Navigating your way through complex Lithuanian labor and employment laws can be a challenge. However, you need to know the differences in labor laws between countries, especially if you’re headquartered outside of Lithuania. Your Lithuanian compliance work gets even more complex when managing workers under European Union (EU) regulations and standards.
So how do you manage a workforce under complicated Lithuanian and EU labor regulations and keep track of all the legal changes that can affect your business? This guide will provide you with the basics so you can confidently hire in Vilnius and the rest of Lithuania without making costly mistakes.
1. At-will employment doesn’t exist
You can only terminate an employee in Lithuania without notice for “just cause”. This comes with a high burden of proof and is usually reserved for cases of serious misconduct or criminal activity.
2. Misclassifying employees can result in significant financial penalties
When hiring abroad, it is vital to know the difference between employees and contractors. In most cases, employees work solely under the direct supervision of an employer for an indefinite time period and are entitled to benefits. Contractors are self-employed, work independently on a fixed-term contract, and are not entitled to benefits. Misclassifying workers can result in substantial financial penalties. These include fines, back pay, and retroactive benefits administration (with interest) that can add up to millions for your company.
3. Lithuania has tough anti-discrimination protections
The Constitution of the Republic of Lithuania states that all persons are equal before state institutions and their human rights may not be restricted. The Law on Equal Treatment prohibits discrimination on the grounds of race, nationality, language, origin, social status, belief, or religion. The Equal Opportunities Ombudsperson investigates complaints and carries out investigations.
4. Hiring illegal workers could cost you a bundle
If you’re looking to the Lithuanian labor market to recruit any number of employees, it is imperative to make sure that your workers have the proper work authorization. Hiring foreign workers without the proper permits and visas is against the law and can result in large fines and other severe penalties.
5. Lithuanian workers have the right to unionize
The Lithuanian labor law entitles workers to the right to form and join trade unions. The union acts as the employees’ representative. Employers and unions then establish collective agreements, which outline and govern conditions of employment including type of work, job function, place of work, working week, working days, working time, rest periods, and night-time work.
6. If you fail to offer benefits, you’ll face fines and legal consequences
Lithuanian workers are entitled to a number of mandatory benefits as set out by the labor code and the State Social Insurance Fund (Sodra). These include unemployment insurance, health care insurance, old-age pension, vacation pay, sick leave, public holidays, and more. Failure to offer these benefits can result in fines, repaying benefits retroactively, and other sanctions.
7. Non-disclosure agreements (NDAs) are legally binding in Lithuania—with restrictions
NDAs are legally used by companies in Lithuania to safeguard proprietary information and trade secrets. It is important to note that an NDA cannot violate any existing laws or regulations. NDAs must be reasonable and not used to obstruct criminal behavior. These agreements can be a separate document or included as a clause in a Lithuanian fixed-term employment contract.
8. Workplace health and safety standards are the responsibility of the employer
In Lithuania, employers are obligated to ensure their employees’ health and safety in the workplace. Occupational health and safety is enshrined in the Lithuanian Constitution and the relevant regulations are contained in the Labour Code of the Republic of Lithuania and the Law on Safety and Health at Work. The Government of the Republic of Lithuania’s State Labour Inspectorate is responsible for ensuring compliance.
New labor code amendments came into force recently that strengthen requirements to protect employees from sexual harassment, violence in the workplace, bullying, and discrimination. The employer is obligated to investigate any complaints on behalf of such employees.
9. You must protect your employees’ personal information
Strict laws protect employee rights concerning personal data in Lithuania. The handling of private data is regulated by the European Union’s General Data Protection Regulation (GDPR) and Lithuania’s Personal Data Protection Law. Any use of employee data must comply with the GDPR and Lithuanian law. Additionally, employers must maintain records of data collection and usage.
10. Companies operating in Lithuania must ensure pay transparency
Lithuania implemented equality and transparency legislation in 2017. The Lithuanian Labour Code requires employers to apply equality standards in numerous areas including recruitment, working conditions, and wages. It also includes protection against discrimination and sexual harassment.
