Debate on the Labour Act amendments has become unnecessarily adversarial, even though the core objective is clear: Latvia needs modern labour-market regulation that supports economic development through cooperation, transparency and flexibility. Today’s discussion focuses mainly on social-protection fears, overlooking how outdated mechanisms limit growth, productivity and fair employment practices. The proposed amendments seek to modernise aspects of the current regulation; however, important issues concerning collective agreements, overtime, and trade union member protection remain outstanding or are not addressed in the draft law. Modernisation is therefore not a reduction of rights but a necessary step toward a labour-market framework that enables constructive dialogue, reduces informality and strengthens Latvia’s long-term competitiveness.
The rules that shape everyday employment relationships affect not only businesses and employees but also Latvia’s overall competitiveness. The Labour Act has now reached Parliament, where lawmakers are reviewing changes that will influence how employment relations are regulated in the years ahead.
Although the current reform package focuses on two particularly significant amendments – overtime remuneration (Article 16) and the modernisation of workplace agreements (Articles 17–18) – it leaves aside an equally important issue discussed earlier: the regulation on the dismissal of trade union members (Article 110). All three areas have remained largely unchanged for more than a decade and clearly require updating to reflect current workplace realities. Public discussion around the amendments has intensified, with claims that the reforms could lower income, weaken employees’ protection, reduce social-security safeguards or shift the balance of power in the workplace. These narratives risk presenting a misleading picture of the proposals, assigning sweeping negative consequences that have no substantiated link to the actual content. A careful review of the evidence and practical context shows a far more accurate and nuanced reality than these public claims imply.
Overtime Remuneration and Its Impact on Income
Concerns have been raised that lowering the statutory overtime supplement from 100% to a minimum of 50% to all employees would reduce employee income, weaken Latvia’s position relative to neighbouring countries, and harm long-term income security. These concerns assume that overtime represents a significant share of earnings, that competitiveness is determined by the nominal size of the overtime premium, and that overtime materially contributes to pension savings.
Overtime represents only a small share of total working hours in Latvia, and the portion that is formally recorded contributes only modestly to employees’ earnings. At the same time, labour‑market data (2022)[1]show that the current double‑rate requirement is rarely applied in practice because it is costly and administratively burdensome. This combination — low volumes of formally recorded overtime and employers’ reluctance to register additional hours under the existing rules — results in many overtime hours being compensated informally or inconsistently.
Such practices reduce transparency, undermine the protective purpose of the regulation and limit the extent to which overtime can contribute to long‑term income security. Hours that are not formally recorded do not generate social‑insurance contributions or pension rights, diminishing their real value for employees. Against this backdrop, claims of substantial income losses overlook how overtime is actually used and accounted for in Latvia: it is not a stable or reliable source of core income, nor is it intended to function as one.
Second, regional comparisons should focus on the practical effect of overtime remuneration rather than the percentage rate in isolation. In neighbouring countries, the overall structure of remuneration and labour‑market conditions means that the same percentage supplement translates into a different absolute outcome. This reflects broader differences in how base pay is formed across labour markets — factors such as productivity, sectoral composition and cost structures shape the underlying pay to which any premium is applied.
What ultimately matters for employees is the real value of the additional payment, which is determined by the base salary, not by the percentage alone. The purpose of the overtime premium is to provide a reasonable extra payment for additional hours worked, but it is not designed to function as a core income source. Overtime remains a supplementary element of pay, and its impact naturally varies depending on the underlying remuneration environment in each country.
Modernising Workplace Agreements
Concerns have been expressed that introducing a review mechanism for collective agreements could reduce stability and weaken employee protection. This assumes that current agreements function effectively and that maintaining them unchanged is necessary to preserve rights.
In reality, the main challenge is the absence of a workable process to review agreements that were concluded many years ago and no longer correspond to present organisational or economic conditions. A small number of these legacy agreements remain in force despite being outdated, slowing the conclusion of new agreements in all market and preventing both sides from adjusting commitments that no longer reflect sector realities.
Establishing a defined review mechanism would resolve these issues. Collective agreements are contracts, and periodic reassessment is a standard element of maintaining balanced obligations. Clear criteria for updating outdated terms would allow necessary adjustments while preserving the protective role of collective bargaining and ensuring that agreements remain aligned with contemporary labour-market conditions.
The Dismissal of Trade Union Members
Finally, the discussion on Article 110 has raised concerns that any modification would weaken protection for trade union members. This argument assumes that the current approval system functions effectively. In practice, however, the existing framework enables the approval requirement to block lawful business processes indefinitely. This is demotivating for organisations and does not contribute to balanced labour relations. A trade union’s role should be to strengthen cooperation by providing legal guidance and engaging in constructive dialogue—not to determine the legal validity of dismissal decisions.
Moreover, the current system creates unequal treatment among employees. Those who have chosen — fully within their rights — not to join a trade union are placed in a comparatively weaker position, as they do not benefit from the same procedural protections. A regulatory model that grants significantly different dismissal safeguards based solely on union membership risks undermining the principle of equal treatment in the workplace.
Long, unresolved disputes also harm employees themselves. Workers tied to prolonged court processes cannot participate in the labour market, access unemployment services or benefit from state-funded upskilling, leaving them in legal and financial uncertainty for months or years. This delays reintegration into employment, reduces competitiveness and undermines the protective intent of the system. Keeping an employee in a disputed role does not support a transparent, well-functioning labour market. For these reasons, it is essential that the proposed amendments to Article 110 shall be included in the draft law for the second reading.
References:
[1] https://stat.gov.lv/en/statistics-themes/labour-market/wages-and-salaries/press-releases/20909-main-indicators-structure?