The latest developments in the Latvian labour law

In this edition we highlight the latest developments in the Latvian labour law related to the following:

• Amendments to the Immigration Act;
• New Cabinet of Ministers Regulation “Procedure for Issuance and Annulment of Sick-Leave Certificates”;
• Introduction directives for protection of platform workers and provision of equal pay;
• The latest notions in the case law of the Supreme Court.

We believe that the above listed developments will affect most companies and their daily operations. We would therefore like to draw your attention to the issues that need to be considered now and for which you should prepare in good time.

I. AMENDMENTS TO THE IMMIGRATION ACT – THE MOST CRUCIAL CHANGES FOR EMPLOYERS
On 8June 2024, amendments to the Immigration Act came into effect. The amendments contain several changes that are crucial for employers in Latvia. The amendments introduce stricter requirements and obligations towards employment and accommodation of foreign nationals. They also mitigate the risks of illegal immigration and dishonest actions.
1. Modifications in a procedure for invitation of foreign nationals. As of 1 January 2025, employers must obtain a confirmation from the State Employment Agency (SEA) before inviting foreign nationals to work in Latvia. As before, the employer is required to publish information about a vacancy on the SEA’s vacancy portal primarily to provide an opportunity for Latvian residents to apply for the vacant position.
A regulation of the Cabinet of Ministers is currently being developed. It will set forth a procedure for the SEA to select and provide an employer with information about candidates for a vacancy, as well as procedure for deciding on the necessity to invite the foreign national. The draft regulation of the Cabinet of Ministers will stipulate an obligation of the employer to collaborate with the SEA in the recruitment process of candidates. This will include providing clear reasons why the candidates proposed by SEA are not suitable for the announced vacancy.
Effective 1 January 2025, the SEA’s decision on the necessity of inviting the foreign national will be a prerequisite for employers to execute invitations for foreign nationals to work in Latvia.
2. Development of a Simplified Workforce Recruitment Procedure. The amendments provide for the introduction of the “Green Corridor” or a simplified workforce recruitment procedure for employers operating in certain industries in order to reduce the administrative burden associated with the workforce recruitment procedure.
The draft regulation of the Cabinet of Ministers stipulates that the procedure will apply to the employers who operate, implement or consider implementing investment projects in certain industries or export their production output. It will be possible to apply for the simplified workforce recruitment procedure a the Investment and Development Agency of Latvia which will evaluate the project implemented by such employer or the suitability of the export for the application of the procedure.

3. Application of Prohibition on Inviting Foreign Nationals Due to Offences. The amendments specify the conditions under which employers may face a sanction– a prohibition on inviting foreign nationals to work in Latvia for a certain period. The duration of the prohibition will depend on the nature of offence committed:

o One year: if the employer provides false data or fails to comply with the information obligation;
o Two years: if the foreign national’s stay does not align with the conditions specified in the invitation;
o Three years: if the employer breaches laws and regulations related to work remuneration or employment.

4. Establishing Administrative Liability for Company Officials and Employees. The amendments stipulate that the officials and employees responsible for inviting foreign nationals can be held administratively liable for several offences. These include noncompliance with the stated purpose of the invitation in visa or a residence permit; failure to cover accommodation and return expenses (if such obligation occurs); as well as for violations of employment laws and regulations, failure to provide work remuneration; and failure to pay compensations and fulfil other obligations.
As a sanction for the said offence, individuals who hold relevant positions in the respective legal entity will be subject to a fine ranging from EUR 210 to EUR 500 along with a prohibition from holding certain positions for a period of one year.

[1] C20 Manufacture of chemicals and chemical products; C21 Pharmaceuticals; C26 Manufacture of computer, electronic and optical products; C27 Manufacture of electrical equipment; C28 Manufacture of machinery and equipment n.e.c.; C29 Manufacture of motor vehicles, trailers and semi-trailers; C30 Manufacture of other transport equipment; H50 Water transport; H51 Air transport; J58 Publishing activities; J60 Programming and broadcasting activities;  J61 Telecommunications;  J62 Computer programming, consultancy and related activities;  J63 Information service activities;  K64  Financial service activities, except insurance and pension funding;  K65  Insurance, reinsurance and pension funding, except compulsory social security;  K66 Activities auxiliary to financial services and insurance activities;  M69 Legal activities and accounting;  M72 Scientific research and development;  M73 Advertising and market research; M74 Other professional, scientific and technical activities.

