Labor law issues
18 March 2020
The state of emergency, the closed borders in many parts of Europe, the disappearance of foreign visitors – these factors have raised concerns among employers and employees about remuneration, work organization and other employment issues. Here is an overview of COVID-19 labor law issues.
Downtime of companies
The tourism, entertainment, passenger transportation and catering sectors have been most affected by COVID-19 so far, as the flow of foreign visitors has completely stopped and locals also choose to stay home and be socially distant.
Currently, under Article 74 of the Labor Law, where the employer does not employ the employee or does not perform the activities necessary for the performance of the employee's obligations (idle time), the employer is obliged to pay the employee the prescribed wage in full.
The government urges entrepreneurs not to make hasty decisions on staff reductions, as the COVID-19 Crisis Act, adopted by the Saeima on 20 March, provides a significant boost to companies in areas most-affected by COVID-19.
For employees for whom the employer is unable to pay wages, the state will cover up to 75% of the costs up to a threshold of EUR 700. It should be noted that such a mechanism will be limited to companies operating in certain sectors, most likely in the tourism, catering and hotel sectors. Downtime will have to be directly attributable to the measures taken by the Cabinet to address the consequences of COVID-19.
Amendments to the contract of employment
The state-declared emergency affects both employers and employees, so it should be remembered that in addition to the final means provided by the Labor Law, such as dismissal of the employer, reduction of the number of employees and collective redundancies, the law also provides for the right to amend contract of employment.
Often, when a company is in idle time, employees are offered annual leave or unpaid leave. It should be noted that such a solution cannot be 'imposed' by the employer, but is a matter for the parties to agree voluntarily. The same applies to any other changes to the contract of employment offered to the employee (see next paragraph).
Reduction of the number of employees
The employer can reduce the number of employees if it is based on economic, organizational, technological or similar measures in the company, thus also in cases when the state of emergency determined by the Cabinet of Ministers has negative consequences for the company – the total downtime of the company as it is currently for most tourism industry businesses.
It should be noted, however, that if the company has a large number of employees, it may be necessary to notify the State Employment Agency (see next paragraph), employee representatives, trade unions, so this process will not resolve the situation immediately.
Reduction of wages or determination of part-time work
The Labor Law provides the right of the employer to offer the employee the opportunity to make changes to the employment contract, for example, by reducing salary or setting part-time work. However, the employee has the right not to agree to changes to the contract, which in any case will lead to termination of the contract. If an agreement to amend the contract of employment is reached and as a result the employee's pay is reduced, the employer shall be obliged to pay the previously agreed payment at least one month after the amendments come into force.
The State Employment Agency (SEA) has already received a number of collective redundancy notices in connection with the situation affected by COVID-19.
As a reminder, in the event of an emergency decision by the employer on collective redundancies, the State Employment Agency must be notified so that the issue of unemployment arising out of collective redundancies can be dealt with in a timely manner. Collective redundancies may be commenced not earlier than 30 days after notification to the SEA.
Workers' representatives should also be consulted in order to agree on the number of employees to be made redundant, their conduct and their social guarantees. Employee representatives may also submit their own proposals to improve the position of employees in the process.
Collective redundancies are reductions in the number of employees over a period of 30 days of:
- at least five employees if the employer normally employs more than 20 but less than 50 employees in the undertaking;
- at least 10 employees if the employer normally employs more than 50 but less than 100 employees in the undertaking;
- at least 10 per cent of the number of employees if the employer normally employs at least 100 but less than 300 employees in the undertaking;
- at least 30 employees if the employer normally employs 300 and more employees in the undertaking.
These conditions do not apply to staff employed by public administrations.
Who is entitled to a paid temporary incapacity certificate?
There is also confusion among employers, employees and general practitioners regarding temporary incapacity certificates. Who will pay for the days the employee spends in quarantine if he / she has returned from a COVID-19 holiday? Do people who have had close contact with COVID-19 have the right to a paid temporary incapacity certificate?
For individuals who have symptoms but have not yet received a test or a negative result.
Temporary incapacity certificates are paid until the symptoms of illness disappear.
Individuals who have returned from COVID-19 affected countries but have no symptoms
Cabinet of Ministers Order No. 103 'Declaration of Emergency' requires persons and contact persons who have returned from a country or territory affected by COVID-19 to take special precautions, including self-isolation at their place of residence (home quarantine).
If the employee has the opportunity to work from home, home quarantine should not affect the progress of work, but what about others? Is this a justification for being absent?
The Labor Law provides for various situations where being absent can be considered as justifiable. Given that self-isolation (home quarantine) imposed by the Cabinet of Ministers is not a recommendation but a mandatory requirement for all, this could be considered as an excuse and, accordingly, the employer is obliged to pay compensation to the non-performing employee; especially in situations where a COVID-19 employee is on a business trip in the affected country.
