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An employment contract is a fundamental document that governs the employer-employee relationship, henceforth, it is important understand its components and be aware of their purport. In cooperation with the magazine “iTiesības”, we begin a series of articles in which we are going to explain the nuances of the employment contract. This time the focus is on the parties to the contract, the commencement of the employment relationship and the terms.

According to the Labour Law (LL), an employment contract must always be concluded in writing, and the employer has obligation to ensure that this requirement is met. The LL also determines what information must be included in the employment contract, at the same time providing that, if necessary, the parties are entitled to include additional details in the contract.

Contracting parties

When concluding an employment contract, information about the parties to the contract – the employee and the employer – shall be indicated. For this reason, the name, surname, personal identity number and place of residence of the employee shall be included in the contract. If the employee is a foreigner who does not have a personal identity number, the date of birth must be indicated instead. The contract shall also include the employer’s name, surname or the name (firm), personal identity number or registration number and address. If the employer is a foreigner who does not have a personal identity number, the date of birth must be indicated in the contract.

During the process of composing the employment contract, it would be advisable for the employer to inspect the employee’s identification data by examining the employee’s identification document (national passport or ID card) in order to ensure the accuracy of the data.

Place of residence

With regard to the employee’s place of residence, it should be emphasized that, according to the LL, the actual geographical address should be indicated in the employment contract as the place of residence, not the declared place of residence of the employee. Of course, the employee has the right to choose which place of residence – actual or declared – to indicate, however, in any case it would be in the employee’s interest to indicate the address to which he receives postal correspondence. In certain cases, for example, by sending a notice of employment contract by the post, only the address specified in the employment contract is binding on the employer, as indicated by the Civil Chamber of the Riga Regional Court in case CA-2361-17/12.

Furthermore, in a situation where the employee indicates his actual place of residence, the employer should refrain from requesting to provide the declared place of residence, unless otherwise provided by law. The declared place of residence qualifies as personal data in accordance with the General Data Protection Regulation, thus, unauthorized processing of it may constitute a personal data breach.

With regard to the employer’s place of residence, it must be taken into account that it must be separated from the employee’s workplace, which, in accordance with the law, shall be indicated in the employment contract. The employee does not always perform the work at the employer’s address, thus, both the employer’s place of residence and the employee’s workplace must be indicated separately in the employment contract. If the employer is a merchant, then, in practice, the legal address stipulated in the Commercial Register is mostly indicated, to which the presumption of receipt of consignments provided for in Section 12 (4) of the Commercial Law applies, i.e. consignments shall be deemed to be received, if the sender proves documentarily that such sending was performed.

Furthermore, given that the information on the contractors may change after the conclusion of the employment contract, in order to avoid the need to amend the employment contract each time, the contract may provide that the parties may inform each other unilaterally about the change, while setting out the procedure for such notification and from which time the change shall be deemed to take effect.

In addition to information on the contractors, the employment contract must also include the date of commencement of the employment relationship. It should be noted that there is a difference between the date of commencement of that relationship and the date of conclusion of the employment contract. Namely, the date of conclusion of the employment contract is the day when the parties agree on the essential components of the employment contract and the employment contract is usually signed. Whereas, the commencement of the employment relationship is the day when the employee begins to perform the work duties, in fact, it can be several days after the date of signing of the employment contract.

Duration of employment relationships

With regard to the duration of the employment relationship, the LL stipulates that general employment contracts are to be concluded for an indefinite period. At the same time, Article 44 of the LL provides for specific cases in which an employment contract may nevertheless be concluded for a specified period, such as for seasonal work or to substitute an employee who is absent. It should be noted that the list of cases specified in the LL, when a specified period employment contract may be concluded, is exhaustive – more information can also be found in the Judgment of the Senate of 27 April 2017 in case SKC-792/2017. Thus, the employer on its own initiative is not entitled to determine additional cases for concluding a specified-term contract. At the same time, it should be noted that the conclusion of a specified period employment contract may also be a requirement of other laws and regulations other than LL. Thus, for example, in the case SKC-1404/2014 of 28 February 2014, the Senate established that the agreement document does not specify the term of termination of the employment relations, as provided for in Article 44 (4) of the LL (employment contract term or circumstances indicating the completion of the relevant work should be included), but in accordance with the norms of the Law on Higher Education Institutions, a person who has not been elected to an academic position may be hired only for a period not exceeding two years.

