10.6092/issn.1561-8048/10958
The Latvian response to the COVID-19 crisis can be praised as successful since the pandemic reached its peak as early as 1 April and there has been a gradual decrease of new cases since then. Nonetheless, the consequences for the labour market are significant. Latvia adopted several measures, including a wage subsidy, income support for the self-employed, and tax relief for companies. However, some of these measures have been deemed ineffective and, in addition, there is evidence that circumvention of some labour laws is taking place in the shadow of the crisis.
application/pdf
1561-8048
10958
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Zane Rasnača
Italian Labour Law e-Journal
Collective dismissals
COVID-19 and Labour Law: Latvia
Text.Serial.Journal
https://illej.unibo.it/
13
National Reports
2020-05-11
2020-05-09
2020-04-15
2020-09-15
ILLeJ
Zane Rasnača
2020/05/11
10.6092/issn.1561-8048/10958
European Trade Union Institute and Institute for European Law (KU Leuven)
1561-8048
1S
Collective dismissals
en
COVID-19 and Labour Law: Latvia
https://illej.unibo.it/article/download/10958/10829
13
COVID-19 and Labour Law: Latvia                                                   Italian Labour Law e-Journal
Zane Rasnača                                                                     Special Issue 1, Vol. 13 (2020)
zane.rasnaca@kuleuven.be                                           Covid-19 and Labour Law. A Global Review
                                                                                               ISSN 1561-8048
                                                                https://doi.org/10.6092/issn.1561-8048/10958




                   COVID-19 and Labour Law: Latvia
                          Zane Rasnača*

                                                Abstract

     The Latvian response to the COVID-19 crisis can be praised as successful since the pandemic
     reached its peak as early as 1 April and there has been a gradual decrease of new cases since
     then. Nonetheless, the consequences for the labour market are significant. Latvia adopted
     several measures, including a wage subsidy, income support for the self-employed, and tax
     relief for companies. However, some of these measures have been deemed ineffective and, in
     addition, there is evidence that circumvention of some labour laws is taking place in the
     shadow of the crisis.



     Keywords: Covid-19; Labour Law; Wage subsidy; Income support; Unpaid leave; Collective
     dismissals.



 1. General Framework

    The Latvian response to the COVID-19 crisis has been praised as successful1. There
 have been relatively few confirmed cases (only 896) and very few deaths (only 16)2 in spite
 of extensive testing efforts and not very stringent social distancing measures, at least when
 compared with other countries in the region. Since 1 April there has been a decrease of
 new cases. There are several reasons for this success. First, a national health emergency was
 announced as early as 16 March when only 16 cases of COVID-19 had been recorded.
 Second, a number of social distancing measures were immediately implemented, including
 mandatory self-isolation following trips abroad and the closure of schools3. Third, the
 response to the crisis has been done in line with advice from experts, most notably the
 leading epidemiologists. All this has allowed the majority of businesses, shops and even
 cafes to remain open during the epidemic, if they are able to ensure compliance with social
 distancing requirements4. Telework was never imposed; however, many companies used it
 as a solution anyway.


 *
   Senior Researcher at the European Trade Union Institute (Brussels) and associated research fellow at the
 Institute for European Law (KU Leuven).
 1 https://www.telegraph.co.uk/news/2020/04/25/latvia-kept-covid-deaths-dozen-businesses-stayed-open/
 2 Data from 4 May 2020.
 3 https://mk.gov.lv/sites/default/files/attachments/covid-19_003.docx
 4 Typically, at least a two-meters distance has to be ensured in public spaces and disinfectants must be

 available in shops and cafes.
 Zane Rasnača                                                                     Italian Labour Law e-Journal
                                                                                 Special Issue 1, Vol. 13 (2020)
                                                                    Covid-19 and Labour Law. A Global Review
                                                                                      Section: National Reports




    The first measures directly affecting the labour market were also adopted early on. The
limit of overtime work was raised to 60 hours per week in a number of sectors, notably
health and social services. Special social distancing requirements were adopted in the food,
farming, forestry and fisheries sectors. International passengers transport was suspended.
Interestingly, less protective social distancing rules were adopted for the transport sector
and for companies that either post or receive posted workers from abroad5. The 14-day
self-isolation period is not mandatory in these sectors. Finally, and in contrast to the ILO
suggestions6, the government also announced that COVID-19 cannot be considered an
occupational disease, meaning the additional protection obligations for employers do not
apply7.


2. Regulatory measures supporting the affected business and workers

   Importantly, Latvian labour law already contained provisions regulating situations of
downtime. Workers have a right to receive their full salary during such periods (Art. 74(2))
and the employer can assign the worker to different tasks than those agreed in the
employment contract, but only for up to two months per year and without any reduction
of the average salary. Finally, employers cannot force workers to take either annual (Art.
150) or unpaid (Art. 153) leave. This must be mutually agreed upon by both sides.
   Nevertheless, already at the onset of the current crisis, there were reports about
dismissals and employers forcing workers to agree to unpaid leave8. The dismissal law in
Latvia is very lax and the severance pay low, therefore it is easy for the employer to either
dismiss a worker or threaten dismissal when proposing unpaid leave (Art. 103(1)(3) and
112(1)).
   To address the problems experienced by both businesses and workers, the Latvian
authorities adopted a series of measures. Most of them where primarily addressed to
companies: the extension of tax deadlines where necessary, a faster refund of VAT
overpayment, ‘credit holidays’ (delayed repayment of loans), and working capital loans for
companies, farmers and fishermen in difficulty are some of the main examples. The most
controversial and central measure, however, was a wage subsidy made available to
companies who experience a drop in their revenue by 20-30% in comparison to the
previous year. To be eligible for this subsidy, companies cannot have a significant tax debt,
cannot have been punished for breaches of tax, customs or employment law which led to a
fine exceeding 500 euros, and cannot have paid less than 200 euros in taxes per month. If


