The latest developments in employment law

Amendments to the Labour Act that came into effect on 1 August 2022

Amendments to the Labour Act (hereafter, LA) that came into effect on 1 August 2022, are large-scale and raised a lot of questions before even being adopted. Therefore, we would like to emphasize the most crucial changes and provide some additional explanation of their application, hoping this will help in your day-to-day activities. If you need additional advice on these or other amendments to LA, we will be delighted to assist.

Part-time work and for a large part of fully unpredictable work schedule

LA states that if a part-time work is contracted, and the work schedule is not predictable, for a large part or fully, it shall be noted that the work schedule is variable, as well as include information about the contracted working time that is the guaranteed paid working time on a monthly basis, as well as information as to the time when the employee may perform the work or he or she would be under an obligation to perform the work, and information about the minimum notice period before commencement of the work or cancellation thereof. These amendments introduce a new concept “for the most part or fully unpredictable working schedule”, which, probably, could cause confusion. Therefore, it should firstly be emphasized that this legal framework applies only to part-time employees; secondly, the work schedule which is completely unpredictable or to a large part unpredictable shall mean a schedule where the employee is assigned to perform work on on-demand basis, for example, cleaning at a sauna. Accordingly, it appears that such legal provisions would be applicable in comparatively rare cases.

Terms of the probationary period

The general legal framework that the maximum duration of the probationary period is three (3) months remains unchanged; however, now LA stipulates certain exemptions: (a) if a collective bargaining agreement is concluded with the employee trade union it will be possible to reach an agreement on a longer probationary period, even up to six (6) months; (b) if a fixed-term employment agreement is concluded which is not longer than six (6) months, then the probationary period may not be longer than one (1) month; whereas, if the term of the agreement is one (1) year, then the maximum probationary period shall be two (2) months. One should take into account that these legal provisions pertain to employment agreements that are concluded after the effective date of the amendments to LA.  Please also review the example of the case law described below in this respect.

Special terms of the work remuneration

The amendments stipulate that if the employer as a subcontractor has complete or partial performance of contractual obligations assigned concerning performance of construction work with respect to constructions of buildings or specialized construction work, whereas the employer has failed to fulfil the duty to pay a work remuneration to an employee by the due date set out by the employment agreement or the collective bargaining agreement, the employee shall have a right to claim disbursement of the unpaid work remuneration from the person who has assigned the employer directly for complete or partial performance of the contractual obligations. Clearly, this legal provision applies only to performance of construction work on buildings and specialized construction work. Claiming the work remuneration from the person who has assigned performance of the contractual obligations to the employer in question means that there must be at least a decision of a bailiff on impossibility of execution by the employer, in order to bring the claim against the person who had assigned the contractual obligations to the employer. Entrepreneurs who assign performance of contractual obligations to subcontractors should evaluate provisions of their agreements in order to establish a control mechanism over performance of contractual obligations by the subcontractors in view of the work remuneration which will, of course, create an additional administrative burden; however, it is advisable to include such a mechanism in order to minimize the possible risk of recovery.

Caregiver’s leave and right to adjustment of the work organization

Amendments to  LA stipulate that henceforth, where the employee who has a child up to eight (8) years of age or needs to take personal care of a spouse, parent, child or other close family member, or a person who shares a household with the employee and who due to a serious medical reason needs significant care or support, then such employee shall have a right to ask the employer to establish an adjustment of the work organization. This means that the employer is under an obligation to evaluate such request; however, it is not obliged to satisfy such request, if such adjustments are not possible because of the nature of the work; for example, a stacker will have no possibility to work from home, whereas such work adjustment, most probably, will be possible for an accountant. The employer also has a right to request a document to be presented where the existence of medical reason is confirmed along with the necessity for significant care or support (such as a certificate from a hospital).

Furthermore, such persons who need to care for their family members will, most probably, have a right to a five-day vacation without retention of salary. It is crucial to note that according to the opinion of the Ministry of Welfare and the State Labour Inspectorate, a close family member is defined as any person with whom the employee maintains a close relationship and permanent  contacts; therefore, the legal framework contained in the Act on the Remuneration of Officials and Employees of Government and Municipal Authorities is argued to be not applicable by analogy; the definition of family members there includes a spouse, a child, a grandchild, a parent, a grandparent, an adopted parent, or an adopted child, a sibling, a half-sibling. 

Latest developments in the case law

We would like to draw your attention to certain latest examples of the case law of the Supreme Court which, in view of our experience, might explain certain issues that many employers have encountered.

SKC-58/2022 – in its judgment the Supreme Court has noted that if an employment relationship is formally terminated and repeatedly, promptly established with one and the same employee, without the employee actually ceasing to perform the work, then there is reason to consider whether there has been an abuse of the right to establish probationary period on the part of the employer (which would aggravate the legal status of the employee). The issue of repeated probationary period frequently arises in cases when another – higher – position is offered to an employee, while the employer still wishes to ascertain the suitability of the employee for that higher position. LA does not provide for such an option; therefore, in such cases, if the employee fails in performing his or her new employment duties, there would be an opportunity to consider termination of the employment relationship due to the fact that the employee does not have sufficient professional skills for performance of the contracted work.

SKC-546/2022 – in this judgment the Supreme Court has evaluated grounds for employment relationship with a member of a management board and has repeatedly emphasized that a member of the management board acts on the grounds of an authorization from the company; consequently, any assignment given to him or her for the purpose to enforce interests of the company should be evaluated based on the Commercial Act and other laws governing legal relationship between a principal and an attorney. The legal nature of this relationship is not affected by the fact that the parties have themselves named the performance of the functions of a board member and remuneration therefore to be an employment agreement. This Supreme Court judgment reiterates that the legal relationship with a member of a management board is a relationship of authorisation; therefore, situations should be avoided where a person performs functions of identical nature based on two different and mutually exclusive legal grounds (authorisation and employment).

Guidelines for the Whistleblowers Act 

Along with promulgation of the new Whistleblowers Act on 4 February 2022, questions arose about its application because, even though it is reminiscent of the previous act both in terms of structure and content, it nevertheless contains certain novel provisions.

Therefore, Irina Kostina, Attorney-at-Law at Ellex Klavins, and Ints Skaldis, Associate Attorney-at-Law, have been engaged in creating guidelines which provide an overview of crucial aspects of the development of an internal whistleblowing system.

Currently, the first International Employment Lawyer’s Guide on whistleblowing issues is available which summarizes legal framework of several countries governing whistleblowing, and where regular updates and supplements are contemplated. The guide is available in English. The guide can be viewed at the following link:

https://www.internationalemploymentlawyer.com/guidetowhistleblowing?f%5B0%5D=jurisdiction%3A558.

Irina Kostina and Ints Skaldis are also authors of a guideline for internal whistleblowing system which is available in the portal www.itiesibas.lv. Currently updates to the guide are underway resulting from the new act adopted on the 4th of February this year, and it will be available to readers very soon. The guide can be viewed at the following link:

https://itiesibas.lv/irokasgramatas/visas-irokasgramatas.

We invite you take the obligation imposed by the act seriously, and to develop an internal whistleblowing system not only because it is an obligation established by law, but also as a supporting mechanism for effective and responsible corporate governance.  We will be glad to assist in developing or updating such system; we can ensure functioning of such system as a third party, provide legal assistance in handling of whistleblower events, and/or in the process of internal investigation.

 

 

 

TEADMISTE JUHTIMISE SPETSIALISTI

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Ints Skaldis

Associate

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Latvia

Irina Kostina

Associate Partner

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Latvia