Organise job categories and ensure comparability, so that each position has a clear remuneration level or range.
- Document decision-making related to remuneration, particularly where differences arise between employees in the same position or job category.
- Review recruitment and offer process to ensure that remuneration offers are based on a consistent approach rather than individual negotiations.
- Establish procedures for handling employee requests for remuneration information and prepare a response mechanism for HR and management.
- Train managers and HR specialists to apply equal pay principles consistently and to to justify differences based on objective criteria.
[3] Planned Amendments to the Labour Act
The Saeima (the Parliament) is preparing significant amendments to the Labour Act. The draft act has been adopted at first reading, and the responsible committee is currently preparing it for the second reading, after which it will proceed to a third — and final — reading.
Amendments agreed so far:
- Overtime allowances – at least +50% for overtime on a working day; +75% on a public holiday; and +100% for work on a public holiday (non-overtime).
- Four-day working week – employers and employees may agree on a four-day working week while maintaining a 40-hour weekly working time (with up to +2 hours per working day).
- Delayed salary payment – if salary is not paid for more than two weeks after the due date, the employee may terminate the employment contract with immediate effect.
- Idle time regulation – if idle time exceeds 5 working days, remuneration may be reduced to 70% (but not below the minimum salary); if idle time exceeds 4 weeks, the employee may terminate the contract without notice and is entitled to severance pay of at least 75%.
- Post-expiry application of collective agreements – if no new collective agreement is concluded within 1 year (rather than the initially proposed 2 years) after expiry, either party may unilaterally withdraw from its application with 6 months’ prior written notice.
- Notice period during probation – termination during probation will require 1 day’s notice (currently 3 days).
Outstanding issues:
- Dismissal of a trade union member (Article 110) – three differing proposals have been considered: the Minister of Economics’ proposal to delete Article 110 entirely; a proposal by members of the Saeima to limit the trade union consent requirement to authorised trade union officials only (rather than all members). The committee’s position is to “consider jointly” with other proposals, and no final decision has been taken. This remains one of the most significant unresolved issues.
- Suspension from work (Article 58) – a proposal to reduce the maximum suspension period from 3 months to 10 working days has been “deferred”, and no final decision has been taken.
When could the act reach the second reading?
Of approximately 60 proposals, about half have been reviewed. More complex issues may be postponed until autumn or even to the next convocation of the Saeima.
Case Law Developments
Judgment of the Senate SKC-2/2026 (29.01.2026) — Non-Compete Clause
The Senate set aside the judgment of the regional court on the basis of the employer’s cassation appeal and remitted the case for a new consideration, while providing guidance on the correct interpretation of a breach of a non-compete clause.
Key findings:
- Purpose – the risk of information misuse, not competition as such. The clause protects not against the former employee working for a competitor per se, but against the risk that the employee may use the employer’s protected information for the competitor’s benefit – for example, client data, pricing, strategies, and trade secrets.
- A credible likelihood is sufficient. In such disputes, there is no need to prove that the employee actually used the information, which in practice would be disproportionately complex. It is sufficient to demonstrate that the employee could have used the information in the new position.
- “Scope of activity” is to be determined by functions, not job title. The regional court compared job titles and occupational classification codes, but the Senate rejected this approach as incorrect. The scope of a non-compete clause must be assessed by reference to the actual functions performed, irrespective of the title, and it is not necessary for all job duties to coincide.
- Specification of the protected information is a mandatory requirement in such disputes. General references to “confidential information” are insufficient. When bringing a claim against a former employee, the specific information must be identified and it must be substantiated why it meets the requirements of Article 2 of the Trade Secret Protection Act.
Practical significance: A non-compete agreement is only as strong as the precision with which it is drafted and applied. It is recommended that confidential information, including trade secrets, be specifically listed in the employment contract or an annex thereto, and that the employee’s acknowledgement of having familiarised themselves with it be obtained.
Judgment of the Senate SKC-53/2026 (09.04.2026) – Termination of the Employment Contract in the Event of Prolonged Incapacity for Work
The Senate set aside the judgment of the regional court in connection with the employer’s cassation appeal and remitted the case for a new consideration, clarifying the employer’s right to issue a new notice of termination while the previous one is still in effect. In the case at hand, the employer had terminated the employment contract on the grounds of a reduction in the number of employees, and subsequently, while the notice period was still running, issued a further notice of termination on the grounds of the employee’s prolonged incapacity for work.
Key findings:
- Two independent notices of termination may be issued. If the notice period of the first termination has not yet expired but new circumstances, independent of the first, have arisen, the employer may issue a second independent notice of termination on a new ground. The first notice need not be withdrawn, and both notices may exist in parallel. The Senate had already affirmed this approach in earlier case law, and this judgment reinforces it.
- The withdrawal procedure (Article 103(3) of the Labour Act) is not applicable here. This provision protects the employee only where the employer wishes to withdraw the notice and continue the employment relationship. If the employer does not wish to continue the employment relationship at all, but merely changes the ground for termination to a new one, the rules on the withdrawal of a notice of termination do not apply.
- The employee’s right to “freeze” the notice period has its limits. The employee may request that the period of incapacity for work not be counted towards the notice period, but only insofar as this does not block the employer’s right to terminate the employment contract on the grounds of prolonged incapacity for work (Article 101(1)(11) of the Labour Act). If the incapacity exceeds six months, the employer may rely on this ground irrespective of the employee’s request.
Practical significance: The Senate clarified that an employee’s prolonged incapacity for work arising immediately after the issuance of a notice of termination does not preclude the employer from exercising the right to terminate the employment contract on a different ground. This finding is also applicable to other grounds for termination of the employment contract.
