If a foreign company is looking to hire resident employees as part of their expansion into Lithuania, they must comply with recruitment regulations such as tax, social security contributions and local employment laws. You will also need to collaborate with or adhere to any collective bargaining, trade unions or work council agreements. Our PEO-services with various solutions to support your plans, can provide compliant employment contracts for your new employees.
In this guide we will address the most pressing issues of employment contracts in Latvia to help your global expansion go as smooth as possible.
How Do You Hire Lithuania Employees?
In Lithuania, employment contracts must be presented to employees in writing and there are a variety of contract types to choose from, depending on business needs and employment types. An indefinite contract, however, is the standard.
Employment law, the Labor Code, and (in some cases) collective agreements govern employment conditions, benefits, and health and safety regulations, and must be adhered to. It is best to confirm with the Labor Inspectorate on what regulation applies, as this may vary according to industry and sector.
Employee and employer protection
Labor law in Lithuania is based on both employer and employee protection. The employment relationship and its terms are hierarchically determined by the Constitution, international treaties, the local labor law, collective employment agreements, employment rules and business practices, with the individual contract being last in the order.
To be fully aware of what you can and cannot apply to your employment practices in Lithuania, it is important for the employer to know the existing labor laws and employee entitlements, as well as collaborate with the appropriate local employment organizations.
Employment Contracts in Lithuania
There are a few types of employment contracts one can use in Lithuania, which are stipulated by the Labor Code, that depend on the employment relationship and the business’ needs:
- Open-ended/Indefinite employment contract – the standard and most used type of employment contract in Lithuania, which is used for indefinite employment.
- Fixed-term employment contract – the standard duration of this contract may not exceed 2 years (with exceptions – the maximum duration is 5 years), of which there is more than one type:
- Apprenticeship employment contract – a fixed-term contract that is used when the person is employed for the purpose of acquiring qualifications or gaining skills required for the profession.
- Project-based employment contract – a fixed-term contract where an employee carries out their job functions for a particular project.
- Temporary employment contract – a contract for temporary workers, that cannot exceed more than 2 months.
- Seasonal employment contract – a contract used for seasonal workers, which can be valid for up to 8 months in a year.
- Contracts on additional work: this contract type stipulates that the employee will perform certain additional duties (that were not agreed to in the first employment contract) at the same workplace.
- Contracts with home workers: contracts for work functions being performed at home.
- Job-sharing employment contract: A contract between 2 employees and an employer, where one job position is shared among the employees.
- Secondary job employment contract: a contract with an employee who will be performing the same job function for more than one job and must be signed by both the employee and employers involved.
All employee contracts, irrespective of type, should contain the following conditions:
- The place of work
- The job function
- The salary.
If the contract has expired, and neither the employer nor employee have requested its termination, then it is considered extended for an indefinite period.
Collective agreements may not be commonplace in the private sector, but they are vital to regulating work conditions in the public sector and affect the conditions and format of the employment contracts. 70% of all valid agreements are established in the public sector, according to the Collective Agreements Register.
Under the Labor Code, all valid collective agreements must be registered with the Ministry of Social Security and Labor, and publicly announced on their website. As of April 2020, there are 298 valid collective agreements which can be grouped as follows:
• 1 National Collective Agreement: this is one agreement that crosses sectors and guarantees wage increases and additional benefits for nearly 200,000 employees, state servants, and internal system officials in the public sector.
• 2 Territorial Collective Agreements.
• 12 Sectoral Collective Agreements: Regulate the working conditions of individual sectors, industries, or professions.
• 283 Employer-level Collective Agreements.
What Laws About Employment Exist in the Lithuania?
Lithuanian employment law is regulated by a Labor Code, as well as national legislation, collective bargaining, and trade union agreements, besides the individual contracts between the employer and employee. Thus, companies and employers must be aware of the laws and agreements that apply for their sector’s and/or industry’s working conditions, pay, and benefits. Employment Law was recently updated in 2020.
The Labor Code governs the employment processes, with certain forms of legislation that must be followed. These include:
• National Minimum Wage: The national minimum wage (which currently stands at EUR 642 per month) can only be paid to unskilled workers. In the case of skilled workers, a renumeration system (specifying employee categories, wages, benefits, allowances, etc.) must be made by the employers, unless already established in the respective collective agreement.
