COBALT secures annulment of prohibition to dismiss a trade union member

Court proceedings have been completed where COBALT has managed to secure annulment of prohibition to dismiss a member of trade union LABA. After the client Evolution Latvia SIA stopped providing services to clients in one of the languages and decided to liquidate the particular structural unit, it had to face the trade union’s prohibition to terminate employment relationship with one employee of the structural unit. Even though the employee was offered an opportunity to continue work in a different company of the group, as well as a compensation for termination of employment relationship, the employee refused to accept any of the offered options. Also the trade union refused to agree with termination of the employment contract without providing any motivation for such decision. Accordingly, the client was forced to use the only option provided by law – to file a claim in the court for termination of the employment contract.

The court ruled that the client’s decision on termination of the employment contract was justified. The court also concluded that increase of efficiency of commercial activity which has led to certain restructuring measures is the company’s right, and the court (and presumably also the trade union) has no legal basis to interfere with assessment of such actions. By referring to the applicable case-law, the court stated in the judgment that: “(…) the court’s area of competence does not include the assessment of the necessity of structural reforms and their efficiency since deciding on such matters is the sole competence of the employer.’’ Moreover, the court specified that: “There was no basis established for the defendant’s argument that the claimant has liquidated the (…) structural unit with the intention to get rid of the defendant as an undesirable employee.’’

We are pleased with such approach of the court and express our hope that trade unions will try to evaluate the substance of every request for dismissal of trade union members. Otherwise, due to the rather unique legal framework of Latvian Labour law which imposes an obligation to obtain an approval from trade unions for dismissal of each of their members, Latvian companies have quite limited possibility to implement the required improvements in the company’s operations in a fast and efficient manner, and thus adapt to the rapidly changing market conditions.

COBALT team led by partner Toms Šulmanis and associate Ivo Maskalāns provided full legal assistance and representation of the client in the court proceedings.