Latvian Saeima approves downtime salary reduction

On Thursday, May 7, Saeima deputies adopted amendments to the law which will allow employers to pay 70% of workers' salary during downtime period.

The amendments to the Law on State Hazard Prevention and Resilience Measures related to Covid-19 Proliferation are intended to ease application of certain conditions for employers participating in the State and Enterprise In-depth Cooperation Program, if affected by the Covid-19 crisis.

The amendments provide for a reduction of the downtime salary specified in the Labor Law from 100% to 70% of the employee's salary.

According to the Saeima Press Service, the employer will be able to pay remuneration to the employee, the amount of which must not be less than the minimum monthly salary (430 EUR). If the worker is legally responsible for minors or studying children under 24, he or she shall retain funds for each dependent child. 

The collective agreement also provides for the possibility to arrange part-time jobs in the event of a temporary production decrease. This solution will allow employers to organize jobs more flexibly and preserve existing jobs in times of crisis.

In cases where the employee does not agree to the reduction of salary, the employer shall be entitled to terminate the contract of employment without complying with the specified one-month period, but the employer will be obliged to pay the employee a severance benefit to the extent specified in the Labor Law.

Representatives of employers and employees stressed that partial pay was limited to members of the In-depth Cooperation Program.

The In-Depth Cooperation program is a special form of state-enterprise cooperation implemented by the State Revenue Service, which provides companies which have proved themselves as honest taxpayers with advantages and benefits.

The law was adopted with 58 votes for, 12 against.

CONTEXT:

Due to the Covid-19 crisis, the Latvian government had agreed at the end of March 2020 on state aid to companies whose turnover had fallen by 30%, in some cases by 20%. The State Revenue Service pays downtime salary of 75% of the employee salary before crisis, but not more than EUR 700 per month. Taxes on this amount are not withheld.

The government agreed to allocate €102 million to the State Revenue Service (SRS) for the cost of downtime benefits.

The SRS had only paid EUR 7 992 731 in downtime benefits by the end of April.

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Economy
Economy