Hiring the right talent in Lithuania to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Lithuania yet. Our PEO and EOR service can be the solution for your company.
At Bradford Jacobs, we believe that the core of every business is its employees. Happy employees result in a team that aims at success and growth. However, labor regulations in Lithuania can divert from other countries and creating a compliant work contract that is satisfying for an employee as well as the company, can therefore be complex.
Our comprehensive knowledge of all Lithuanian employment sectors and understanding of the culture and customs guarantees an untroubled transition. Our guide goes through everything an employer needs to understand the recruitment process in Lithuania.
The Recruitment Process in the Lithuania
A foreign company expanding into Lithuania does not require the assistance of a local entity to hire their employees. It is, however, vital to your recruitment efforts to know where you can find the right talent, as well as which local and international employment organizations they can collaborate with to access the right talent pools. This, however, does not come easily – and once the right employee is found, the employer must follow thorough staffing and registration procedures. These include:
• Registering employees with the State Tax Inspectorate for a Lithuanian Tax Identification Number (VMI).
• Registering with the State Social Insurance Fund Board (SODRA).
• Registering employees’ information with the Labor Inspectorate and Employment Services.
• Creating employment contracts and translating them to Lithuanian.
• Applying for employees’ work permits.
• Applying for employee’s visas or special expatriation status (if applicable)
• Calculating employees’ monthly salary and creating payslips.
• Researching for any available tax-free allowances or benefits.
• Submitting wage tax returns and national insurance forms.
• Corresponding with the involved parties (organizations, trade unions, etc.).
• Creating annual accounts, financial administration, and year-end statements.
• Creating a payment schedule for wage tax, national and social insurances, and net wages.
How to recruit in Lithuania
The recruitment process requires time and dedication, and how can you find these things in the array of all these complicated tasks? Well, allow us to provide the answer - by engaging an Employer of Record (EOR) such as Bradford Jacobs. By acquiring our services, we can convert your Lithuanian expansion goals into an action plan with a few simple steps:
1. Bradford Jacobs steps in as an EOR and acquires the right employees, ensuring they comply with Lithuanian employment contracts, payroll, HR, tax, visa requirements, and work permits (if required).
2. We manage all work-related registration formalities, whilst you have daily control of your employees.
3. The employees must complete their time sheets and expenses claims and we invoice you, the client. Once paid, we deduct all contributions to the Lithuanian authorities and transfer the balance into employee’s account.
Within a few days, your company has international presence in Lithuania – in a prime position to explore further expansion without risking the expense or hassle of setting up your own subsidiary or branch office.
Legal Checks You Can Make on Employees
The Lithuanian law follows the EU Law Constitution, which require employers to implement equal treatment in the workplace, and protect employees against discrimination based on several characteristics, such as race, nationality, gender, sexual orientation, religion, age, disability, family status or membership in political or public organizations.
This includes background checks, which are only considered fair and legal if they relate directly to a job and are necessary for reaching a decision on recruitment. Such data can only be collected directly from the candidate, following the Data Protection Directive 95/46/EC put in place by the EU. Personal data also concerning a candidate’s health falls under similar restrictions, and is only necessary for:
- Assessing a candidate's suitability.
- Fulfilling the employer's health and safety obligations.
- Establishing employees' rights and providing welfare benefits.
Nevertheless, employers recruiting in Lithuania may ask for the following checks (following certain conditions):
- Reference and educational checks – these checks are permissible except for reference checks from current employers – the individual’s consent is required.
- Criminal background checks – It is prohibited to perform an individual’s criminal background check, except for specific situations that are established by labor laws.
Medical checks/examinations – Medical checks are mandatory upon an employee’s hiring, as well as periodic medical checks during the validity of the employment contract for the following groups:
- Employees under 18 years old.
- Employees working at night.
- Shift workers.
- Employees whose workplace occupational risk assessment results show that there is or might be a risk to their safety or health.
- Disabled employees – checks should be performed upon hiring and each time their work conditions change.
Basic Facts on Hiring in the Lithuania
• An employer’s questions during an interview are regulated and restricted by EU data legislation – they must directly relate to job specifications and requirements.
• Terms and conditions of employment in Lithuania are regulated by the Labor Code. Collective agreements and trade unions also play a vital role in work conditions, so it is best to check if your industry/sector is covered by one.
• It is obligatory for an employer to present two copies of the employment contract to the employee in writing. The contract must also be translated to Lithuanian and any other relevant language.
• The essential conditions of the employee contract (work function, wage, and place of employment) must be agreed to separately, and any changes cannot be acted upon without the employee’s written consent.
• The employer must register new employees with the 1-SD form to the Social Security Tax Office no later than one day before the employee’s first day of work.
• Employers must apply for work permits for foreign employees with the Lithuanian Labor Exchange.
• In Lithuania, payment is regulated for idle time (when an employee is not provided with work and is not at fault for this time).
• The standard length of work hours is 8 hours a day and 40 hours a week, but this can be altered according to the type of employment contract and work.
• Employers must at least meet the minimum wage (currently at EUR 642), but the average monthly salary can differ according to the industry and sector.
• Overtime is permitted but must not exceed 48 hours within 7 days, and employees are compensated with a one and half hourly pay bonus.
• Employers are obligated to with-hold and pay employees’ personal income tax and social security contributions monthly.
• The standard notice period for employee termination is 1 month – if the employee has been working under a year, the notice period is 2 weeks.
• The Lithuanian Labor Code establishes that a probation period must be at about 3 months, but this may be specified in the employment contract.
Working with a Recruitment Agency
The main recruitment and employment body in Lithuania is the Lithuanian Labor Exchange, also known as the Employment Service – an administrative agency that runs under the Ministry of Social Security and Labor. They are responsible for the establishment of labor market services for jobseekers and employers as well as the application of active labor market policy measures.
You can apply to the Lithuanian Labor Exchange online or at any one of their 10 offices across the country. Registration and use of their services are free.
Lithuanian is also a European Employment Service (EURES) member, a platform that ensures free movement for workers within the European Economic Area (EEA), where employees have access to living and working conditions in the EEA, as well as search job availabilities. Employers can use these services to post job advertisements. Access to these services depend on the country’s employer registration requirements.
Employers can also acquire the services of private employment agencies. They are authorized and regulated by law in Lithuania and have been prohibited from charging local or foreign employers for their services since 2010. These services are provided for by the European Union (European Parliament and Council Directive 2006/123/EC).
What are the Benefits of Hiring Outsourcing for Lithuania?
Outsourcing recruitment into Lithuania provides a major benefit of more efficient, speedy, and cost-effective business expansion. Optimizing this service allows companies to focus on managing their new enterprise and meeting their development goals. Other significant advantages for outsourcing include:
• An extensive talent search done with reduced costs.
• Ensures employment compliance requirements are met with no hassle or reprimands.
• Removes the need to establish premises for a subsidiary.
• More control over your company’s capital expenditure.
• Alleviates risks with an easy operation that provides the employer opportunity to explore new markets.
• Improves work flexibility.
• Allows you to focus on your core business operations whilst we take care of rest.
Get in touch with Bradford Jacobs
Our international Employer of Record (EOR) and Professional Employer Organization (PEO) employment solutions offer an efficient, fast, and stress-free alternative to the time-consuming, hazardous, and expensive exercise of establishing a legal entity in-country.
To get started on your recruitment expansion in Lithuania, contact us today!