Labor law in Latvia: how to hire and fire employees in Latvia: Chapters from Multilaw book „How to Hire and Fire in 96 Jurisdictions"
1. GENERAL PRINCIPLES
Forums For Adjudicating Employment Disputes
The Labour Dispute Law has been in force since 01.01.2003. Any party to an individual dispute regarding rights can apply to the court if the dispute has not been settled by negotiation between the employee and the employer or if any of the parties is not satisfied with the decision of the Labour Dispute Commission. Any party to a collective dispute regarding rights can apply to the court within one month if the collective dispute has not been settled in the Conciliation Commission. Any party to a collective dispute regarding rights can apply to the court if a Conciliation Commission is not established or settlement of the collective dispute is not commenced in a conciliation commission within one month from the submission date..
The Main Sources Of Employment Law
Labour Law, in force from 01.06.2002;
Labour Protection Law, in force from 01.01.2002;
Labour Dispute Law, in force from 01.01.2003;
Support for Unemployed Persons and Persons Seeking Employment Law, in force from 01.07.2002;
On Protection of Employees in case of Insolvency of Employer, in force from 01.01.2003;
On Unemployment Insurance, in force from 01.01.2000;
Strike Law, in force from 26.05.1998.
National Law And Employees Working For Foreign Companies
An employee and an employer may agree on the law applicable. However, if they have not chosen it, the laws of Latvia shall apply or the laws of another state if an employee normally performs his work in this another state. If none of this applies, the law of the state in which is located the undertaking which hired the employee or another state if it appears from the circumstances that the employment contract or employment legal relationships is more closely linked to it shall apply.
National Law And Employees Of National Companies Working In Another Jurisdiction
The same rules as to employees working for foreign companies apply.
2. HIRING THE EMPLOYEE
Legal Requirements As To The Form Of Agreement
An employment contract shall be entered into in writing and shall be prepared in duplicate, one copy to be kept by the employee, the other by the employer.
- Trial Period
If an employment contract does not specify a probation period, it shall be regarded as entered into without a probation period. The period may not exceed 3 months. Moreover, a probation period shall not be determined for persons under 18.
- Hours Of Work
Working hours shall be specified by working procedure regulations, shift schedules, or by an employment agreement.
Regular daily working time of an employee may not exceed eight hours, but for employees exposed to special risk and adolescents- seven hours.
Before holidays the length of the working day shall be reduced by one hour.
The minimum wage shall not be less than the minimum monthly salary (LVL 180~ EUR 255), as well as minimum hourly wage rates determined by the Cabinet. Appropriate supplement is due to an employee who performs additional work or work in special circumstances, performs night work (not less than 50 per cent of the specified hourly or daily wage rate) or performs overtime work or on a holiday (not less than 100 per cent of the hourly or daily wage rate).
- Holidays/Rest Periods
The lengths of a one day rest within a period of 24 hours shall not be less than 12 consecutive hours, and for children – not less than 14 hours.
The length of a weekly rest period within a seven day period shall not be less than 42 consecutive hours. If it is necessary to ensure continuity of the work process, it is permitted to require an employee to work on a holiday by granting him or her rest on another day of the week or by paying appropriate compensation.
Every employee has the right to a break in work if his or her daily working time exceeds six hours, it shall be granted not later than four hours after the start of work and it may not be less than 30 minutes.
Annual paid leave may not be less than four calendar weeks, not counting national holidays.
An employee might be granted study leave for the taking of a State examination or the preparation and defence of a diploma work, which study leave shall not be less than 20 days a year. The employer may retain the average earning for such period. However, such obligation is not compulsory and depends on the mutual agreement between employee and employer.
- Minimum/Maximum Age
It is prohibited to employ a person who is under 15 years of age or who is in basic education up to the age of 18. In exceptional cases children from the age of 13, if one of the parents (guardian) has given written consent, may be employed outside of school hours doing light work not harmful to the safety, health, morals and development of the child.
If one of the parents (guardian) has given written consent and a permit from the State Labour Inspection has been received, a child may be employed as a performer in cultural, artistic, sporting and advertising activities.
It is prohibited to employ person between the ages of 15 and 18 in jobs in special conditions which are associated with increased risk to their safety, health, morals and development.
