Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Lithuania might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Latvia including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.
Our team in Lithuania keeps track of the local laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. To support your plans in Lithuania we created this guide including the basics of employee benefits in Lithuania.
What Lithuania Compensation Laws Exist?
In Lithuania, compensation laws are set by the Labor Code and national legislation, but the compensation may vary according to the sector the employees are in, the regulations of the relevant collective agreements and internal regulations of the company.
- The 13th month salary is not required to be paid, but companies may pay the salary as a yearly bonus
- Compensation is also required for business trips that includes a flat-rate daily allowance for the employees for all days of the trip.
Lithuanian legislation also mandates employee compensation for overtime, work on weekends (depending on the job) and public holidays.
There are, however, other benefits/compensation which are guaranteed by national legislation:
- National Minimum Wage
The minimum wage was changed from EUR 607 (2020) to EUR 642 (2021). Employees must be receiving at least this amount from their employers (although this will vary according to the position and qualifications).
- Social Insurance Contributions
Employees in Lithuania are entitled to social security benefits. Social security contributions are paid monthly to the Social Security Fund (SODRA) through contributions by the employee and the employer (employee contributions are withheld by the employer). The contribution percentage varies according to the employee’s pay. Social security contributions include pension, healthcare, unemployment, and maternity/paternity.
- Notice Periods
Notice periods in Lithuania are mandatory and vary according to the termination type. For indefinite employment, the standard notice period after a year is month, and increases gradually.
- Redundancy, Termination and Severance
Employees are entitled to severance pay after the probation period is passed. If the employment period was less than a year, the employee is entitled to half a month’s payment; for over a year they are entitled to 2 months of their average salary. If the employee is dismissed to due to employer’s will, they are entitled to 6 months’ worth of their average salary.
- Work Hours and Breaks
Average working hours is 8 hours a day, 5 days a week. Working time cannot exceed 48 hours within a 7-day consecutive period. Breaks are between 30-60 minutes in an average workday.
- Sick Leave
All employees in Lithuania are entitled to sick leave and compensation, which is paid by both the employer and social security funds.
- Holiday/Vacation Leave
Employees are entitled to annual leave, as well as leave on the main public holidays. Annual vacation leave starts at 20 days for a five-day working week, and 24 days for a six-day working week. This amount of leave gradually increases, depending on the length of service.
- Maternity/Paternity Leave
Mothers are entitled to 70 calendar days of leave before delivery (including childbirth), and 56 calendar days after delivery.
Paternity leave is granted for 30 days (uninterrupted). The leave can be taken any time from the date of birth to the age of 3 months. In the case of a complicated delivery, twins, or multiple births, the leave can be taken until the child reaches 6 months.
- Parental Leave
The State Social Security Fund can compensate the mother, father, grandmother, grandfather, or other relatives participating in the care and raising of a child. This leave is granted for 1 year until the child reaches the age of 3. The leave can be taken all at once or in installments.
Social Security in Lithuania
Social security contributions is Lithuania are split according to health insurance, pensions, sickness, and maternity – these contributions are granted on an employee’s salary (which is withheld by the employer). An employer’s contribution is typically split into unemployment insurance and accident insurance. Both are paid monthly by the employer.
Employer’s social security contributions, however, can vary according to the “floor” or “ceiling” attributes:
THE SOCIAL SECURITY CONTRIBUTIONS “FLOOR”
Companies must pay both employer and employee social security contributions for their employees whose monthly salary is lower than or equal to the national minimum wage.
THE SOCIAL SECURITY CONTRIBUTIONS “CEILINGS”
If an employee’s income from the same employer exceeds 60 average monthly salaries, the social security contribution “ceiling” (i.e., exemption) for the employee becomes applicable. If the employment income exceeds this threshold, the employer will only have to contribute the mandatory health insurance rate (6.98%) monthly from the employee’s salary.
Contributor Social Security Contribution (%)
- Employee: 19.5
- Employer:1.77 (indefinite), 2.49 (definite)
Statutory Cost in Lithuania
The National Minimum Wage: Employee wages must at least be equal to the national minimum wage of EUR 642 per month. This wage is determined upon by the Tripartite Council and the Government of Lithuania.
Statutory social security costs to be made by the employee (and in certain cases, the employer) also include these monthly contributions:
Contribution Percentage (Employers and Employee)
- Pension 8.72%
- Maternity 1.09%
- Pension 8.72%
- Maternity 1.09%
- Healthcare 6.98%
- Sickness 2.09%
What Benefits Are Guaranteed in the Lithuania?
- Overtime: Overtime pay in Lithuania is guaranteed at a rate of 1.5 times the employee’s regular hourly pay. Employees working on a day of rest or holiday are entitled to 2 times the employees’ hourly salary.
- Health Insurance: All employees benefit from national health insurance if they are paying social security contributions.
- Public Holidays: Lithuania enjoys about 13 annual public holidays (holidays are announced yearly), and employees are entitled to get those days off, and receive compensation for them.
- Vacation Leave: Vacation leave is also a guaranteed benefit in Lithuania, which starts at 20 or 24 days (depending on the workdays) and increases yearly.
- Sick Leave: Sick leave and sick leave payments are guaranteed and paid by both the employer and social security funds.
- Maternity Leave & Paternity l Leave: Expectant mothers are entitled to a maternity leave, with pay, of 70 days before birth and 56 or 70 days after birth. 30 days of paternity leave is also guaranteed to an employee, which is paid by the government – sickness and maternity benefits are granted at any time from birth to 3 months, or in the case of two or more children, birth to six months.
What Restrictions Exist for Benefits and Compensation in Lithuania?
- Social Security: Social security contributions for both the employer and employee (excluding health insurance payments) are capped after the “ceiling” threshold of 60 average monthly salaries.
- Vacation Leave: Annual leave for the employee’s first working is granted after six months of uninterrupted work at the company. After that, annual leave is granted to the employee according to a schedule agreed upon between the employer or employees, or in a collective agreement (if applicable).
- Severance Pay: Upon ordinary dismissal, the maximum severance payment an employee can receive is 2 months’ average employee salary.
- Overtime: Maximum working time (overtime and additional work) cannot exceed 12 hours per day and 60 hours within a 7-day consecutive period.
- Unemployment Benefits: Employment benefits cannot exceed 9 months and are only applicable to those who have shown collaboration with the Employment services. The payment also depends on how the person has been insured before filing for unemployment benefits.
Health Insurance and other Benefits in Lithuania
Employees are entitled to health insurance – public healthcare in Lithuania is delivered through a universal system which entitles citizens to free or low-cost healthcare that is funded by compulsory monthly social security payments.
However, dental care is not covered with this insurance. So, many employees may also opt for private health insurance (also known as supplementary health insurance), which can be paid for in monthly installments along with the normal health insurance payments. Other mandatory benefits include pensions, unemployment, and accident insurance.
Company benefits, however, may vary according to the industry and sector, but can normally include private healthcare, education, and flexible benefits.
Get in touch with Bradford Jacobs
A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over a hundred countries with creating compliant and balanced labor contracts.
Employment law in Lithuania is based on a mix of legislation – employment law, the labor code, collective agreements, trade unions and work councils’ agreements.These comprehensive aspects can result in delays and risks during your global expansion. Get ahead of these issues by working with Bradford Jacobs’ Employer of Record (EOR) services and contact us today!