To prevent unfair competition and so called “wage dumping” in certain sectors, recent amendments to the Latvian Labor Code allow employers in industries covered by an industry collective agreement, or general agreement, to make reduced overtime payments.
Under the Latvian Labor Code, in the absence of a different arrangement set out in a collective agreement or employment contract, employees are entitled to receive a supplement of at least 100 percent of their normal hourly or daily salary rate for overtime work.
However, the recent amendment allows employers in sectors covered by an industry collective agreement to reduce the overtime supplement to 50 percent of the normal hourly salary rate.
Currently, industry collective agreements are not common. The first, which covers the construction industry, came into force on November 3, 2019. However, more industries are likely to introduce their own industry collective agreements. The construction industry collective agreement applies to all employers and employees in the construction industry and determines a minimum salary of EUR 780.00; a minimum hourly rate of EUR 4.67; and a minimum supplement for overtime work of 50 percent of the normal hourly salary rate.
Although these amendments to the Latvian Labor Code may reduce overtime pay for certain employees, they may lead to more industries adopting industry collective agreements, which will normally have provisions that benefit employees in other areas.
Written by Toms Tidemanis of TGS Baltic and Roger James of Ogletree Deakins
© 2020 TGS Baltic and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.