Latvia: Amendments to labour law promote sectoral collective bargaining
Amendments to the Latvian labour law (from 16 August 2017) are expected to promote collective bargaining at sector and territorial levels and to strengthen the role of collective agreements, although they may be more favourable for employers than employees.
Main changes introduced
As part of the changes to the labour law, several new norms favourable for employers, as well as employees are introduced, and some norms are clarified. Calculation of the hourly wage rate is adjusted to the number of working hours in a particular month. Mariners are now included in the collective redundancy regulation, and special norms are introduced for this group regarding transfer of an undertaking. On 27 July 2017, the Latvian Parliament adopted amendments to 30 sections of the labour law, which came into force on 16 August. Section 18 of the law, about parties to a collective agreement, was rewritten.
Section 18 amendments
- Companies or a group of companies may now negotiate and conclude sector-level collective agreements (previously, only employer organisations and their associations could do this).
- For employees, the negotiating partner for a sector-level collective agreement is the trade union association that unites the largest number of workers in the country, or the trade union that is included in the confederation that unites the largest number of workers in the country (previously, this could be the employees’ trade union or the association of unions that it belonged to).
- A sector-level agreement, where employers are represented by companies or a group of companies may be expanded to cover all employers in the sector, only if both sides meet the law’s representativeness criteria, which have not been changed.
- Other employers or groups of employers are eligible to join existing agreements and are included in the count for representativeness criteria (new norm). Representativeness is now calculated using data from the Central Statistical Bureau of Latvia (CSP). Prior to this, the basis for calculation had not been established.
- An employer, or employer organisation, is expected to comply with commitments made in a sector-level collective agreement, even if an employer leaves the employer organisation (or if an employer organisation leaves its umbrella organisation).
There is now a time lapse for a collective agreement to come into effect – of ‘no earlier than three months from the day of its publication’. Previously, a collective agreement came into effect on the day of publication.
The role of collective agreements is also strengthened by adding the condition ‘unless otherwise provided for by an employment contract or collective agreement’ to the norm ‘A break in work is not included as working time’ (Section 145). This means that, within company-level collective agreements, breaks can be included as working time.
Amendments favourable for employers
New norm in Section 58: Employers are now permitted to terminate an employee’s contract while an employee is suspended from work.
Changes to Section 96: An employer who gives an employee notice of termination while the employee is undergoing training can now claim back any expenses the employer has paid for. Previously, an employer could only claim for lost training expenses if the employee gave notice.
Changes to Section 103: An employer may terminate an employment contract immediately if the employee is too ill to carry out their work (and is certified as such by a doctor), unless the collective agreement or employee’s contract specifies a longer time period for a notice of termination. Previously, the employer had to give 10 days’ notice.
New norm in Section 136: Overtime pay may be replaced by a proportional amount of paid rest time.
New norm in Section 151: Employees can now take annual paid supplementary leave only until the date when the next year’s leave begins. Any unused paid supplementary leave cannot now be compensated for in money.
Amendments favourable for employees
Changes to Section 84: Clarification of the legal relationships and obligations of employees regarding competition restrictions after they leave a company, and conditions when an employer may withdraw in writing from an agreement about restrictions on competition have been expanded (Section 85).
Changes to Sections 91 and 92: An employee is permitted to enter into an employment contract not only with several employers but also to be otherwise employed.
Changes to Section 105: Crews of sea-going ships are included in the regulation on collective redundancy and new norms are introduced for this group on the transfers of undertakings (Section 114).
Changes to Section 145: If, according to an employment contract, an employee is prohibited from leaving his/her workplace during rest periods, this time should be included in their worked time.
New norm in Section 75.3: The hourly wage rate is now to be calculated by dividing the agreed monthly wage by the number of working hours in any particular month.
It is always difficult to change the labour law due to the strong resistance to change from the unions – it took two years to discuss previous proposals for amendments, which were then only partly adopted. The latest amendments were adopted without discussion and cover (apparently) small issues that, nevertheless, are important to employers and employees. For instance, a lack of social partners to negotiate at sector and regional level has hampered collective bargaining at these levels. However the current approach that a large enterprise is now eligible to negotiate a general (sectoral) agreement, may threaten the competitiveness of smaller enterprises that may not able to afford the wage levels of large enterprises.
It is likely that the amendments are more favourable for employers than employees, possibly because employer organisations have stronger lobbying power than trade unions.