In 2023, the EU adopted new rules on pay transparency. The goal of these regulations is to combat pay discrimination and close the gender pay gap across the EU. Employers will be required to share information on the amount of remuneration and initiate changes if their gender pay gap is above 5%. The directive also contains requirements regarding redress for victims of wage discrimination, as well as penalties for employers found to be in violation of these regulations. EU member nations have three years to add the directive to national regulations.
Frequently asked questions about Lithuanian labor laws
What is the minimum wage in Lithuania?
As of May 2023, the minimum monthly wage in Lithuania is €840 ($893). The hourly minimum wage is €5.14 ($5.47). A proposal currently under consideration would increase the monthly minimum remuneration in 2024 to €924 ($983).
What are the overtime laws in Lithuania?
The Lithuanian Labour Code defines the standard work week as 40 hours—eight hours a day for five calendar days. Normal working hours cannot exceed eight hours in one day.
Overtime cannot be assigned and is allowed only under special circumstances. Exceptions include several categories of employees, such as those working in healthcare, energy, childcare, or other critical jobs. Employees in those sectors can work up to 24 hours straight.
Overtime work cannot exceed four hours in a 48-hour period. The annual maximum is 120 hours.
Compensation for overtime is calculated at a minimum of 1.5 times the employee’s average salary. However, the compensation increases to two times the average salary under the following circumstances:
- Working on a day of rest (if not given time off in lieu)
- Working on a holiday (if not given time off in lieu)
- Scheduled to work on a holiday
Consent must be obtained from workers who:
- Are pregnant
- Have recently had a child
- Are breastfeeding
- Are raising a child under three
- Are the single parent of a child under 14
- Are the parent of a disabled child
- Are a disabled person
In most cases, overtime cannot be assigned to a minor.
What are the required benefits in Lithuania?
All full-time Lithuanian workers are entitled to the following statutory benefits:
- Unemployment insurance
- Health care insurance
- State pensions
- Vacation pay
- Public holidays
- Sick leave
- Minimum wage
- Working time and overtime pay
- Maternity leave
- Parental leave
- Annual leave
- Childcare benefit
- Probation period
- Notice period
- Severance pay for dismissed employees
- State social insurance and other social security benefits
- Additional employee benefits and entitlements listed in the labor code
If you don’t offer these mandatory benefits, you could face fines and criminal liability.
For more information on benefits in Lithuania, see our guide.
How do I terminate employees in Lithuania?
You might not be thinking about terminating employees at this stage, but you should be aware of Lithuania’s termination regulations before expanding your team. Because at-will employment isn’t recognized in Lithuania, termination of the employment contract can be done without cause and for cause.
You should know that Lithuanian employees can leave their job voluntarily for any reason, so long as they give advance notice.
Termination without cause. In the case of termination upon the employer’s will—for example, economic reasons—notice must be three business days. If the employee agrees, the employer has the option to release them from their obligation to work during the notice period. However, in these situations, the employer must still pay the employee their salary. An employee who has been terminated must be provided with a severance payment that amounts to no less than six months of their average monthly salary. This payment increases depending on the length of the employment relationship—up to 36 months’ pay for 20 years of service. For more information on notice periods and termination pay for Lithuanian employees, see our guide.
Termination for cause. The employer must initiate termination within a month of discovering the breach of contract. Examples of this are gross misconduct, conflict of interest, theft, or violence in the workplace. If employment is terminated with just cause, the labor code stipulates what, if any, notice and severance pay is required.
Termination during a probationary period. Probationary periods are defined in the contract of employment, and they typically last three months. Trial periods allow employers to see if a new hire is suitable for a new position. If the employer decides the employee isn’t a good fit, the worker can be dismissed at the expiry of the probation period with no right to severance. The employee can quit the probation period at any time with three days’ notice.
Certain groups of employees are entitled to special protection from dismissal. This includes pregnant women, employees on maternity, paternity, or parental leave, and those with children under three years of age.
Interested in learning more about Lithuanian termination regulations—including notice periods and wrongful dismissal claims—refer to our guide.
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Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.