II. NEW CABINET OF MINISTERS REGULATION “PROECEDURE FOR ISSUANCE AND ANNULMENT OF SICK-LEAVE CERTIFICATES”
The new Cabinet of Ministers Regulation No 409 “Procedure for Issuance and Annulment of Sick-Leave Certificates” (hereinafter, the Cabinet Regulation) came into effect on 28 of June of this year. This Regulation introduces certain changes to the procedure of issuance of sick-leave certificates (hereinafter, SLC).
The purpose for development of the Cabinet Regulation was to establish cases when a dentist and a midwife, in addition to physicians and physician’s assistants , are authorized to issue the SLC. It also updates and specifies various issues related to the SLC issuance procedure.
The following provisions represent the most significant updates:
1. Issuance Timing – Previously, the Cabinet Regulation did not specify a time for issuance of the SLC, leaving room for interpretation, for example, retroactive issuance of the SLC. The new Regulation requires that, upon an agreement with the individuals for whom it is issued the SLC must be issued from the day the individual first approached the health care organization (HCO) with retroactive issuance allowed only under specific circumstances.
2. Monitoring Long-Term Illness: To improve monitoring and controlling patients with long-term illnesses; further on, if the sick-leave period lasts for more than 90 days the physician must conduct an in-person evaluation of the patient’s health condition and work incapacity.
3. Recognition of Foreign Documents: The SLC issued abroad shall be recognized without requiring to issue a new SLC for the respective period, provided that (a) the document clearly indicates the incapacity period and includes information about the issuing healthcare organization and its contact details, or, if the document received is prepared on a Form E116 Medical Report related to Incapacity for Work ; (b) it meets the requirements for document legalization.
4. Complaint Submission: The new regulation specifies a deadline for submitting complaints to the Health Inspectorate regarding potentially incorrect SLCs. Complaints can be filed if the SLC in question was issued within the last two years before the complaint is received by the authority.
5. Registration Deadline: If technical issues prevent the registration of an SLC in the e-health system on the first day of sick leave, the SLC must now be registered within 2 business days instead of the previous 5 business days.
It should be acknowledged that there are still cases of the SLCs being issued as soon as employees have problems at a workplace. Unfortunately, the Cabinet Regulation does not resolve this issue. Therefore, we would recommend employers to approach the Health Inspectorate if there is a suspicion that a SLC has been issued without a justified reason, as this is the only way how to resolve the issue of unjustified SLCs and to draw the attention of government authorities to this issue.

III. EUROPEAN UNION EQUAL PAY DIRECTIVE

Although in our previous newsletter we informed about the adoption of the equal pay and pay transparency directive (No 2023/970 / Equal Pay Directive) and Latvia’s obligation to transpose it into the national law by 7 June 2026, we would like to remind once again of the aspects that employers should consider in good time – before implementation of the Equal Pay Directive.

Preparation for the introduction of the Directive. Employers should bear in mind that the introduction of the Equal Pay Directive will require the transparency of remuneration prior to the commencement of the employment relationship, as well as the transparency of the policy for determining and developing remuneration within the scope of the employment relationship. It is crucial that in the context of remuneration transparency, not only equal pay for men and women for the same work, but also for work of equal value is considered.

Therefore, it would be worthwhile for employers to prepare and revise the pay structure now, so that it is already possible to assess whether the situation of employees is comparable in terms of the value of work, based on objective, gender-neutral criteria. Employers need to review the current positions in a company in a timely manner so that they can identify jobs of equal value taking into account the required skills, qualifications, effort, responsibilities and work conditions , and in the respective case – any other factors which are crucial for the specific professional or job position.

It is important to remember that while the Equal Pay Directive focuses primarily on ensuring equal pay for men and women, employers must also adhere to the principles of equal rights and non-discrimination as outlined in the Labour Act (Articles 7 and 29). This means that when determining remuneration, employers must use only objective criteria and may not consider aspects that have the potential to be discriminatory.

IV. EUROPEAN UNION DIRECTIVE FOR PROTECTION OF PLATFORM WORKERS
The European Union has taken steps to establish a legal framework and improve working conditions of workers who typically work through digital platforms, such as car services, food delivery and freelancer positions on the market. A directive drafted by the European Commission is expected to be adopted this year with an indicative implementation date of 2026.
1. Key changes for employers. One of the most important changes to be introduced by the directive is the criteria for determining the status of platform workers. Platforms will be subject to certain criteria to identify whether workers are to be considered employees or self-employed. The definition of the criteria is left to the Member States; however will mainly be based on factors such as recording / control of working time, payment terms, level of supervision of the workforce. Employers need to be prepared for the risk that platform workers may be reclassified as employees.

