Navigating employment termination in Latvia requires careful adherence to the Labour Law to ensure compliance and avoid potential disputes. Both employers and employees have specific rights and obligations when an employment relationship ends, whether initiated by the employer, the employee, or by mutual agreement. Understanding the legal framework surrounding notice periods, valid grounds for dismissal, required procedures, and severance entitlements is crucial for a smooth and lawful process.
Properly managing terminations is essential not only for legal compliance but also for maintaining good employee relations and protecting the company's reputation. Employers must follow strict procedural requirements and provide clear, legally sound reasons for dismissal, particularly when terminating an employee's contract unilaterally. Failure to comply with these regulations can lead to costly legal challenges and reinstatement orders.
Notice Period Requirements
The Labour Law in Latvia specifies minimum notice periods for terminating an employment contract, primarily when the employer initiates the termination. The length of the notice period typically depends on the grounds for termination and, in some cases, the employee's length of service.
Generally, when an employer terminates an employment contract due to reasons related to the employee's conduct or performance (e.g., violation of work rules, insufficient skills), the minimum notice period is 10 calendar days.
When the employer terminates the contract due to reasons related to the employer's operations (e.g., redundancy, company liquidation), the minimum notice period is longer and depends on the employee's length of service with the employer:
| Length of Employment with Employer | Minimum Notice Period (Employer Initiated, Operational Reasons) |
|---|---|
| Less than 5 years | 1 month |
| 5 to 10 years | 2 months |
| More than 10 years | 3 months |
An employee resigning must provide the employer with one month's written notice, unless otherwise agreed or specified in the employment contract or collective agreement.
During the notice period, the employment relationship continues, and both parties must fulfill their obligations. The employer must pay the employee's salary and provide all benefits during this time.
Severance Pay Calculations and Entitlements
Severance pay is typically required in Latvia when the employer terminates the employment contract due to reasons related to the employer's operations or specific circumstances not related to the employee's fault. This includes termination due to redundancy, company liquidation, or the employee's inability to perform work due to health reasons (if the employer cannot offer alternative suitable work).
Severance pay is calculated based on the employee's average monthly earnings and their length of service with the employer. The minimum statutory severance amounts are as follows:
| Length of Employment with Employer | Minimum Severance Pay (in months' average wage) |
|---|---|
| Less than 5 years | 1 month |
| 5 to 10 years | 2 months |
| 10 to 20 years | 3 months |
| More than 20 years | 4 months |
Severance pay is calculated using the employee's average earnings over the last six months of employment. This payment is in addition to the employee's final salary for the work performed up to the termination date and any accrued but unused annual leave compensation. Severance pay is generally subject to income tax and social contributions.
Severance pay is not typically required when the employee is terminated for reasons related to their own fault, such as gross misconduct, repeated violations of work rules, or prolonged absence without valid reason.
Grounds for Termination
Employment contracts in Latvia can be terminated based on various grounds specified in the Labour Law. These grounds can be broadly categorized as those initiated by the employee, by mutual agreement, or by the employer (with or without employee fault).
Employer-Initiated Termination (With Employee Fault): The employer can terminate the contract with cause based on the employee's actions or inactions. Valid grounds include:
- Employee has violated the employment contract or internal work rules without a valid reason.
- Employee has failed to perform work tasks or has performed them improperly without a valid reason.
- Employee has acted illegally while performing work.
- Employee has acted contrary to moral principles (e.g., theft, fraud) while performing work.
- Employee is under the influence of alcohol, narcotic, or toxic substances at work.
- Employee has grossly violated work safety regulations, endangering their own or others' health and safety.
- Employee has been absent from work for more than one working day without a valid reason.
- Employee has failed to pass a probationary period.
Employer-Initiated Termination (Without Employee Fault - Operational Reasons): The employer can terminate the contract due to reasons related to the company's operations or the employee's inability to perform the work through no fault of their own. Valid grounds include:
- Reduction of the number of employees (redundancy).
- Liquidation of the employer.
- Employer is declared insolvent.
- Employee is unable to perform the agreed work due to health condition, confirmed by a doctor's opinion.
- Employee is unable to perform the agreed work due to insufficient professional competence.
- Employee cannot perform the work due to reinstatement of a previously dismissed employee.
Employee-Initiated Termination: An employee can terminate the contract by giving notice (resignation). They can also terminate the contract immediately for a valid reason if the employer has significantly violated the terms of the contract or the law.
Termination by Mutual Agreement: The employer and employee can agree to terminate the employment contract at any time. This must be documented in writing.
Procedural Requirements for Lawful Termination
To ensure a termination is lawful, employers must strictly follow the procedural requirements outlined in the Labour Law. Failure to adhere to these steps is a common pitfall and can render the dismissal invalid.
Key procedural steps for employer-initiated termination typically include:
- Written Notice: The employee must be given written notice of termination. The notice must clearly state the legal grounds for termination.
- Reasoning: The employer must be able to prove the existence of the stated grounds for termination. This often requires prior warnings or documentation of performance issues or misconduct.
- Opportunity to Explain: Before terminating for reasons related to the employee's conduct or performance, the employer must typically give the employee a written request to provide a written explanation for their actions or inactions. The employee must be given a reasonable time (usually not less than two working days) to provide this explanation.
- Consultation (if applicable): In certain cases, such as redundancy, the employer may need to consult with employee representatives (e.g., trade union) if they exist.
- Issuance of Final Documents: On the last day of employment, the employer must pay all outstanding wages, severance pay (if applicable), and compensation for unused annual leave. The employer must also issue the employee's employment book (if applicable) and other required documents.
- Registration: The termination must be registered with the State Revenue Service.
Common pitfalls include failing to provide written notice, stating incorrect or insufficient grounds, not giving the employee an opportunity to explain their conduct, miscalculating notice periods or severance pay, and failing to provide final payment and documents on time.
Employee Protections Against Wrongful Dismissal
Latvian law provides significant protections to employees against unfair or unlawful dismissal. An employee who believes their termination was wrongful has the right to challenge it in court.
Grounds for challenging a dismissal include:
- Termination without a valid legal ground.
- Failure to follow the correct procedural requirements (e.g., insufficient notice, no opportunity to explain).
- Termination based on discriminatory reasons (e.g., gender, age, race, religion, pregnancy, trade union membership).
- Termination during periods of protection (e.g., during temporary incapacity for work, pregnancy, or while on maternity/parental leave, with limited exceptions).
If a court finds that a termination was unlawful, it can declare the dismissal invalid and order the employer to reinstate the employee to their previous position. In such cases, the employer may also be ordered to pay the employee average earnings for the entire period of forced absence from work, plus moral damages.
Employees seeking to challenge a dismissal must typically file a claim with the court within one month from the date they received the written notice of termination. This short time limit emphasizes the need for employees to act quickly if they believe their rights have been violated.
