Latvia
Draft Law “Amendments to Labour Law” (Draft law No.: 1022/Lp14)
Impact date: The Draft Law was prepared by the Ministry of Welfare on 18 March 2025. It has been submitted to the Parliament of the Republic of Latvia and has passed the 1st reading. Proposals for the second reading had to be submitted by 6 February 2026. A meeting of the Social and Labor Affairs Committee was held on 3 March 2026, to decide on the inclusion and exclusion of proposals in the draft law before it was submitted for the 2nd reading in the Parliament of the Republic of Latvia.
There is currently no provisional date as to when (if) the Draft Law will enter into force.
The Draft Law has been developed to improve the regulation of employment relations, addressing key areas such as the employee's right to refuse work and terminate the employment contract in cases of wage non-payment, overtime, idle time, part-time work, collective agreements, and periods of incapacity for work. It also aims to reduce formal requirements imposed on employers, without compromising the overall level of legal protection for employees.
The proposed key amendments are as follows:
- the employee will have the right to terminate the employment contract immediately if the agreed or legally mandated salary is delayed by more than two weeks beyond the scheduled payment date and will be entitled to receive severance pay
- periods during which an employee is on sick leave to care for a sick child will not be counted towards the time that entitles the employer to terminate the employment contract
- the amount of overtime pay may be reduced to 50% or 75%, but only through a collective or general agreement, and only if certain conditions are met
- an employee and employer may agree to a four-day working week either at the time of signing the employment contract or during the term of an existing contract. This means that an employee could agree to work ten hours per day from Monday to Thursday, with Friday off
- if a new collective agreement is not concluded within two years after the expiry of the previous one, either party has the right to unilaterally withdraw from the agreement’s application, provided that the other party is given six months’ written notice in advance
- if the downtime exceeds five consecutive working days, the employer may reduce the compensation paid during this period to 70%, provided that the employee’s retained remuneration does not fall below the minimum monthly wage, pro-rated according to the agreed working hours. If the downtime lasts more than four consecutive weeks and the employee does not agree to the reduction in downtime compensation, they will have the right to terminate the employment contract immediately
Currently, there are ongoing discussions regarding the overtime pay rate, with a proposal to set overtime compensation at 50%, maintaining the possibility of setting higher overtime rates in collective agreements. There are also suggestions to remove from the law the provision that prohibits terminating the employment of a trade union member without the union’s consent. Additionally, it has been proposed to establish a one-year validity period for collective agreements after their expiration, as well as to introduce a six-month notice period for terminating contractual obligations. The government's proposal to set a lower overtime rate in collective agreements is not supported in the discussions.
Employer implications/action needed Potential actions include: Companies with collective agreements could evaluate whether their current terms would be affected by the new rules on collective agreement expiry and overtime surcharge reductions. HR teams could review internal policies on downtime notification procedures, salary payment compliance, and the potential introduction of a four-day working week option once the law is adopted. Employers deploying high-risk AI systems in the workplace should be aware that they must be ready to comply with the written notification requirements for employee representatives and affected staff.
Amendments to Law on Remuneration of Officials and Employees of State and Local Government Authorities
Impact date: The law was amended on 16 October 2025 and entered into force on 1 January 2026. The amendments provide for severance pay for executive directors of local government authorities, leaving them in office due to the expiration of their term of office in order to ensure equal conditions in the process of termination of employment relationships. The amendments also provide for a higher allowance for diplomatic and consular service officials (employees), as well as soldiers who are at risk of hostilities, violence, unrest or natural disasters at their place of duty, as well as improved regulations that provide for the conditions for compensation of travel expenses for officials who perform their service (work) duties abroad. Another purpose of the amendments is to prevent diversity in the application of the provisions for determining the remuneration of medical professionals and to strengthen the performance of the basic functions of the Emergency Medical Service and its readiness for urgent and extraordinary crisis situations. The amendments will improve the regulation that determines the remuneration to military personnel and soldiers and the conditions for its granting. And lastly, they will ensure legal clarity regarding the reorganization of the State Revenue Service and the establishment of the Tax and Customs Police.
Employer implications/action needed State and Local Government Authorities as employers will need to review their internal working policies to comply with new amendments.
Minimum wage increase
Impact date: Amendments came into force on 1 January 2026. The new minimum wage in the Republic of Latvia within normal working hours is €780.
Employer implications/action needed The new minimum wage must be complied with when determining employee wages and their working hours.
