Latest developments in the labour law in Latvia

September 2021

In the beginning of this fall season, we would like to update you on the latest developments in the labour law which might be useful to know in your daily business.

Irrespective of current discussions about limiting the spread of Covid-19 infection, including the right of employers to take decisions that may affect the rights and interests of unvaccinated employees, the amendments to the Labour Act that came into effect on 1 August 2021 could be recognized as the latest news in the labour law. These amendments include a novel solution for covering expenses of an employee in case of remote work, and termination of employment with employees who have the status of a disabled person.  Also, the legal meaning of the minimum salary established in a general agreement is updated.

May the employee be reimbursed for the expenses related to remote work?

Amendments to the Labour Act stipulate that if an employee and an employer agree on performance of work remotely, such employee’s expenses related to performance of the work remotely shall be covered by the employer unless otherwise stipulated in an employment contract or collective bargaining agreement. This means that, contrary to the general principle prescribed by the Labour Act that the employer is under an obligation to cover all expenses related to performance of work, in this case (and via agreement with the employee) the employer may abstain from covering expenses or cover them only partially [1]. It is crucial that in such case a relevant understanding between the employer and the employee is necessary which might be incorporated in the employment contract itself or in its annexes.

As regards these amendments, one should take into account that the employer’s obligation to provide the equipment necessary for performance of the work or cover expenses related to depreciation of the equipment owned by the employee, if used for performance of the employment duties (Articles 56 and 76 of the Labour Act), is still valid. On the other hand, for the expenses incurred upon performing the employment duties remotely, an exemption is set forth that allows parties to agree on a different procedure. The parties may agree on waiving coverage of such expenses, for example, if they are insignificant, if the employer has increased the employee’s salary due to the work being carried out remotely, or if there are other pertinent circumstances. If such expenses of the employee are covered, we would recommend the parties to clearly agree what these expenses are, the cap amount to be reimbursed, and to agree on the procedure for the reimbursement. Please note that these amendments do not change the employer’s obligation to cover expenses related to compliance with the labour safety and protection requirements pursuant to the Labour Protection Act.

The notion of remote work contained in the Labour Act is identical to the one prescribed by the Labour Protection Act. In our experience, the employers equate remote work to working from home; however, one should take into account that the notion included in the law is more broad. Namely, remote work can be done in other places as well, for example, in cafes or public transport. Therefore, if it is important for the employer that remote work is conducted only from the employee’s home or one specific remote work place, this must be expressly provided for in the employment contract.

In this context, the employers must also be aware of the fact that in absence of a specific agreement on where exactly the work is to be performed, upon working remotely the employee may even decide to perform the work from abroad. In such case the employer may be burdened with additional unintended duties – to register as an employer in such foreign countries or provide the employee with a visa permitting such work, as well as issues concerning tax, labour safety and labour protection might arise. The situation where an employee works from abroad may affect the law and legal framework governing the employment. Therefore, to avoid such misunderstandings, we strongly advise that the agreement with the employee shall mandate that the employee shall promptly notify the employer about the intent to remotely work abroad and that such requires employer prior approval. We have encountered cases where employers ban their employees from working remotely in another country.

Termination of employment with employees who have the status of a disabled person

After long years of discussions, paragraph two of Article 109 has been deleted from the Labour Act – it stipulated that the employer is prohibited from terminating employment of an employee having the status of a disabled person, except for certain specific cases stipulated in the Labour Act. It was concluded during discussions between lawmakers and social partners that the current legal framework does not protect such employees, but on the contrary – limits their access to the employment market.  Thus, it was decided that the provision did not serve its intended social function and was removed from the Labour Act. Now employers will be able to terminate employment with disabled persons also in cases where redundancy of employees is contemplated or in case an employee who previously performed the respective work is reinstated to the same position. Keep in mind though, that in case of redundancy of employees and upon performing evaluation of employees, the disabled employees still have a priority to retain employment in accordance with subparagraph 6 of paragraph two of Article 108 of the Labour Act.

In order to balance rights of disabled employees the Labour Act establishes longer notice periods. Paragraph one of Article 103 of the Labour Act is supplemented with subparagraph 4 which stipulates a 2-month notice period if the termination notice is served to a disabled employee in the following cases: the employee who previously performed the work is reinstated to the position, there is a redundancy of employees carried out, or the employee does not perform work for a lengthy period due to a temporary incapacity to work (subparagraphs 8, 9, and 11 of paragraph one of Article 101 of the Labour Act). On the other hand, it is stipulated in the Transitional Provisions of the amendments that if the employment relationship is established before 31 July, 2021, then the employer must observe a 3-month notice period. Also in these cases, the employee and the employer may, after the termination notice is served, agree separately on reduction of the notice period in line with paragraph four of Article 103 of the Labour Act.

In order to facilitate employment of disabled persons the amendments also stipulate that upon request of such employees they may have part-time employment stipulated (paragraph two of Article 134 of the Labour Act). The purpose of these amendments is an attempt to integrate these persons on the employment market ensuring a possibility for them to work according to their abilities and health condition.

General agreement and the notion of minimum salary

The amendments provide that the minimum salary set out by a general agreement within the framework of employment shall have the same legal consequences as the statutory minimum salary. These amendments have been introduced in order to facilitate legal certainty, to avoid misunderstandings about the notion of the minimum salary, taking into account that the minimum salary applies to all employers in the respective sector, also those which have not participated in conclusion of a general agreement. This means that henceforth the State Labour Inspectorate will be authorised to impose a fine on the employer, if it does not disburse a salary in line with provisions of the general agreement.

Please note that there is a difference whether the employer makes deductions in accordance with Articles 78-80 of the Labour Act, or whether those are performed by a bailiff under the procedure set out by the Civil Procedure Act. In the first instance, when the employer is the one making deductions, the employee shall have the remuneration retained in the amount of the minimum monthly salary in any case; consequently, in the amount that is stipulated by the general agreement. However, if the bailiff carries out the recovery from the debtor’s property, the employee shall have the remuneration retained in the amount of the minimum salary set by the state.

If you have any queries with respect to the abovementioned latest developments, please contact us.


[1] In accordance with Paragraph 159 of the Transitional Provisions of the Law “On Personal Income Tax” the employee’s expenses related to the performance of remote work, which are covered by the employer in accordance with the Labour Act, are exempted from taxation with payroll tax in 2021, if their total amount for full – time work does not exceed € 30 per month. See also State Revenue Service “Personal Income Tax on Compensation for Remote Work Expenses”.

 

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Irina Kostina

Associate Partner

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Latvia

Ints Skaldis

Associate

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Latvia