Explore our EOR&PEO services in LITHUANIA

As your EOR in Lithuania, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.

 

Your candidate is hired by a PEO in Lithuania provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.

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Southern Baltics
business district modern downtown vilnius lithuania 250132 6994 e1661758416131 - Lithuania EOR and PEO

Country Overview

Lithuania is a country located in Northern Europe, bordered by Latvia to the north, Belarus to the east, Poland and the Russian enclave of Kaliningrad to the southwest, and the Baltic Sea to the west. The country has a population of around 2.8 million people. The official language is Lithuanian and the currency is the Euro (EUR).

 

The country has a mixed economy, with a significant agricultural sector, as well as a growing service and manufacturing sector. Lithuania is a member of the European Union, NATO, and the World Trade Organization, and has been a member of the Eurozone since 2015. The country’s main trading partners are the EU countries, primarily Germany, Latvia, and Poland.

General Information

  • Population: ~2.800.000

 

  • Capital City: Vilnius (population: ~700.000)

 

  • GDP: ~$131 billions

 

  • GDP per capita: ~$46.000
  • Currency: Euro (EUR)

 

  • Unemployment: ~8%

 

  • Employer Taxes: ~1.77%

 

  • Employee Taxes: 20% – 32%

LITHUANIA EOR SPECIFICS

Employment contracts in Lithuania

All employment contracts must be in writing and signed by both the employer and the employee. The contract must also include certain key information, such as the job title, start and end date of the contract (if it is a fixed-term contract), and the length of the probationary period, if any. Employers are also required to provide employees with a copy of the signed contract within 7 days of the start of employment.

 

Employment contracts in Lithuania can be either for a fixed term or an indefinite term. A fixed-term contract is one that has a specific start and end date, while an indefinite-term contract does not have a set end date. Indefinite term contracts are more common in Lithuania, particularly for full-time jobs. However, fixed-term contracts may be used for seasonal work or for temporary replacements of absent employees.

Probation period in Lithuania

The maximum length of the probation period is 6 months. Employers include information about the probation period in the employment contract, including the start and end date of the probation period and the specific job duties that the employee will be expected to perform during this time. The probation period can be extended only if both parties agree on it and the extension can not exceed one month.

 

During the probation period, the employee may be terminated from employment without notice and without the need for the employer to provide a reason for the termination. However, an employer should conduct regular evaluations of the employee’s performance during the probation period and provide constructive feedback to help the employee improve.

 

Employers also should be aware that discrimination is prohibited during the hiring process or during the probation period, and an employee can not be dismissed based on discrimination reasons.

Working hours in Lithuania

The standard workweek is 40 hours per week, which is similar to many other European countries. According to data from Eurostat, the average working hours for employees in Lithuania was 42.5 hours per week in 2022. This can vary depending on the specific industry or job, as some jobs may require longer working hours.

 

Lithuanian Labor Code specifies that the maximum workweek is 48 hours, including overtime. Additionally, employees are entitled to a minimum of 11 hours of rest between workdays, and at least 24 hours of rest in a calendar week. Employers are also required to provide their employees with at least 20 days of paid vacation per year.

 

Certain categories of employees such as night workers, and those in certain hazardous or physically demanding jobs may be subject to specific working time arrangements, and additional protections. Employers should ensure compliance with the provisions of the Lithuanian labor law regarding working hours and rest time.

Vacation days in Lithuania

Employees have a minimum of 20 days of paid vacation per year. This is in line with the European Union’s minimum standards for annual leave, which is 4 weeks or 20 days. It’s worth noting that this does not include public holidays, which are additional days off. According to Eurostat, the average number of days of paid vacation in Lithuania was 27.2 days in 2019.

 

Employers are required by law to provide their employees with the opportunity to take their annual leave, and it is the employer’s responsibility to ensure that the employee’s right to annual leave is not compromised. The employee also has a responsibility to notify their employer in a timely manner of their intention to take annual leave.

Sick leave in Lithuania

Employees may take paid sick leave if they are unable to work due to an illness or injury. According to the Lithuanian Labor Code, an employee can take up to 14 days of paid sick leave per calendar year. The first 3 days of sick leave are paid by the employer, and the remaining 11 days are covered by the State Social Insurance Fund (Sodra).

