Latest developments in the labour law in Latvia

March 2022

In these difficult times we would like to both inform you of the latest developments in Latvian employment law, as well as to consider the possibilities of providing support to citizens of Ukraine by providing them with employment in Latvia.

Therefore, in addition to a summary about the legal framework for support of Ukrainian citizens, we would like to draw your attention to individual issues that are important for entrepreneurs to know as the effects of the Covid-19 pandemic are changing, and related amendments to employment law have already come into effect or are being considered.

Employment of Ukrainians in Latvia

In order to protect the economic and social interests of Ukrainians, on 3 March 2022 the Parliament (Saeima) of the Republic of Latvia passed a legislative act for the support of Ukrainian citizens (hereafter, the Act). The Act stipulates, among other matters, a procedure by which Ukrainians can obtain long-term visas, their right to employment as well as the manner in which social and other types of support is provided.

In order to ensure the economic interests of Ukrainians, the Act prescribes that the Office for Citizenship and Migration Affairs issues visas and residence permits to those Ukrainian civilians who have left Ukraine due to the war. The Act also provides for the issuance of long-term visas or residence permits to these persons for 1 year. Concurrently with granting of the visas or residence permits, those Ukrainian civilians who have reached the age of 15 years have the right to employment without restrictions.

After receipt of the visas or residence permits, Ukrainians will be eligible to be employed in the Republic of Latvia. Employers must ascertain that before commencement of work the citizens of Ukraine have received the right to employment. To ensure Ukrainians’ right to work without delay, the Parliament (Saeima) on 24 March 2022 will review draft amendments, which provide for the Ukrainians’ right to work with employer up to 30 days without visa or residence permit if the employee has a valid travel document and has filed application for visa in 10 days after commencement of employment. that the Act stipulates that an employer is entitled to employ Ukrainian civilians for the first three months after conclusion of an employment contract without them undergoing the mandatory primary health examination, except for work in special conditions.

The Act stipulates that employer does need not register a vacancy with the Employment State Agency (hereafter, ESA) in order to employ Ukrainians. Moreover, employment of Ukrainians will not be subject to the requirement of executing invitations for employment in the Republic of Latvia.

While their long-term visa or residence permit is in effect, a Ukrainian will not be subject to the requirements set by laws and regulations to ensure work remuneration that is not less than the average gross remuneration in Latvia in the previous year. The foregoing does not release the employer from an obligation to ensure the current minimum work remuneration pursuant to the laws of the Republic of Latvia.

Upon hiring a Ukrainian, the employer is entitled to receive a subsidy from ESA in the amount of one minimum monthly salary.

Employers should specify that announcements of vacancies are intended for refugees from Ukraine when posting them on the website of ESA. ESA will provide consultations and assistance to Ukrainian refugees in order to ensure their recruitment in Latvia and communication with employers. Requirements of the knowledge of the official language will not be applied to Ukrainian refugees unless it impedes the performance of their job responsibilities.

Please note that during the period while the Ukrainian employees’ long-term visa and temporary residence permit is in effect, employers may still submit documents for the approval of an invitation for employees from Ukraine to be able to obtain a temporary residence period valid for 5 years under the general procedure established by the Immigration Act.

Remote work – will it be the new normal in the future as well?

Even through remote work or teleworking was not unheard of before the Covid-19 pandemic; during the pandemic amendments to the Labour Protection Act and the Labour Act came into effect defining remote work and related issues, while the majority of employers faced challenges related to organizing remote work. It seems that a considerable number of employers still cannot to decide whether remote work will become a permanent component of their operational routine.

Therefore, in this section we have included a brief description of issues to be considered when organizing remote work policies:

  • Employers should evaluate whether the work could be performed remotely only or whether a “hybrid model” could be applied; namely, the work is performed both remotely and at the office;
  • Employers must take into account that an agreement on the workplace is also mandatory with regard to remote work. Therefore, an employment contract should specifically envisage whether in case of remote work the employee must work at some specified location, or the job can be performed at various places;
  • It is advisable to provide employers with the right to change the workplace by order establishing that it is, for instance, at the office, thus avoiding a situation where due to change of circumstances the employer is unable to require that the employee perform his or her official duties at the office;
  • Taking into account specifics of each enterprise, one should evaluate whether strictly established working hours are necessary, or flexible working hours are allowed, or else, a “hybrid model” would be more efficient where only part of the working time is strictly established;
  • It is important to distinguish between the requirements of job equipment and costs related to performance of work remotely. Pursuant to the Labour Act, an employer is under an obligation to provide equipment for the job in any case (or agree with an employee about use of the latter’s equipment), whereas with respect to costs associated with performance of the work duties the Labour Act stipulates a possibility for the parties to reach an agreement whether such costs are covered;
  • Even though the issues of labour safety and protection are still an obligation of the employer; nevertheless, the Labour Protection Act prescribes a duty for the employee to cooperate. Therefore, it is worthwhile to prescribe in an employment contract that the employer is entitled to establish the workplace at the office in case the employee fails to cooperate in the prevention of risks related to the work environment;
  • The issue of confidentiality becomes ever more critical if the employee works remotely. The employer should implement a clear confidentiality policy for teleworking, specifically prescribing a procedure for both safeguarding of documents and use of computers, as well as other similar issues.

Whistleblowing Act

On February 4 the new Whistleblowing Act came into effect. This new legislative act was adopted since a great deal of the previous legislative act needed to be amended due to the obligation to transpose Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law.

