COVID-19 in Latvia: Procedure for payment of idle time compensations

On 24 March 2020 the Cabinet of Ministers has approved the procedure for payout of the idle time compensations to employers of the affected industries (List in Latvian only, please use Google Translate or refer to identical NACE codes in English). The following main conditions should be taken into account:

• The amount of compensation is 75% from the employee’s gross salary for the past 6 months prior to the emergency situation, but not more than EUR 700 per month.
• At the moment the idle time period is determined from 14 March until 14 May but not longer than the emergency situation remains in force.
• Companies are eligible for the compensation only if the turnover for March 2020 has decreased by at least 50% in comparison to March 2019.
• Applications for the idle time compensation should be submitted to the State Revenue Service (SRS) via the electronic declaration system.
• It is important that the principal area of activity of the company matches one of the items on the said list of affected industries.
• Employer must certify to the SRS that the employee for whom the compensation has been requested will not be terminated within 1 month from the application.
• The compensation is paid directly to the employee’s bank account indicated in the application.
• There are certain exceptions when the compensation is not paid, like failure to submit all tax declarations for the past 12 months, tax debt in excess of EUR 150.

On 26 March 2020 the Cabinet of Ministers as adopted a decision that any other employers (even if they are not in the list of affected industries) will be entitled to receive the idle time compensations on the same conditions if the following criteria are met:

• If the income from commercial activity during March or April 2020 has decreased by at least 30% in comparison to the same month of 2019 due to the spread of Covid-19; or
• If the income from commercial activity during March or April 2020 has decreased by at least 20% in comparison to the same month of 2019 due to the spread of Covid-19 and at least one the following additional criteria is met:

1) The amount of export in 2019 constitutes 10% of the total turnover or is not less than EUR 500 000; or

2) The average monthly gross salary paid to its employees during 2019 is not less than EUR 800; or

3) Long term investments in fixed assets as on 31 December 2019 are at least EUR 500 000.

Regarding related employment issues please contact COBALT Latvia Partner Toms Šulmanis.