• Working Hours: The Labor Code, according to Arts.144 (1) – 144 (3), states that the default working time is 40 hours a week, and the maximum (including overtime), must nothing exceed 48 hours within 7 days. The standard working week is 5 days and 2 rest days, or else 6 days with 1 rest day.
If the employee is working in more than one place or taking on extra work at their workplace, working time cannot exceed 12 hours.
• Healthy and Safety: Employees must be guaranteed appropriate, safe, and healthy working conditions as established by law. Employees also have the right to refuse to perform work if these conditions are not met. The employer must also compensate for any damage caused to the employee’s health due to injury, other health impairments, occupational disease, or an employee’s death.
• Sick Leave: Employees who are temporarily incapable of work due to illness or other forms of sickness are entitled to sick leave of no more than 120 successive days or no more than 140 days within 12 months.
• The Second EU Data Protection Act: affects the data rights of EU employees.
• Leave Entitlement: Leave entitlement in Lithuania has recently been shortened – for employees working a five-day week, they are entitled to 20 working days a year; and for those working a six-day week, they are entitled to 24 working days a year.
• Maternity Protection: Lithuanian employment law and the Labor Code state that the employment contract with a pregnant woman may not be terminated from the day the employer receives notification of the pregnancy and for a month after maternity leave.
Also, pregnant women, women have recently given birth, and breast-feeding women cannot be assigned to perform work in conditions that are hazardous or that can affect the health of the women and/or child. The employer must establish the nature and duration of the potential risk.
• Probation: The employment contract may provide a probationary period by mutual agreement between the employer and employee, with conditions set out in the employment contract. The probationally normally may not exceed 3 months, but in certain cases provided by law, an employee can be asked to undergo a longer probationary period of no more than 6 months.
• Termination & Severance Pay: Termination of employment can be split into three categories: with or without fault of the employee, and in the case of the employer’s will.
If the employee is dismissed without fault, they are entitled to a notice period (in writing) of 1 month, and a severance pay of 2 months’ average wage. If the employment is less than a year, this is halved to 2 weeks’ notice and half their average monthly salary.
If the employee is dismissed in case of the employer’s will, they are entitled to 3 days’ business notice or 6 average monthly salaries as severance pay.
How Do You Onboard Lithuania Employees Internationally?
Considering whether to move existing employees into Lithuania or recruit new staff in-country is the first phase of a parent company’s plan to onboard employees in a new territory. You must then deal with acquiring the right visas and work permits and ensure compliance with all local laws and regulations at the risk of attracting fines and sanctions from Lithuanian authorities. This takes up your time, money, and resources that can be of better use in other areas of your international establishment plan.
The most efficient and effective method of onboarding employees into Lithuania is through a global recruitment company such as Bradford Jacobs. Our Professional Employer Organization (PEO) and Employer of Record (EOR) services manage every stage of the employment process from finding the employee to seeing that their first cheque is paid on time. We can assure the right people in the right time to help you get the ball rolling on your business expansion plans.
Translating Lithuanian Employment Contracts
When translating contracts, one must consider the nature of law and legal language, and their accompanying complexities in legal translations. In legal translations, employers must deal with two legal systems, as well as the cultural and linguistic differences between the source and target languages (base and expansive languages).
Legal systems have their own cultural, social, and linguistic structures. Incompatibility of these structures between the source and target languages are where the difficulties lie in translating legal documents. Translating a document without an understanding of the similarities and differences between both systems, the intention behind the translation, the knowledge of the legal writing style of the target language and the correct legal terminology can be dangerous and lead to serious consequences and proceedings.
Get in touch with Bradford Jacobs
Bradford Jacobs’ comprehensive knowledge of all aspects of Lithuanian employment laws make us the ideal partner for your expansion into the strongest economy in the Baltics.
The global reach of our Professional Employer Organisation (PEO) recruitment platforms combined with the in-country knowledge of our Employer of Record (EOR) specialist teams guarantee a successful and smooth transition of your employees into your new territory.
To learn more about our PEO and EOR packages, contact one of our sales specialists today.