In addition, the Directive will   impose an obligation about organization of the work of platforms. For example, platforms will have to disclose the algorithms used in decision-making processes that affect workers, for example, task allocation, pricing and product evaluation They will also have to ensure that these algorithms are fair, non-discriminatory and comprehensible.

2. Preparing for the implementation of the Directive. It would be advisable for employers to start reviewing and evaluating existing contracts and draft contracts in order to determine whether the Directive’s criteria for determining the status of workers may lead to changes in the status of individuals employed currently or in the future. It is advisable for employers to evaluate existing contracts in the light of the criteria set out in the Directive and, if necessary, to make the necessary changes and adjustments. It is advisable for employers to draft internal procedure or guidelines to justify and explain the nature and content of the relationship with the workforce.
It is advisable for employers to start evaluating and reviewing the algorithms used to manage the workforce and introduce procedures to ensure that these algorithms operate on equal basis and transparently. Employers need to be prepared that information on the operating of algorithms may have to be disclosed to either workers or supervisory and monitoring authorities for example to ensure that work organisation/task sharing is applied equally across the platform’s workforce.

V. AMENDMENTS TO THE LABOUR ACT
A draft act is currently in in its third reading at Saeima (the Parliament), which provides for the introduction of amendments to the Labour Act to consolidate the use of the official language at the workplace and to ensure that requirements for fluency in a foreign language are set only in justified cases. The main changes for employers include:
1. Language proficiency requirements in job advertisements and interviews. The draft act provides for consolidation of use of the official language at the workplace considering the current requirement that it is prohibited to require foreign language skills in job advertisements, except in cases when it is reasonably justified for performance of work duties. It is planned to stipulate in the amendments that it will be prohibited to require foreign language skills in job advertisements if the job is related to production, provision of services or other activities on the domestic market, except for cases where the performance of the job is related to foreign countries or there are other objective conditions. It is prescribed that during job interviews it will be prohibited to asks questions about knowledge of foreign languages, if it is not objectively necessary for performance of the job.
2. Conditions of employment contracts. The draft act stipulates that it will be allowed to include foreign language requirements in employment contracts only if there is a clear justification for their necessity, for example, if the work is related to foreign countries. If no foreign language is necessary for performance of job duties, the employee has the right to use the official language.
3. Employer Decrees. Employers will not have the right to require an employee to use a particular foreign language based on an internal order, unless it is necessary for the performance of job duties. The use of the Russian language for the performance of job duties may be required by an employer only if it is objectively necessary or the work is related to a foreign country.
The Ministry of Welfare is currently working on further amendments to the Labour Act with the aim of making the legal framework of certain employment relationships more flexible. However, it is currently difficult to predict when these amendments might reach the Parliament. We will continue to monitor developments and will keep you informed.

VI. JUDGMENT OF THE SENATE IN CASE No SKC-410/2024

On 17 June 2024, the Department of Civil Cases of the Senate of the Supreme Court reviewed a case concerning the setting of a time limit for an employer to bring an action for termination of an employment contract, when a trade union does not approve a notice of termination. The court ruled that when applying Article 110(4) of the Labour Act on the one-month deadline for bringing an action for termination of employment relationship, it is crucial to establish whether the union’s non-approval is absolute or conditional – if an offer is made to consider an out-of-court solution in accordance with the employee’s interests in order to avoid the termination.

Pursuant to the decision, if the trade union does not agree to the dismissal, while proposes considering an alternative solution, for example, the possibility of transferring the employee to another position, the countdown of the period for bringing the action would begin from the moment the employer receives the union’s absolute refusal, where no alternative solutions are considered or proposed. This means, that a dialogue between the employer and the trade union aimed at finding the most favourable solution for the employee can have a significant impact on the starting date of the preclusive period for bringing an action set out in Article 110(4) of the Labour Act.

Moreover, the case law emphasises that only the honest exercise of rights deserves a protection of the court. Therefore, it is also reasonable to assess whether any actions have been taken that would facilitate the commencement of the time limit set out in Article 110(4) of the Labour Act regarding the determination of the starting date of the statute of limitations.

We do hope that the information provided will be advantageous for you, and if you have any questions regarding these latest developments, please contact us.

Yours sincerely,

Irina un Ints