A case on protection of employees in case of insolvency of employer has been initiated
The First Panel of the Constitutional Court has initiated a case “On Compliance of Para 6 and 7 of Transitional Provisions of the Law on Protection of Employees in Case of Insolvency of Employer with Article 1 and Article 91 of the Satversme of the Republic of Latvia”.
The Law “On Protection of Employees in Case of Insolvency of Employer” provides: if an insolvent enterprise is not able to disburse all due sums to employees (like wage, remuneration for annual paid leave, dismissal benefit), they shall be disbursed from the employee claims guarantee funds of the Insolvency Administration [Maksātnespējas administrācija].
The contested norms were adopted on June 2009 and came into force on 10 July of the same year. They establish restrictions to sums to be disbursed to employees in case if an application has been submitted to the Insolvency Administration in the period from 10 July 2009 to 31 December 2011.
The application was submitted by more than fifty former employees of SIA “Triāls” who indicate that payments due to them and to be disbursed from the employee claims guarantee fund have been reduced based on the contested norms. The employees have counted on the fact that they would receive the compensation from the guarantee fund at full extent. They indicate that the contested norms infringe Article 91 of the Satversme (All human beings in Latvia shall be equal before the law and the courts) because the norms establish a different attitude towards those employees who have submitted applications to the Insolvency Administration before 10 July 2009 and those who have addressed the Administration after the above mentioned date. The contested norms also infringe legal security of the applicants because insolvency of the particular enterprise was announced before the contested norms were adopted.
The Saeima was asked to provide, before 11 January 2011, a reply on facts of the case and legal justification thereof. The term for preparation of the case is 11 April 2011.
Linked case: 2010-69-01