Changes to overtime pay system

The Latvian parliament has passed amendments giving employers alternatives for overtime pay

Until 16 August 2017, overtime work in Latvia had to be paid at double the usual hourly rate. This was among the highest overtime payment rates in the EU. Overtime pay could not be replaced by time off in lieu (“Compensatory Time”). But under a recent change in the law overtime work can now be compensated by paid Compensatory Time on another working day.

The preconditions for Compensatory Time are as follows:

  • It requires the written consent of the employee (like overtime work itself), to be given at the same time as consent to overtime work.
  • Compensatory Time must be given: (i) in normal working time within one month from the day when the overtime was worked; or (ii) in aggregated working time during the next reference pay period (not exceeding 3 months). For example, the 3rd quarter of 2017 has 520 normal working hours and the 4th quarter of 2017- 495 h. An employee who had to work 525 hours in the 3rd quarter could opt for 5h overtime but instead of being paid 100% extra could now agree with the employer to work 490h in the 4th quarter but be paid for 495h.

Additionally, employer and employee may agree to add Compensatory Time to the employee’s annual paid vacation. In that case, the one-month and three-month restrictions do not apply.

If employment ends before the employee uses up agreed Compensatory Time, then the employer must pay the overtime extra payment (double the usual hourly rate) for overtime work.

Source: Amendments to the Labour Law (2017), Latvijas Vēstnesis, 152, 02/08/2017

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