When concluding an employment contract for an indefinite period, the employment contract usually indicate that the contract is concluded for an indefinite period or without a term. On the other hand, if the employment contract is concluded for a specified period, pursuant to Article 44 (4) of the LL, the contract shall specify the expected duration of the employment relationship, i.e. either the expiry date of the employment contract or the conditions determining that the respective work is completed. In addition, since the word “or” is used in the legal norm, if the term of the employment contract is indicated, the contract does not have to indicate the conditions determining the completion of the work, as stated by in the Judgement of the Senate of 17 October 2012 in case SKC-1618/2012.

The term of the employment contract sets a specific date until which the employment contract is valid, thus, this date shall be the last working day of the employee. In addition, according to the LL, in general, the maximum term of a specified period employment contract should not exceed five years, unless other laws and regulations provide for a different term, in case for seasonal works – term should not exceed ten months within one year. It should be noted that the circumstances which indicate the completion of the work in question shall be applicable and sufficiently precise, for example, the employment contract may be concluded for a substitution of an employee who is absent, which means that the employment contract will be terminated as soon as the absent employee returns.

In addition, as the Senate has pointed out in case SKC-792/2017, in the case of a specified period employment contract, the employer is obliged to substantiate the need to enter into a specified period employment contract. The justification shall not merely be a reference to Article 44 of the LL, but rather specific circumstances prevailing in the undertaking which indicate such need. Thus, in order to reduce the possibility of dispute, it is advisable that the employer in the specified period employment contract include both a reference to Article 44 of the LL and a description of the circumstances justifying the need to conclude such contract.

At the same time, if the employment contract does not specify the term for which it is concluded, or, according to the circumstances, it is not possible to conclude an employment contract for a specified period, the contract shall be deemed to be concluded for an indefinite period pursuant to Section 44 (5) of the LL.

The Workplace

In addition to the above, the workplace must also be indicated in the employment contract. The workplace must be interpreted as the place where the employee will actually perform his duties. In the case of a fixed workplace, the employment contract should specify address, such as the address of the employer’s legal or structural unit. Fixed workplace should also be specified in cases where the parties have agreed that the employee will perform the work remotely on a permanent basis, for example at his place of residence, i.e. outside the employer’s company’s location. On the other hand, if the performance of the work duties is not provided for in a particular workplace, the contract shall state that the employee may be employed in various places. For example, an employer working in the construction sector could indicate the workplace of a construction worker as follows – the employer’s construction sites in Latvia. In addition, as the Senate pointed out in its judgment of 28 November 2012 in case SKC-2263/2012, in the case of unfixed or mobile workplace, the employer has the right to change the workplace by unilateral order without amending the employment contract, nevertheless, he is obliged to properly inform the employee about his workplace in accordance with the procedures.

The indication of the exact workplace in the contract and in the employer’s orders becomes relevant if there is a dispute between the employer and the employee regarding the improper performance of work duties. Namely, in such cases it is often important to establish whether the employee has actually been at the workplace and performed his work duties.

What to do if there are uncertainties or difficulties arising from the employment contract?

If you need help with labour law matters, please contact our lawyer Ilze Jankeviča.

Lawyer Ilze Jankeviča shared her knowledge at the LEADELL Academy. Ilze has in-depth knowledge in the field of labour law and she would be pleased to help you in finding solutions to issues arising from employment relations. In the following articles, we will look at mandatory and optional information that must be included in the employment contract.

Read more in LEADELL Academy