A judgment in the case on protection of employees in case of insolvency of an employer has been adopted
The Constitutional Court has adopted a judgment in the case No. 2010-69-01 “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”.
Article 1 of the Satversme strengthens the democratic regime of the Republic of Latvia, whilst Article 91 of the Satversme provides: “All human beings in Latvia shall be equal before the law and the courts. Human rights shall be realized without discrimination of any kind.”
On 18 June 2009, the Saeima adopted the Law “Amendments to the Law “On Protection of Employees in Case of Insolvency of Employer”” by thus restricting the amount of support to be disbursed from the guarantee fund from three average monthly salaries to four minimum monthly salaries in the period from 10 July 2009 to 31 December 2011.
The applicants, namely, 59 natural persons indicated that the contested norms fail to comply with the principle of legal equality enshrined in Article 91 of the Satversme of the Republic of Latvia because it provides for a different attitude when establishing amounts of sums to be disbursed; neither it complies with the principle of legal equality (legitimate expectations) enshrined in Article 1 of the Satversme.
When examining the case, the Constitutional Court concluded that the contested norms ensure the possibility to satisfy, at a certain extent, requests of all those persons who have the right to request pursuant to normative acts. When comparing the benefit gained by the society and detriment caused to rights and legal interest of a person, the Constitutional Court concluded that the contested norms do not contradict the principle of legal equality included in Article 91 of the Satversme.
Nonetheless, the Constitutional Court indicated that, by failing to provide a transitional period before coming into force of the contested norms, the legislator has breached the principle of legitimate expectations of a person. Namely, persons could count into the fact that, after declaring a company as insolvent, legal relations related thereto would be regulated in accordance with normative acts effective at the date of declaring the company as insolvent.
When adopting the contested regulatory framework, the legislator has protected the rights of only those persons who addressed the Insolvency Administration, which ensured that these persons are applied the previous regulatory framework. However, persons, whose employers have been declared as insolvent and who did not submit their claims to the Insolvency Administration before the coming into force of the contested norms were, not established any transitional period; consequently, the legislator has breached the principle of legitimate expectations. Consequently, the contested norms, insofar as they apply to persons, whose employer has been declared as insolvent before the date of coming into force of the contested norms, do not comply with Article 1 of the Satversme and shall be declared as null and void as from the date of adopting them.
The Judgment of the Constitutional Court is final and not subject to appeal. The Judgment shall come into force on the fate of publishing it in the newspaper “Latvijas Vēstnesis”.
Linked case: 2010-69-01