The maximum age is not set.
An employer may request an applicant to undergo a health examination, which would allow verification that the applicant is suitable for performance of the intended work.
- Location Of Work/Mobility
Generally location of work is in the undertaking, however, an employee may be sent on official travel. A person under 18 years may be sent on official travel only if one of the parents has given a written consent.
- Pension Plans
Participants of the pension plan shall participate in the pension plan through the intermediation of their employer if the employer has concluded a collective participating contract with an open or closed pension fund, moreover, a collective participating contract with a closed pension fund may be concluded only in such cases when the relevant employer is also one of the founders (stockholders) of the same closed pension fund. Legal relationships of the employer and employees arising in connection with the implementation of a pension plan and participation of employees therein shall be regulated by the employment contract or collective work agreement.
- Parental Rights (Pregnancy/Maternity/Paternity/Adoption)
The Labor Law provides prenatal and maternity leave as well as parental leave afterwards.
Prenatal leave of 56 calendar days and maternity leave of 56 calendar days shall be summed and 112 calendar days granted irrespective of the number of days prenatal leave has been used prior to child-birth.
A woman who has initiated pregnancy-related medical care at a preventive medical institution by the 12th week of pregnancy and has continued for the whole period of pregnancy shall be granted a supplementary leave of 14 days, adding it to the prenatal leave and calculating 70 calendar days in total.
In case of complications in pregnancy, childbirth or postnatal period, as well as if two or more children are born, a woman shall be granted a supplementary leave of 14 days, adding it to the maternity leave and calculating 70 calendar days in total.
Accordingly, taking into consideration above mentioned conditions, total time of prenatal and maternity leave may not exceed 140 days.
A woman who makes use of pregnancy or maternity leave shall have ensured her previous work. If this is not possible, the employer shall ensure the woman similar or equivalent work with not less favourable conditions and employment provisions.
Concerning benefits of prenatal and maternity leave please see section Payments For Maternity And Disability Leave.
The father of a child is entitled to leave of 10 calendar days immediately after the birth of the child, but not later than within a two-month period from the birth of the child.
Parental leave shall be granted for a period not exceeding one and a half years up to the day the child reaches the age of eight years. Parental leave, at the request of an employee, shall be granted as a single period or in parts. The time spent by an employee on parental leave shall be included in the total length of service.
An employee who has a child under one and a half years of age shall be granted additional breaks for feeding the child.
For a family, which has adopted a child up to three years of age, one of the adopters shall be granted 10 calendar days of leave.
- Compulsory Terms
An employment contract shall include:
Names and addresses of the parties; starting date and expected duration of employment; workplace; the trade, profession, speciality of the employee in conformity with the Classification of Occupations; the scales and intervals to pay; working time; the length of the annual paid leave; the term for giving notice of termination of the employment contract; the provisions of collective agreement.
- Non-Compulsory Terms
The employer and the employee are free to agree any other terms in addition to the compulsory provisions, provided that these terms are no less favourable than certain statutory rights.
Types Of Agreement
An employment agreement may be for an unspecified or specified period as well as collective agreement is possible where parties agree on the provisions regulating the content of employment relationships, in particular the organization of work remuneration and labour protection, establishment and termination of employment legal relationships, raising of qualifications, work procedures, social security of employees and other issues.
An employee has a duty not to disclose any information brought to his or her knowledge, which is a commercial secret of the employer and to ensure that the information is not available to third parties.
Ownership of Inventions/Other Intellectual Property (IP) Rights
If an author has created a work when performing his or her duties in an employment relationship, the moral and economic rights to the work shall belong to the author, except when the work is computer program the economic rights belong to the employer. However, the economic rights may be transferred in both cases.
Aliens (persons who are not Latvian citizens or non-citizens) may be employed only if they have received a work permit.
If a non-national's employment requires short term or occasional residence in the Republic of Latvia and does not exceed 90 days within half a year, the non-national is obliged to receive a visa or a temporary residence permit and a work permit. This provision refers also to non-nationals who do not need a visa for entering the Republic of Latvia.
If a non-national's employment requires regular residence in the Republic of Latvia and exceeds 90 days within half a year, the non-national is obliged to receive a temporary residence permit and a work permit.
