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Cobalt Latvia Persuades Court to Annul Trade Union Prohibition of Employee Dismissal

Cobalt Latvia Persuades Court to Annul Trade Union Prohibition of Employee Dismissal

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Working on behalf of Evolution Latvia SIA, Cobalt has secured the annulment of a prohibition against dismissing a member of the LABA trade union in Latvia

According to Cobalt, at some point Evolution Latvia SIA stopped providing services to clients in a specific language and announced its intention to liquidate that particular "structural unit" within the company. The LABA trade union protested that it was not allowed to terminate the employment relationship with an employee in that structural unit, even though Evolution Latvia had offered the employee the opportunity to continue working in a different company of the group, as well as compensation for the termination of the employment relationship (both of which the employee refused to accept). At that point, according to Cobalt, Evolution Latvia, "was forced to use the only option provided by law – to file a claim in the court for termination of the employment contract."

According to Cobalt, "the court ruled that the client’s decision to terminate the employment contract was justified. The court also concluded that [the goal of] increasing the 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 its 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.'"

Cobalt described itself as "pleased with [the] approach of the court," and said that it hoped "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."

The Cobalt team was led by Partner Toms Sulmanis and Associate Ivo Maskalans.

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