 

Employees have to provide their employer with a certificate from a medical practitioner confirming their illness. If an employee is unable to provide such a certificate within 3 days, their employer has the right to withhold payment for the first 3 days of sick leave.

 

Employees who are absent from work due to an illness for more than 14 days can apply for additional sick leave with a doctor’s certificate. If the employee is unable to return to work within the period specified in the certificate, the employee may be entitled to additional sickness benefits. The employee is responsible for informing their employer as soon as they know they will be absent, and employers should keep accurate records of the employee’s sick leave.

Wages and Salary Payment in Lithuania

The minimum wage is set by the government, and is currently €730 per month for a full-time worker. This is reviewed annually and can be adjusted based on the economic situation and inflation. According to Eurostat, the average hourly labor cost in Lithuania is one of the lowest in the EU.

 

Employers pay their employees at least the minimum wage, and pay their salaries on a regular basis. As per the Labor Code, the salary payment has to be done at least once per month, and the due date for the salary payment has to be clearly stated in the employment contract or in the internal regulations. Employers provide their employees with a written statement of their salary and deductions.

Public Holidays in Lithuania

Official public holidays:

 

  • 1 January New Year’s Day
  • 16 February Independence Day (Re-establishment of the State of Lithuania)
  • 11 March Re-establishment of Lithuania’s Independence Moveable Easter Sunday and Easter Monday
  • 1 May International Labour Day
  • First Sunday in May Mother‘s Day
  • First Sunday in June Father‘s Day
  • 24 June Rasos (Midsummer Festival) and Joninës (St John’s Day)
  • 6 July Statehood Day (Coronation of King Mindaugas)
  • 15 August Assumption Day
  • 1 November All Saints’ Day
  • 24 December Christmas Eve
  • 25 and 26 December Christmas

Employer Taxes in Lithuania

Employers and employees are both required to make contributions to the State Social Insurance Fund (Sodra), which provides for retirement, unemployment, sickness, and maternity leave benefits. Employers are responsible for withholding their employees’ contributions from their salary during payroll.

 

Specifically, employers are required to contribute 1.77% of a permanent employee’s salary and 2.49% of a fixed-term employee’s salary to the fund. This contribution rate for employer is for the base social security fund and not for additional contributions such as health, unemployment and pension.

Employee Taxes in Lithuania

Starting on January 1, 2022, there will be a ceiling for social security contributions (SSC) in Lithuania, excluding mandatory health insurance contributions and employer’s contributions. The ceiling for SSC will be set at EUR 90,246.

 

For income up to the SSC ceiling, the standard SSC rate will be 19.5%. However, an additional 2.7% or 3% may be withheld if the employee is participating in a certain second pillar pension accumulation fund. For income exceeding the SSC ceiling, the standard SSC rate will be 6.98%.

 

In terms of personal income tax, there will be a rate of 20% for income up to EUR 90,246 and 32% for income exceeding this amount. It’s worth noting that these rates, SSC ceiling and SSC rate are subject to change according to government regulations and it’s always a good idea to stay updated with any new developments.

Notice Period in Lithuania

The notice period for ending an employment relationship is typically one month. However, there are a few exceptions to this rule:

 

  • If the employment relationship lasts for less than one year, the notice period is reduced to two weeks.
  • For an employee who is less than five years away from the statutory retirement age, the notice period is extended to two months.
  • For an employee raising a child under 14 or a disabled child under 18, the notice period is extended to three months.

Termination / Severance in Lithuania

Employment contracts can be terminated by either the employer or the employee, with certain conditions and procedures. According to the Lithuanian Labour Code, an employment contract may be terminated:

 

  • by mutual agreement of the employer and employee;
  • by the employer for reasons provided by law, such as redundancy, or for disciplinary reasons;
  • by the employee for reasons provided by law, such as the employer’s violation of labour laws, or the employee’s inability to perform the job due to health reasons.

 

When an employment contract is terminated by mutual agreement, the employer and employee must reach an agreement on the termination of the contract and the terms of severance. In case of termination by the employer for disciplinary reasons, the employer must provide the employee with written reasons for the termination, and the employee has the right to appeal.

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