The non-taxable minimum
Impact date: 1 January 2026 The Law On Personal Income Tax transitional provision 202 was amended in 2024, to provide that transitional provision 197 applied from 2025. This transitional provision states that, in accordance with the first part of Article 12 of the Law On Personal Income Tax, the monthly non-taxable minimum is €550 per month in 2026.
Employer implications/action needed N/A
Employer risk N/A
Amendments to the Whistleblowing Law
Impact date: Amendments entered into force on 1 March 2026. The amendments concern both the protection of whistleblowers and the institutional framework and reporting procedures. They are intended to make the whistleblowing system more effective, secure, and accessible.
Employers with 50 or more employees are required by law to establish an internal whistleblowing system.
As of 1 March 2026, the whistleblower contact point has been transferred from the State Chancellery to the Corruption Prevention and Combating Bureau (KNAB), which is now the central coordinating authority. KNAB is responsible for supervising the examination of reports, providing methodological support, organizing training, and monitoring compliance with the law. The website trauksmescelejs.lv has also been transferred to KNAB.
The list of actions that are considered prohibited adverse consequences for whistleblowers, their relatives and related persons has been expanded. In addition to the existing prohibitions (dismissal, disciplinary action, changes in employment conditions, etc.), it is now also clearly prohibited to intimidate, influence or ostracize a person, cause them financial loss, include them in the industry's "blacklist" and submit false applications to the court. The law also provides that causing adverse consequences includes not only actual actions but also threats and attempts to cause them.
There is a detailed procedure for submitting reports. Whistleblower reports may be submitted not only in writing and electronically, but also verbally by telephone or in person. The employer must ensure that such reports are recorded or written down, which the whistleblower can check and sign.
At the same time, the law has been supplemented with a provision granting the right to compensation for losses or non-pecuniary damage caused by the deliberate provision of false information using the whistleblowing mechanism. Therefore the system also protects against the malicious use of whistleblowing.
Employer implications/action needed Employers must review their internal whistleblowing systems to ensure compliance with the new amendments, including enabling oral reporting channels (by phone or in person) with proper documentation procedures, updating employee onboarding materials to cover both internal and external reporting options, and training designated persons on the expanded scope of prohibited retaliation and confidentiality requirements. Employers with 50 employees should verify whether the lowered threshold now applies to them.
Employer risk Failure to maintain a compliant internal whistleblowing system may result in administrative fines. Retaliation against whistleblowers, their relatives or associated persons, including threats or attempts, carries fines of up to 2,800 fine units for legal entities. Unlawful disclosure of a whistleblower's identity may lead to criminal liability. The burden of proof that any adverse action was unrelated to the whistleblower report rests with the employer.
New law implementing the EU Pay Transparency Directive
Impact date: New law transposing the Directive is expected to enter into force on 7 June 2026. The legislative drafting process is currently underway at the Ministry of Welfare, but the draft law has not yet been published. Latvia is transposing EU Directive 2023/970 on pay transparency, which must be implemented into national law by 7 June 2026. The Ministry of Welfare is preparing a new standalone law to transpose the Directive's minimum requirements.
The law will require all employers to establish gender-neutral pay structures based on objective criteria (skills, effort, responsibility, working conditions) and to provide employees and job applicants with access to pay-related information. Employers with 100 or more employees will be subject to regular pay gap reporting obligations.
Key requirements including the duty to ensure equal pay, provide transparent pay criteria, respond to employee information requests, and refrain from asking candidates about their pay history will apply to all employers regardless of size. Employees will have the right to request written information about their individual pay level and average pay levels by gender for comparable roles, and contractual clauses prohibiting employees from disclosing their pay will be banned. Where a pay gap exceeding 5% in any employee category cannot be justified by objective, gender-neutral criteria, the employer will be required to conduct a joint pay assessment with employee representatives and take corrective action.
Employer implications/action needed All employers will need to establish gender-neutral pay structures based on objective criteria, ensure pay transparency for employees and job applicants, and be prepared to justify any pay differences for equal or equally valuable work. Employers with 100 or more employees will additionally face periodic pay gap reporting obligations. Employers are advised to review their current pay systems ahead of the law taking effect.
Employer risk Failure to meet pay transparency obligations (e.g. refusing requests, not reporting pay data) shifts the burden of proof to the employer in any discrimination claim. Employers may also face exclusion from public procurement procedures for non-compliance.
Contact
Jānis Siliņš Co-Head of Employment, Partner, Attorney at Law
E: janis.silins@eversheds-sutherland.lv T: +371 67 280 102
M: +371 26 330 394
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.