Latvia
Draft Law “Amendments to Labour Law” (Draft law No.: 1022/Lp14)
Impact date: Awaited
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
During the second reading stage, the Social and Labor Affairs Committee of the Saeima has been examining proposals to the draft law over several sittings. At its sitting on 14 April 2026, the committee discussed, among others: a Chamber of Commerce proposal to allow employers to deduct the value of unreturned or damaged company assets from final pay (Section 79), which was noted but not supported; a trade-union proposal to extend the limitation period for unequal-treatment claims from three months to three years (Section 95); the grounds for immediate termination by an employee where remuneration is delayed, including whether this should cover all remuneration components and what delay period should apply (Section 100, with the committee leaning toward a five-working-day delay); and the exclusion of sick-leave time for caring for a seriously ill child from the period giving the employer a right to terminate (Section 101). Several proposals were referred to the Ministry of Welfare, the Ministry of Economics, and the social partners for further discussion. Proposals concerning protection of trade union members against dismissal (Section 110) were deferred to a later sitting.
Not all proposals have yet been examined, and further committee sittings are scheduled before the draft law is advanced for its second reading in the Saeima.
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.
New law implementing the EU Pay Transparency Directive
Impact date: Awaited 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. However, 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.
On 26 March 2026, the Ministry of Welfare published a draft bill to transpose the Directive. The draft bill generally mirrors the requirements of the Directive. On 1 April 2026, the Ministry of Welfare published the draft bill for public consultation until 9 April 2026. The draft itself does not specify a separate effective date, signalling adherence to the Directive's 7 June 2026 transposition deadline. The reporting obligations are then phased in under transitional provisions.
Under the draft, the gender pay-gap reporting obligation is tiered by headcount and phased in over time: employers with 250 or more employees report annually (first report by 7 June 2027); employers with 150 to 249 employees report every three years (first report by 7 June 2027); and employers with 100 to 149 employees report every three years (first report by 7 June 2031).
Employers with fewer than 100 employees may report voluntarily. Where an unjustified pay gap of at least 5% in any category of employees is not corrected within six months of reporting, the employer must carry out a joint pay assessment with employee representatives. The Ombudsman (Tiesībsargs) oversees protection of the right to equal pay, while the State Labour Inspectorate (Valsts darba inspekcija) handles administrative offences, with fines of up to 2,800 penalty units for legal persons for failure to report.
Claims arising from the right to equal pay are subject to a three-year limitation period, and the burden of proof shifts to the employer where transparency obligations have not been met. The Cabinet of Ministers must issue the reporting-procedure regulations by 1 May 2027.
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 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
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