New requirements when posting an employee to work from Latvia to another country

14.01.2021 Irina Stromberga, lawyer

On December 21, 2020, the Saeima of the Republic of Latvia adopted amendments to the Labour Law, which entered into force on January 5, 2021. According to the annotation provided by the legislator, the amendments aim to ensure more effective protection of the rights of posted workers, taking into account the requirements of Directives (EU) 2018/957 and (EU) 2019/1152 adopted by the European Parliament and the Council.

The new amendments concern those articles of the Labour Law that regulate employment relations with employees who come to work in Latvia, as well as with Latvian employees who are posted by the employer to work in other European Union or European Economic Area countries.

If we are talking about employees who are posted from Latvia to work in other European Union or European Economic Area countries, the above-mentioned amendments stipulate that the employer is obliged to inform the employee in writing about:
1) the country or countries in which the work is intended to be performed and the expected duration of the performance of the work;
2) the currency in which the salary will be paid;
3) cash benefits or benefits in kind in connection with work tasks, if such are provided;
4) the possibility of repatriation and the procedure thereof, if it is provided;
5) the remuneration to which the employee is entitled in accordance with the regulatory enactments of the state in which he or she will perform the work;
6) the remuneration related to the posting of the employee and the procedures by which the expenses for travel, meals and accommodation are reimbursed;
7) the single official website of the country where the work will be performed, which contains information on the posting of workers.

In addition, when posting an employee to work in another member state of the European Union or in a country of the European Economic Area, the regulatory enactments governing the reimbursement of business trip expenses shall apply accordingly. Now the employer pays the posted employee a daily business trip allowance in the amount of 30 percent of the business trip daily allowance norm specified in the regulatory enactments that regulate the reimbursement of expenses related to business trips.

However, the employer is not obliged to pay the posted employee the daily subsistence allowance provided for in the new provisions of the Labour Law if one of the following conditions is in force:
1) the employee is provided with meals three times a day;
2) the remuneration paid to the employee is the same as that of a comparable employee in the country to which the employee is posted to perform work.

In other words:

  • if the posted worker is paid the minimum hourly rate set for the relevant profession/position in the country where the worker is posted to perform work, the employer will be obliged to pay the worker 30 per cent of the daily subsistence allowance specified in the legislation of that country;
  • if the posted worker will be paid the average hourly rate for the profession/position in the country where the worker is posted and plus the worker will be provided with meals three times a day at the employer’s expense, the employer has the right not to pay such worker the daily subsistence allowance.

The new provisions of the Labour Law also emphasize that if the employer pays the employee a daily subsistence allowance in accordance with the law, it is in any case considered as compensation for expenses, but not as part of the salary.

Another important innovation: in the future, a person who provides a service to ensure the employment of foreign employees in Latvia (for example, an employment agency) is considered to be an employer who sends an employee to work in Latvia. The person providing the employment service in this situation is subject to all the conditions of posting of the employee. Thus, the legislator imposed responsibility for the observance of legal norms with regard to a person who is sent to Latvia to perform work not only for the employer, but also for the intermediary through whom the employee was employed by the Latvian employer.

New amendments to the Labour Law may have a negative impact on temporary employment agencies, as well as Latvian construction companies that provide services abroad. It is no secret that the daily subsistence allowances, which exist in all Eastern European countries, brought certain benefits to their employees by sending them to the countries of Old Europe. Thus, the cost of Latvian employees’ services abroad may increase, which means that it will be unprofitable to attract them in the future.

In addition, questions arise about the possibility of performing already concluded contracts for the performance of works in other European Union countries. The contracts stipulate the salaries of employees, all costs; therefore, sudden amendments to regulatory enactments may also cause unforeseen costs or early termination of these contracts.

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