Even though the structure and content of the act have not changed significantly; there are certain aspects which are important for employers to take note of. The new act updates both the terms used and the areas and breaches for which one can blow the whistle. The employer has a duty to appoint a person in charge of handling of whistle-blowers’ reports and perform their prima facie evaluation, as well as anonymization of these reports. The new act also prescribes sanctions for interfering with whistleblowing, which means that a situation where submission or reviewing of whistleblowing reports is impeded is not allowed.

We recommend that those employers who have a mandatory obligation to develop an internal whistleblowing system revise and update their current legal framework. Since the internal whistleblowing system can be provided by a third party (e.g., certified auditors or attorneys-in-law) the employer should evaluate this option as well. In any case it is important to take the obligation to develop the internal whistleblowing system seriously not only because it is an obligation imposed by law but also because it may be of assistance in avoiding damage to the company’s goodwill or other losses.

Amendments contemplated to the Labour Act

Currently draft amendments to the Labour Act were approved by the Cabinet of Ministers on 15 March 2022 before they are delivered to the Parliament for its vote. Therefore, below is a description of the key modifications in these amendments, that might be of interest for employers:

  • A possibility prescribed for parties to agree in an employment contract that the employee himself or herself may establish their workplace.
  • It will be possible to agree with a trade union to establish a probationary period which is longer than three months but does not exceed six months, if the overall level of employee protection is not reduced.
  • A requirement that, if the work schedule of an employee (exact time when the employee begins and finishes their work) cannot be fully anticipated, then employment of the employee is allowed only if the work is performed during pre-set reference hours and days (a time period on certain days when the work can be performed upon the employer’s request), and the employer has duly communicated the accurate timeline for performance of the work to the employee.
  • A list of information that the employer must provide to an employee in writing before that employee is sent on a business trip. Namely, not only is there a duty to inform about the time and place of the business trip but also about the currency in which the work remuneration and allowances related to official travel will be disbursed, along with the possibility of repatriation, if such is offered, if the business trip or official travel lasts longer than 4 consecutive weeks;
  • The draft amendments also allow the employee a right to request flexibility in the use of child-care leave. The employer is under an obligation to evaluate such request on the employee’s part and respond within one month of the request. The purpose of these amendments is to ensure quality child-care and the presence of parents to the extent possible. Therefore, the employee will be entitled to request child-care leave in various manners, for instance, using it every second week, as a result of which the employee will be able to work on part-time basis.

Please note that modifications are possible as these are draft amendments at this stage. The full text of the legislative bill of draft amendments is available on the website of the Cabinet of Ministers.

Latest updates in court practice

Employee’s notice of termination for a cause

In its judgement of 16 December 2021 in case No SKC-1060/2021, the Senate of the Supreme Court pointed out that in case an employee has terminated their employment relationship for cause (paragraph five of Article 100 of the Labour Act), the employee has the burden of proof to show that such cause exists for the notice of termination, if he or she wishes to receive a severance pay. The only exception when the employer has the burden of proof is when the termination notice is related to breach of the ban of differentiated treatment on the employer’s part.

Furthermore, the Senate noted that the precondition for eligibility to severance pay is the unlawful nature of the employer’s actions. Moreover, such unlawful actions must be associated with a violation of moral and ethical standards. Finally, not all actions which are contradictory to moral and ethical standards may be deemed to entitle an employee to severance pay. One must establish that the action creates a threat to the employee.

Posting of employees and per diem

On 20 January 2022 and 17 February 2022 as regards cases No SKC-52/2022 and No SKC-83/2022, the Senate of the Supreme Court has provided an evaluation of the notion of work remuneration and per diem for employees on business trips. The Senate has pointed out that if it is in line with the legal provisions of the country whereto the employee is posted, the per diem can be deemed to be part of the minimum salary in the meaning of Article 142 of the Labour Act.

The Senate has also concluded that including the per diem and compensations due to the employee in the employee’s work remuneration is contradictory to the law because these payments are not taxed with the state social security mandatory contributions and the personal income tax. The Senate has explained that the per diem during business trips is not part of the work remuneration under the Labour Act. The amount of the work remuneration must be specified in the employment contract, and it cannot be mixed with other payments due to the employee from the employer. Furthermore, depending on whether the employee performs the work in Latvia or is posted elsewhere, the inclusion of the per diem and costs in the work remuneration may be significantly impact the employee’s social security.

However, it is possible for an employer and an employee to agree that in case of being posted abroad, the share of the minimum salary of the country whereto the employee is posted also comprises the per diem. Pursuant to the judgment of the Senate, such an agreement would not be contradictory to Article 142 of the Labour Act, if the per diem was not paid as an additional payment and the employer had covered costs related to posting of the employee, and the employee had agreed with that, because in such case there would be no reason to consider that the employer had impaired the social protection of the employee.

It should be noted that pursuant to Section 8.1 of 12 October 2010 Cabinet of Ministers Regulation No 969 “Procedure for compensation of costs associated with business trips”, the purpose of the per diem (daily allowance) is to cover the costs of the employee. Consequently, in case of the agreement described above, there is a risk that per diem would be taxed, because it would not be, in fact, intended to cover the costs.

If you have any queries with regard to these latest updates, please feel free to contact us.

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Irina Kostina

Associate Partner

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Latvia

Ints Skaldis

Associate

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Latvia