2014/32 Severance Pay is Salary (LA)
Severance compensation paid to an employee pursuant to section 112 of the Latvian Labour Law (e.g. where an employment contract is terminated on account of a headcount reduction) is covered by the concept of “work remuneration” (hereinafter “salary”) as defined in section 59 of the Labour Law, being “any other remuneration in relation to work”. This means that wrongly paid severance compensation can only be reclaimed on the basis of section 78 of the Labour Law and not on the basis of the general provisions of civil law. According to a recent Supreme Court decision, this in turn means that an employer cannot recover severance compensation paid to an employee based on a court judgment that has been enforced despite appeal and later overturned.
Latvijas Republikas Augstākās tiesas Civillietu departaments (Supreme Court of the Republic of Latvia, civil section), 2014-03-27