Latvia: Amendments to labour law
2014 saw the most important changes to the labour law in Latvia's history. Proposed amendments to make labour legislation more flexible and to adjust it to changing labour market conditions has caused heated debate between social partners. While 35 articles were amended, two amendments proposed by the employers were not adopted due to trade union resistance.
The current labour law (in Latvian) was adopted on 20 June 2001 and came into effect on 1 June 2002. Before 2001, labour relations were regulated by the labour code from the Soviet period which had been valid since 1 October 1972, and by independent legislation regulating collective bargaining.
The 2002 law was adopted to modernise labour relations in Latvia and to amalgamate major labour legislation into a single law. Rules on collective bargaining were incorporated into several chapters of the labour law.
The law has since been amended 13 times. In 2012, the Ministry of Welfare proposed the most comprehensive amendments since the adoption of the current law. Several of these amendments to the labour law (in Latvian) were initiated by employers' organisations.
Latvian labour legislation favours employees
From the beginning, the Latvian labour law was seen as being protective of employees. Flexibility and security of employment was provided on the basis of the 'not prohibited' principle. Mainly because of this, international experts consider Latvian labour legislation to be rigid. For example, the Organisation for Economic Co-operation and Development (OECD) notes that employee protection in Latvia is higher than the average in OECD countries. Local experts maintain that the flexibility of the Latvian labour market is not due to flexible rules but to non-compliance with these rules (Zasova, 2011; Krasnopjorovs, 2013).
To some extent, rigidity is determined by the role of trade unions and collective agreements in ensuring employees' rights. The experts’ opinion has encouraged employers to call for discussions on amendments to the current labour law.
Difficult debate starts in 2012
While previous amendments had been readily adopted, the latest set of amendments met serious opposition from the trade unions. Following a lengthy discussion, agreed amendments to 35 articles were adopted on 23 October 2014. However, two contested items (reducing the rate of supplementary pay for overtime; amending the rule that an employer must have the consent of a trade union before giving notice of termination of employment to an employee who is a member of that union) remained under discussion.
The amendments concern a wide range of issues and include the following provisions.
- In job advertisements, the requirement to give the name of a company was changed to require the name and the registration number of the company so as to provide more information about the employer.
- When preparing an employment contract for a 'foreigner' (except EU citizens and citizens who have free movement rights in the EU), an employer is required to ask this person to present their visa or residence permit that allows them to enter into employment in Latvia.
- An employment contract should not include restrictions on language skills, should be in Latvian and should be available for inspection by the appropriate authority.
- The Cabinet of Ministers is responsible for determining the fields of commercial activity where an employee must have an identity card.
- The maximum term of an employment contract entered into for a specified period was changed from three to five years.
- A copy of the written order detailing the reasons for the suspension for work or a reproof or reprimand should be given to the employee concerned.
- The rules on the payment of sums due to an employee are supplemented by the rule that all payments should be made not later than on the next day after dismissal in cases when immediate dismissal is necessary because an employee, when performing work, acted illegally and therefore lost the trust of the employer, or was under the influence of alcohol or a narcotic or toxic substance.
- An employer should reimburse an employee for all unused annual paid leave.
- In addition to the groups already specified in the labour law, unpaid leave may be requested by an employee who is a foster parent or cares for another child as appointed by the orphan's court, and by employees who are members of the National Guard Service.
- The procedure for returning to work before the end of parental leave has been changed and should be covered by the provisions of a collective agreement or an agreement between the employer and the employee.
- The specified period for a special regime for breast-feeding women was restricted to children under the age of two.
- The articles on aggregated working time and temporary absence were amended.
The rules on employment contracts with members of executive bodies of capital companies were repealed. Section 44(3) of the labour law previously set out a duty to conclude an employment contract for a specified period with members of executive bodies of capital companies unless they were employed on the basis of another contract governed by civil law. This requirement was recognised as wrong because members of executive bodies are elected and the labour law provisions (for instance, regarding notice of termination) do not cover elected persons.
Pay and dismissal regulation also changed
Regarding collective employment rights, the most important changes are outlined below.
- The Cabinet of Ministers will now determine how the hourly tariff rate is calculated instead of setting the hourly tariff amount.
- Eight changes are made to the rule on the calculation of average earnings.
- Deductions from pay to compensate for losses incurred by the employer should now not exceed 20% of an employee's monthly pay.
- Additional guarantees are provided for employees sent for vocational training.
- The period of advance notification of collective redundancy is reduced from 45 to 30 days.
- A new provision allows an employer to give notice of termination of an employment contract to an employee who is declared to be disabled if the employee is not able to do the work specified in the contract.
- Several restrictions on employment are introduced or changed regarding children over 15 years old, foreigners (except EU citizens and citizens who have free movement rights in the EU) and employees with a health condition.
- The rule that overtime work must not exceed 144 hours within a four-month period is changed to 'overtime work may not exceed, on average, eight hours over a seven-day period, calculated over the reporting period which does not exceed four months.
- The existing regulation on night-time work is supplemented by a rule that bans employment at night for longer than eight hours within a 24-hour period for employees whose work is associated with a special risk. This provision does not apply if aggregated working time has been prescribed.
- In cases when an employee is ordered by the employer in writing to work during the week's day of rest, the employee should be granted a day of rest at another time as requested. In addition, at least two weekly rest periods (not less than 42 consecutive hours within a seven-day period) must be provided within any 14-day period.
- Annual paid supplementary leave must be granted not only to employees who have three or more children under 16 (three working days' paid leave) but also to employees who have fewer than three children (not less than one working day's paid leave).
Social partners continue discussion on contested issues
Employers have welcomed the various changes and amendments. They are, for instance, happy with a new rule that if an employee undertakes vocational training or a capacity-building measure paid for by the employer, the employer can ask for a guarantee that the employee will stay with the company for a certain period, up to a maximum of two years. Where such an agreement is in place and the employee does leave, they will repay a proportion of the cost.
Employers admit that the longer period permitted for temporary employment contracts is also favourable.
Both the employers' and employees' sides are ready to continue the debate on the two unsolved issues:
- the rate of pay for overtime work;
- the need for trade union consent in case of the dismissal of a trade union member.
Krasnopjorovs, O. (2013). Employment protection in Latvia: rigid de jure, flexible de facto? Latvian Bank, Riga.
Zasova, A. (2011), 'Labour market institutions: an obstacle or support to Latvian labour market recovery?', Baltic Journal of Economics, Vol. 11, No. 1, pp. 5–24, DOI: 10.1080/1406099X.2011.10840488.