5https://mk.gov.lv/sites/default/files/attachments/rikojums27_132.doc     and
https://mk.gov.lv/sites/default/files/attachments/rikojums_157.doc
6-https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---

normes/documents/publication/wcms_739937.pdf p. 14.
7 https://mk.gov.lv/sites/default/files/attachments/rikojums_161.doc
8 The increase of consultations and reported cases at the Labour Inspectorate is reported here:

https://www.lsm.lv/raksts/zinas/latvija/valsts-darba-inspekcija-saistiba-ar-covid-19-butiski-pieaug-
konsultaciju-skaits.a352325/

https://doi.org/10.6092/issn.1561-8048/10958                                                                   2
     Zane Rasnača                                                             Italian Labour Law e-Journal
                                                                             Special Issue 1, Vol. 13 (2020)
                                                                Covid-19 and Labour Law. A Global Review
                                                                                  Section: National Reports




eligible, the companies’ workers receive a wage subsidy amounting to 75% of the salary,
but capped at a maximum of 700 euros.
    There have been many complaints about the scheme. First, many companies did not
qualify due to tax debts, which is a very common predicament in the tourism and catering
industries, and accordingly their workers remain without support. Second, only private
sector companies were eligible for the subsidy. However, collective dismissals began
immediately in several state-owned companies (and without due consultations of workers’
representatives9), including the flag carrier (AirBaltic) and the national airport (Riga
Airport)10, which indicated a need for increased support in the public sector as well. Third,
the subsidy was initially not available for the self-employed or payers of micro-company
tax. Fourth, it was not available for those workers who experienced partial downtime; to be
eligible, they had to stop working completely. Finally, the first data from March 2020
showed that the average subsidy allocated was around 300 euros only11. The government
explained this by the fact that the shadow economy accounted for a significant share in the
sectors most affected by the COVID-19 crisis, where workers officially receive only the
minimum wage and the rest of their salary is paid to them in cash, meaning they do not pay
taxes and social contributions (used for calculating the subsidy).
    Some of these issues were mitigated by amending the initial scheme. An analogous
(income) support scheme was introduced for the self-employed and payers of micro-
company tax. This was especially important for the cultural and creative industries,
amongst others, where most people work under these statuses. Furthermore, it was decided
that self-employed workers who have a part-time work contract but receive less than 430
euros per month from this job should be eligible for the income support as self-employed
workers12. Finally, a new social assistance mechanism was introduced for those who do not
qualify for the wage subsidy. A social assistance benefit for downtime amounting to 180
euros per month and an additional 50 euros for any dependent child is now available. It can
also be used for those working part-time since it will be calculated in proportion to the days
when the worker is not working.
    In addition, eligibility for a number of benefits (including parental leave and
unemployment benefits, as well as support for those in poverty or vulnerable situations)
has been extended throughout the duration of the crisis. This is important for those at the
margins of the labour market and those seeking re-entry.
    Finally, on 28 April the government supported amendments to the COVID-19 Law that
aim to reduce the protective standards regarding downtime laid out in the labour law
framework. One amendment, which still has to be approved by the parliament, would
allow employers to reduce workers’ salaries by 30% during downtime and force them to
take annual leave. Finally, it also allows it to be agreed in a collective agreement that


9 https://www.lsm.lv/raksts/zinas/ekonomika/arodbiedriba-neapmierinata-ar-atlaisanam-airbaltic.a351743/
10 https://www.lsm.lv/raksts/zinas/ekonomika/lidosta-riga-plano-500-darbinieku-atlaisanu.a354983/
11 https://www.diena.lv/raksts/uznemeja-diena/zinas/dikstaves-pabalsti-izmaksati-2757-uznemumu-15-064-

darbiniekiem-14239669
12-https://lvportals.lv/skaidrojumi/315476-dikstaves-pabalsts-ari-pasnodarbinatajiem-ar-maziem-

ienakumiem-par-nepilnu-slodzi-2020

https://doi.org/10.6092/issn.1561-8048/10958                                                               3
     Zane Rasnača                                                             Italian Labour Law e-Journal
                                                                             Special Issue 1, Vol. 13 (2020)
                                                                Covid-19 and Labour Law. A Global Review
                                                                                  Section: National Reports




workers can be required to work part-time during a temporary decline in production, as
long as they are paid at least the monthly minimum salary13.
   The Latvian legal framework was already relatively protective of workers in crises like
the current one. At the same time, the weak protection against dismissal, the lack of
effective worker representation in the private sector and the resulting power imbalance
between management and workers, together with the shadow economy’s large share in
certain affected sectors, meant that these protections did not really work in practice. As a
result, the government adopted a number of measures essentially aimed at preventing
dismissals and providing at least some income support for those who found themselves
suddenly in need. Only time will tell whether it has reached a sufficient number of people
and what will be the impact of COVID-19 on the Latvian labour market at large.




Copyright © 2020 Zane Rasnača. This article is released under a Creative Commons
Attribution 4.0 International License




13  https://www.lsm.lv/raksts/zinas/ekonomika/darba-devejs-darbiniekam-dikstaves-laika-drikstes-maksat-
70-no-algas.a357740/

https://doi.org/10.6092/issn.1561-8048/10958                                                               4