An employer wishing to employ a non-national shall submit to the branch of the State Employment Agency an employer’s work invitation. If an employer has intended to employ a non-national by entering into an employment contract, the work invitation may be approved if a vacant position or a specialist vacancy is registered at the branch of the Agency.
A work permit is not needed in the following cases:
- if the non-national enters in connection with road shows (concerts) as a performer (musician, singer, dancer, actor, dangler etc.), author (compositor, choreograph, film/stage director, stage designer etc.), administrative or technical worker who is responsible for ensuring performances (concerts) and if planned residence time does not exceed 14 days;
- if the non-national enters in accordance with an educational institution’s or a scientific institute’s or independent researcher’s invitation in relation to scientific studies or in order to participate in implementing educational programs and if planned residence time does not exceed 14 days.
Hiring Specified Categories Of Individuals
There are restrictions on who can be employed to carry out certain hazardous activities and restrictions on the types of work that vulnerable groups (e.g. children or pregnant women) can be required to undertake.
Outsourcing And/Or Sub-Contracting
If an undertaking or a part of it retains its independence after transfer of the undertaking, the status and functions of employee representatives affected by such transfer shall be retained with the same provisions that were applicable up to the moment of transfer of the undertaking. Such provisions shall not apply if the preconditions required for the re-election of employee representatives or for the reestablishment of representation of employees have been satisfied.
The transfer of an undertaking shall mean the transfer of an undertaking or its autonomous part to another person on the basis of an agreement, as well as a merger or division of commercial companies.
3. MAINTAINING THE EMPLOYEE RELATIONSHIP
Changes To The Contract
An employee and the employer may amend an employment contract by mutual agreement.
An employer has the right not later than one month in advance, to give written notice of termination of an employment contract if the employee does not agree to continue such relationships in conformity with amendments to the employment contract.
In order to prevent any risk, which may negatively affect the safety and health of a pregnant woman, an employer, after receipt of a doctor's opinion, has a duty to ensure such working conditions and working time for the pregnant woman as would prevent her exposure to the risk referred to, although the amount of work remuneration may not be less than the previous average earnings of the woman.
Change In Ownership Of The Business
Rights and duties of the transferor of an undertaking that arise from employment legal relationships applicable at the moment of transfer of the undertaking shall devolve to the acquirer of the undertaking.
After transfer of an undertaking the acquirer of the undertaking shall continue to comply with the provisions of the collective agreement entered into previously and applicable at the moment of the transfer of the undertaking up to the moment of termination of such collective agreement, or until the moment a new collective agreement enters into effect, or until the moment of application of the provisions of another collective agreement. Within a one-year period from the transfer of the undertaking, the provisions of the collective agreement shall not be amended to the detriment of employees.
Social Security Contributions
Types of social insurance are as follows:
- State pension insurance (hereinafter – pension insurance);
- social insurance in case of unemployment (hereinafter – unemployment insurance);
- social insurance in respect of accidents at work and occupational diseases (hereinafter – occupational accident insurance);
- invalidity insurance;
- maternity and sickness insurance;
- parental insurance.
Employees shall be socially insurable in conformity with all types of social insurance.
The object of mandatory contributions of an employer and employee shall be all calculated employment income from which personal income tax must be deducted without deduction of the non-taxable minimum, tax concessions and eligible expenses for which the taxpayer has the right to reduce the taxable income.
If an employee has been insured for all types of social insurance, the mandatory contribution rate shall be 33,09 per cent from which an employer shall pay 24,09 per cent and an employee shall pay 9 per cent.
Accidents At Work
An employer shall ensure the investigation of accidents at work and shall perform registration thereof.
Employers shall have the following obligations:
- to organise without delay rendering of first aid to the insured person who has suffered harm from an accident at work or an accident while commuting to or from work in a means of transport which is possessed by the employer, as well as ensure their conveyance to a medical institution;
- to ensure a medical examination of the state of health of the insured person at a medical institution, if the doctor has suspicions that an occupational disease has been contracted;
- to ensure the investigation of an accident at work or an occupational disease in accordance with the procedures prescribed by law, and, on the basis of the investigation materials, to take the necessary measures in order to eliminate the causes for accidents at work and the contracting of occupational diseases;
- to pay, out of their own funds, to an employee who has suffered an accident at work, sick pay for the first 10 calendar days amounting to 80 per cent of the employee's average monthly earnings; and
- to pay to an employee a lump sum benefit equivalent to one month's salary if an accident at work is the employer's fault and the employee has suffered a serious injury.
