Zane Bormane, Attorney at Law and partner at TRINITI Latvia, has published an article in iBizness magazine: “Vai darbiniekus prēmēt par labu darbu?” (“Should employees be rewarded for good work?”).
In the article, Zane looks at how employers can use bonuses and other material incentives to motivate employees, while staying compliant with Latvian employment law.
- One of the article’s central insights is that the legal status of a payment depends on its purpose, not its name. A payment called a “bonus” may in fact be a premium, an allowance or another type of work-related remuneration – and this distinction can affect how it is treated, including in average earnings calculations.
- Zane also explains that employers may design their own bonus systems, but the wording matters. To avoid different interpretations and disputes, bonus criteria, targets and payment conditions should be clearly set out in the employment contract, internal work regulations, collective agreement or a separate bonus policy.
- Although a bonus is not automatically payable in the same way as salary, an employee who fulfils all agreed criteria may have a legitimate expectation to receive it. It is therefore recommended to assess the specific bonus rules in each case, including whether payment also depends on company-level results.
- The article also highlights the principle of equal treatment: differences in bonuses are acceptable only when based on objective, verifiable and consistently applied criteria.
We thank Zane for sharing her expertise.
Full article in iBizness (Latvian):
https://ifinanses.lv/bizness/raksti/uznemuma-vadiba/darbinieki/biz-new-vai-darbiniekus-premet-par-labu-darbu/31795
