Employers can pay 70% of salary during idle time and other changes in application of Labor law norms related to mitigating consequences of Covid-19

On May 7, 2020 Amendments in the Law On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19 (hereinafter – the Amendments) have been approved, with the aim to provide more flexibility for employers in organizing existing work positions. The Amendments are related to employer’s rights to: (1) reduce the salary amount that employer pays to employee during idle time; (2) organize granting of annual leave. Additionally, the Amendments regulates determination of partial work time in a collective agreement concluded with a trade union.

Employers who will be able to use the rights determined with the Amendments
Only such employer who complies with the two following criteria will be able to use the below indicated rights:

1.       who complies with criteria for participant in the In-depth Cooperation Programme[1];
2.       who has been affected by crisis caused by Covid-19.

The text of the Amendments allows to conclude that there are no specific criteria that the employer must comply with in order to determine that the employer “has been affected by crisis caused by Covid-19”. However, to avoid any disputable situations the employer, who uses the below indicated rights, should be able to prove that the employer has been affected by the Covid-19 crisis.

Right to reduce the amount of the remuneration paid during idle time up to 70% of the salary
The existing regulation of the Labor law provides that during such idle time, which has not accrued due to employee’s fault, the employer must continue to pay the remuneration determined to the employee.

The approved Amendments provides that employer who complies with the above mentioned criteria may reduce the employee’s remuneration for idle time determined in Section 74 of the Labor Law to 70% of the employee’s salary. In any case remuneration in the amount of minimum wage. Furthermore, for an employee, upon whom his minor child or a child who continues acquiring general, professional, highest or special education and who has not reached age of 24 years, is dependent additional fund shall be maintained for the employee in the amount of minimal amount of maintenance determined by law for each of the dependent child. The mentioned right shall be in force until December 31, 2020.

Employee who disagrees to such reduction in the remuneration during idle time, shall have the right to unilaterally terminate the employment contract without observing the notice period determined in the Section 100(1) of the Labor Law. In such case the employer will be obliged to disburse employee the severance payment in the amount as determined in Section 112 of the Labor Law.

It can be concluded that the Amendments will allow employers to unilaterally reduce the amount of remuneration to be paid during the idle time. The text of the Amendments allows to conclude both employers who have applied and whose employees receives state paid idle time benefit, and those who do not comply with the criteria to receive the state paid idle time benefit, will be allowed to use this opportunity.

Granting annual leave without taking into consideration the wishes of employee
The existing regulation of the Labor Law foresees also that the employer has the obligation to as far as possible consider the wishes of the employee when granting annual leave (Section 150(2) of the Labor Law).

The approved Amendments foresees that the employer, who corresponds to the above mentioned criteria, may grant the annual leave by not observing Section 150(2) of the Labor Law. Accordingly, the Amendments provides that the employer has the right not to observe the obligation – as far as possible to consider the wishes of the employee when granting annual leave. The mentioned right shall be in force until December 31, 2020.

However, it is not clear from the text of the Amendments whether this means that the employer may unilaterally send an employee on annual leave without the consent of the employee. The approved Amendments applies only to the mentioned Section 150(2) of the Labor Law. Therefore, the Amendments does not affect other parts of the Section 150 of the Labor Law, which also provides that the annual leave shall be granted in accordance with the agreement between employee and employer. Thus, the Amendments seems not to affect the fact, that annual leave shall be granted on the basis on mutual agreement of both parties.

Determination of partial working time in a collective agreement concluded with a trade union
The approved Amendments foresee that in a collective agreement that has been concluded with a trade union with a mutual agreement and without reducing the overall level of the employees’ protection, it may be provided that in case of a temporary reduction of production amounts, a partial working time can be determined to an employee. In any case remuneration in the amount of minimum wage. Furthermore, for an employee, upon whom his minor child or a child who continues acquiring general, professional, highest or special education and who has not reached age of 24 years, is dependent additional fund shall be maintained for the employee in the amount of minimal amount of maintenance determined by law for each of the dependent child. Such amendments in the collective agreement can be in force for a time period that does not exceed December 31, 2020.

An employee who does not agree to the partial working time shall have the right to unilaterally terminate the employment contract without observing the notice period determined in the Section 100(1) of the Labor Law. In such case the employer will be obliged to disburse employee the severance payment in the amount as determined in Section 112 of the Labor Law.

It should be noted that regulations approved during the state of emergency raises different questions and ambiguity in relation to the application of the regulation. The above mentioned is the opinion of Leinonen Latvia lawyers and it might change in case additional explanations are provided in regard to the application of the regulations.

We invite you to contact our legal team in case you have any questions related to application of the rights determined in the Amendments or if you require any other assistance in regard to managing employment related issues in order to mitigate consequences of Covid-19.

[1] Information on criteria: https://www.vid.gov.lv/lv/kriteriji-padzilinatas-sadarbibas-programmas-dalibnieka-statusa-iegusanai