The employer shall reimburse, by way of subrogation, to the State Social Insurance Agency the costs related to the insurance compensation paid to employees and third parties, if the employer has not made the compulsory contributions in accordance with the procedures prescribed by law.
Discipline And Grievance
An employer who normally employs more than 10 employees at an undertaking shall adopt working procedure regulations.
An employer may give a written reproof or issue a reprimand in writing to an employee for violation of specified working procedures of an employment contract. Prior to expressing a reproof or a reprimand, the employer shall familiarize the employee in writing with the essence of the violation he or she has committed and then request from him or her an explanation in writing regarding the violation committed.
If a new reproof or reprimand has not been issued to the employee within a one-year period from the date of issuing a reproof or reprimand to the employee, the employee shall be regarded as not having been disciplined.
The labours law establishes the general rule that everyone has an equal right to work; to fair, safe and healthy working conditions and to fair work remuneration.
An employer has a duty to take measures that are necessary in conformity with the circumstances in order to adapt the work environment to facilitate the possibility of disabled persons to establish employment legal relations, fulfil work duties, be promoted to higher positions or be sent for occupational training or the raising of qualifications, insofar as such measures do not place an unreasonable burden on the employer.
If an employer has not specified equal work remuneration for men and women for the same kind of work the employee within a one-month period from the day he or she has learned or should have learned of the violation has the right to request the remuneration that the employer normally pays for the same work.
It is prohibited to apply sanctions to an employee or to otherwise directly or indirectly cause adverse consequences for him or her because the employee, within the scope of employment legal relationships, exercises his or her rights in a permissible manner, as well as when if he or she informs competent institutions or officials regarding suspicions with respect to the committing of criminal offences or administrative violations in the workplace.
In the case of a dispute the employer has a duty to prove that the employee has not been punished.
If an employer in determining working conditions, occupational training or the raising of qualifications has violated the prohibition of differential treatment; the relevant employee has the right to request the termination of such differential treatment. The relevant employee has the right to bring an action in a court within a one-month period from the day he or she has learned or he or she should have learnt of the violation of the prohibition of differential treatment.
Compulsory Training Obligations
The workplace of an employee, who has been sent for occupational training or to raise his or her qualifications thus interrupting work, shall be retained. The employer shall cover expenditures associated with occupational training or the raising of qualifications.
An employer may make deductions from an employee's earnings in order to reclaim amounts overpaid due to an error of the employer, in relation to advance pay and in relation to recalculation of holiday pay on termination (subject to certain exceptions).
An employer has a right to make deductions to compensate for losses caused to it due to an illegal, culpable action of the employee. The making of such deduction requires written consent from the employee.
The total amount of all deductions cannot exceed 20 per cent except in particular cases where the maximum is 50 per cent. Moreover, it is prohibited to make deductions from severance pay and compensation for expenses of an employee.
Payments For Maternity And Disability Leave
Persons who are socially insured are entitled to maternity, paternity, sickness and funeral allowances.
A maternity benefit shall be granted and disbursed for the entire period of prenatal and maternity leave if the woman is absent from work and thereby loses income to be gained from paid work.
A sick-leave certificate issued in accordance with the procedures prescribed by the Cabinet or an employer certification regarding the absence of an employee from work shall be the grounds for granting a maternity benefit. Such benefit shall be granted in a 100 per cent amount of the average wage of the benefit recipient that is subject to insurance contributions.
However, if a sick – leave certificate with regard to maternity leave begins on the November 3, 2010 or later on, maternity benefit is granted in the amount of 80 per cent of the average earnings and disbursed with the following limitations:
- if granted maternity benefit for one calendar day does not exceed 11.51 LVL (16.38 EUR)
- in the granted amount;
- if granted maternity benefit for one calendar day exceed 11.51 LVL (16.38 EUR), in such case recipient receives 11.51 LVL (16.38 EUR) and 50 per cent from amount of granted maternity benefit that exceeds 11.51 LVL (16.38 EUR) for one calendar day.