Special regulations for teachers, doctors, social workers
On March 14, amendments to the Cabinet of Ministers Regulations Nr. 152 “Temporary incapacity certificates issuing and Cancellation” were made, which improved procedures for issuing temporary incapacity certificates for health, social care and educational staff.
Regulations stipulates that temporary incapacity certificates are payable to persons:
- who have returned from COVID-19 affected countries, and
- who are employed in an educational institution attended by children, medical or social care institution and have close contact with the recipient, client or patient at work.
If the child has returned from COVID-19 affected countries
The temporary incapacity certificates can be given for parents whose children have returned from countries at risk of COVID-19.
Persons who have been in close contact with COVID-19
In accordance with Ministers Regulations Nr. 152 “Temporary incapacity certificates issuing and Cancellation” paragraph 3.3. temporary incapacity certificates shall be issued if quarantine isolation is required.
The Epidemiological Safety Act defines a contact person as a person who has been in direct or indirect contact with an infectious person or has been in the focus of an epidemic and who has been exposed to infection.
It must be noted, that contacts are only eligible to receive an temporary incapacity certificates if:
- A COVID-19 patient has been tested and found positive;
- The person's close contact with the infectious patient has been determined by an epidemiologist.
Planned amendments to legislation
In order to ease the burden and expense of entrepreneurs in the event of an emergency, the government is looking for ways to provide employers with a temporary incapacity certificates in a balanced way. Currently, it is planned that the first 10 days will be paid by the state from the social budget.
If the employee does not self-isolate
Social media show posts saying that people who have just returned from abroad continue their daily activities and do not observe the prescribed self-isolation.
In accordance with the requirements of the Labor Protection Law, if the employer has information that any of the employees have been abroad or have been in contact with COVID-19 during the last 14 days, it is the employer's duty not to allow the employee with Article 58 of Labor Law. Unless the employee is able to work from home, the employer may, by written order, impose a temporary ban on staying in the workplace without being paid for the period of suspension.
If the employer has already terminated the employment contract, the person has the right to obtain unemployment status and apply for unemployment benefit. The SEA advises to submit applications for unemployment status electronically.
You can apply for unemployment benefit if:
- the person has at least one year of being employed and;
- compulsory social security contributions for unemployment in the Republic of Latvia have been made for at least 12 months during the last 16 months.
Since January 1, 2020, unemployment benefits are being paid for eight months instead of the previous nine months, but the government, considering possible solutions to the crisis, has considered extending this benefit period.
Section 4 of the Labor Protection Law lists the general principles of labor protection, including the requirement to eliminate the causes of work environment risks, hygiene requirements, adapted work environment requirements. Requirements for the implementation and fitting-out of the work environment are primarily the responsibility of the employer, while employees must comply with them.
Practical examples of adapting the work environment during pandemic:
- ensure hygiene: hand disinfectants, paper towels, soap, alcohol wipes;
- in view of the fact that the coronavirus travels in the form of droplets of air, it is necessary to ensure effective ventilation and the possibility of ventilating the room by allowing fresh air to flow;
- Provisions should be made for social distance. This means that during an epidemic, any meetings with customers and partners should be restricted as much as possible, instead using the benefits of modern technology and eliminating events for clients to prevent the risk of the virus spreading.
Trade unions play an important role in promoting social protection and respect for workers' rights. The union has priority in representing the rights and interests of employees in the company, especially if the company or industry has a collective agreement. Under Article 11 of the Labor Law, trade unions have the right to inform and advise employers of actions which have the least impact on or affect workers' interests in the event of an emergency. In addition, if a union member is to be dismissed, the employer must obtain union approval.
We encourage employees and employers to find mutually beneficial solutions through negotiation with employee representatives and/or trade unions.
Support from the European Commission
The European Commission is also actively involved in the fight against the coronavirus crisis, which has pledged to help SMEs in difficulty immediately. The EU budget will use existing instruments to financially support these companies, complementing actions taken at national level. In the coming weeks, EUR 1 billion will be channeled from the EU budget as a guarantee to the European Investment Fund to provide banks with liquidity for SMEs. It will help at least 100,000 European SMEs and small mid-cap companies with around € 8 billion in funding. The European Commission points out that workers must be protected against unemployment and loss of income in order to prevent permanent adverse effects. The Commission stands ready to support Member States in this regard, in particular by promoting short-term working schemes, skills upgrading and retraining programs which have proved effective in the past.
This publication has been carefully prepared, however it is written in general terms and should be considered as general informative material. The team of BDO Law will follow the development of the current situation and publish up-to-date information as soon as any changes will come into effect. Please contact BDO Law to discuss your particular situation!