Average wage is calculated taking into account earnings for the period of 12 months that ends two months prior to commencement of prenatal and maternity leave.
A sickness benefit shall be granted if a person is absent from work and thereby loses paid labour income. This benefit shall be granted in an 80 per cent amount of the average wage of the benefit recipient that is subject to insurance contributions.
However, following limitations is set to sickness benefit:
if granted sickness benefit for one calendar day does not exceed 11.51 LVL (16.38 EUR) - in the granted amount;
if granted sickness benefit for one calendar day exceed 11.51 LVL (16.38 EUR), in such case recipient receives 11.51 LVL (16.38 EUR) and 50 per cent from amount of granted sickness benefit that exceeds 11.51 LVL (16.38 EUR) for one calendar day.
See social security contributions
Absence For Military Or Public Service Duties
There is no specific regulation regarding absence for military or public service duties.
Works Councils or Trade Unions
Trade unions are independent from an employer, they represent their members in relationships with the employer and maintain their working, professional and social rights and interests to elected institutions’ mediation.
On behalf of their members, trade unions can conclude a collective agreement with an employer for labour and other social and economic issues. In some cases, an employer can only settle these types of issues by submitting them for the trade union's approval.
Without prior consent of trade union termination at the employers’ initiative of an employment agreement with member of a trade union is not allowed with exception of breach of labor discipline and working conditions.
Employees’ Right To Strike
The Strike law establishes the right to strike of employees of a branch of an undertaking in order to protect their economic or professional interests. The right to strike shall be exercised as a last resort if no agreement and reconciliation has been reached in the collective interest dispute.
Participation in a strike shall be voluntary and no employee may be forced to participate in a strike or be prohibited from participation in the strike.
Employees On Strike
Employees shall take a decision regarding the declaration of a strike at a general meeting of employees of the relevant undertaking in which at least half of the number of the employees of this undertaking participate.
A trade union or employees upon taking a decision regarding the declaration of a strike, shall establish a strike committee to lead a strike and represent the interests of employees of the relevant trade union or relevant undertaking during the strike negotiations with the employer.
Not later than seven days prior to the commencement of a strike the strike committee shall submit to the employer, the State Labour Inspection and the Secretary of the National Tripartite Co-operation Council a declaration of a strike. During the strike the trade union or employees shall not be allowed to state to the employer demands which have not been indicated in the declaration.
The employees participating in a strike shall not receive remuneration for work during the strike, and the employer shall not make social security payments for these employees, unless otherwise agreed by the parties to the collective interest dispute.
Employers’ Responsibility For Actions Of Their Employees
An employee shall be fully or partially released from civil liability for losses caused to an employer if the employer himself or herself is also to blame for the losses. This shall also apply when the employer has not warned the employee of the risk of causing such losses which the employee has not foreseen and he or she did not have to foresee, as well as when the employer has not taken appropriate care to prevent or reduce losses.
4. FIRING THE EMPLOYEE
Procedures For Terminating the Agreement
The agreement might be terminated by notice of termination by employee or employer.
An employee has the right to give a notice in writing of termination of an employment contract one month in advance; however by agreement of an employee and the employer, an employment contract may be terminated also before expiry of the time period for a notice of termination. Without complying with the time period the agreement might be terminated by employee if he has good cause, i.e. each condition based on considerations of morality and fairness that does not allow the continuation of employment legal relationships shall be regarded as such cause.
An employer may terminate an agreement one month after he has given a written notice of termination and has received the employees’ explanation in writing if the employee:
- has without justified cause significantly violated the employment contract or the specified working procedures;
- when performing work, has acted illegally and therefore has lost the trust of the employer;
- when performing work, has acted contrary to moral principles and such action is incompatible with the continuation of employment legal relationships;
- when performing work, is under the influence of alcohol, narcotic or toxic substances;
- has grossly violated labor protection regulations and has jeopardized the safety and health of other persons.
Without requesting an explanation in writing the employer may terminate an agreement if:
- the employee lacks adequate occupational competence for performance of the contracted work;
- the employee is unable to perform the contracted work due to his or her state of health and such state is certified with a doctor’s opinion;
- an employee who previously performed the relevant work has been reinstated at work;
- the number of employees is being reduced;
- the employer is being liquidated.
Other ways of termination of the agreement with specific conditions are reduction in the number of employees, collective redundancy, agreement between employee and employer, requests by third parties and court judgment or death of an employer.
The employment agreement may be terminated instantly if the employee, when performing work, has acted illegally and therefore has lost the trust of the employer or is under the influence of alcohol, narcotic or toxic substances.
An employee has the right to give a notice in writing of termination of an employment contract one month in advance, unless a shorter time limit for the giving of a notice of termination is provided by the employment contract or the collective agreement.
Termination On Notice
See section of procedures for terminating agreement
Termination By Reason Of The Employee's Age
Termination by reason of the employee’s age would be a discrimination.
Automatic Termination In Cases Of Force Majeure
The death of an employer shall constitute a basis for the termination of employment legal relationships if the fulfilment of employee obligations is closely related only and exclusively to the employer personally.
Termination By Parties’ Agreement
Such termination is possible and the only requirement is that the agreement shall be in written form.
Directors Or Other Senior Officers
With regards to Limited Liability Companies a member of the board of directors may be recalled by a decision of the shareholders. If the company has a council, the council may suspend any member of the board of directors from his or her position until the meeting of the shareholders but not for longer than two months.
It may be provided for by the articles of association, that a member of the board of directors may be recalled only if there is an important reason. Such reasons shall, in any case, be considered to be gross violations of authority, failure to perform or to appropriately perform his or her duties, an inability to manage the company, or causing harm to the interests of the company, as well as loss of confidence.
A member of the board of directors may leave the position of the member of the board of directors, by submitting a notification thereof to the company.
As regards to stock companies members of a board of directors may be recalled by the council only if there are important reasons.
Special Rules For Categories Of Employee
There are no categories of employee to whom special rules apply, but certain categories benefit from more generous rules for protection from unfair dismissal.
Specific Rules For Companies in Financial Difficulties
A law On Protection of Employees in case of Insolvency of Employer has been in force since 01.01.2003. it regulates general provisions for satisfaction of claims of employees in case of insolvency of the employer and procedures of formation and utilisation of the resources of the employee claims guarantee fund.
The claims of employees resulting from an employment legal relationship, shall be satisfied from the resources of the employee claims guarantee fund regarding work remuneration, reimbursement for annual paid leave, reimbursement for other types of paid leave, severance pay in connection with the termination of an employment legal relationship and reimbursement for injury in connection with an accident at work or an occupational disease.
Restricting Future Activities
A written agreement between an employee and an employer regarding the restriction of the occupational activities of the employee after termination of employment legal relationships is possible. Such agreement is permitted only if:
- its purpose is to protect the employer against such occupational activity of the employee as may cause competition for the commercial activity of the employer;
- the term for restriction on competition does not exceed two years; and
- it provides for a duty of the employer to pay the employee adequate monthly compensation for the observance of restriction on competition with respect to the time period of restriction on competition.
An employer has a duty to provide severance pay to an employee if the agreement is terminated by reasons when the employer does not have a duty to request the employee’s explanation (see “procedures for terminating the agreement”) or the employee has had a good cause.
Special Tax Provisions And Severance Payments
Severance payments are subject to personal income tax in the amount of 26%.
Allowances Payable To Employees After Termination
Employers are not required to contribute to any allowances payable to employees after termination.
Time Limits For Claims Following Termination
An employee may bring an action in court for the invalidation of a notice of termination by an employer within a one-month period from the date of receipt of the notice of termination. In other cases, when the right of an employee to continue employment legal relationships has been violated, he or she may bring an action in court for reinstatement within a one-month period from the date of dismissal.
Specific Matters Which Are Important Or Unique To This Jurisdiction
Gencs Valters Law Firm
Valdemara Center, 3rd Floor
Kr Valdemara Street 21-10
LV-1010, Riga, Latvia
Tel: +371 67 240090 Fax: +371 67 240091