To succeed in business in Lithuania, it is vital to have a strong understanding of the country’s business culture. Lithuanian business culture is modern and reflects ongoing changes in Western society. However, there are still hierarchical elements reflected in some companies, although this varies according to the company.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Latvian work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Latvia to start your expansion well-informed.
The work culture in Lithuania
Lithuania places great significance on relationships, and local businessmen often treat their business relationships as the foundation of friendships. Thus, it is important to both you and your local business partners to treat business dealings with respect and great care.
Like other countries, there has been an increasing awareness in the importance of work-life balance and flexible working times, but Lithuania still places significant importance on business etiquette for the smooth operation of businesses. Here are some tips and tricks to use during your first few months:
- Business Relationships:
The business community in Lithuania is close-knit; they are business partners as well as friends. The best way to open communications with a Lithuanian businessperson is through a trusted mutual contact.
Once contact is made, it is important to solidify the relationship with regular calls or visits to Lithuania. If hospitality is given, accept and reciprocate. Once a friendship has been formed, they are willing to discuss business. Critical business issues require face-to-face discussions.
It is preferred to have all agreements on paper, signed and sealed by both sides and in both English and Lithuanian. Verbal agreements are also practiced, but they are not legally binding.
It is common practice in Lithuania to greet someone with a handshake, holding direct eye contact and with a smile, both before and after a business meeting. It is also customary to exchange business cards at the start of a meeting.
Once a relationship has been formed, greetings may become more open and can include a hug – however, it is important to wait for your Lithuanian associates to determine when you have reached that level.
In Lithuania, small gifts upon first meeting with business associates are acceptable, and the first gift should be a souvenir – something small that represents your country or your company.
Business meeting gifts include items for the office. While developing the business relationship, gift-giving is standard practice – favorable options include wine, high-quality chocolates or a basket of tea and biscuits.
When visiting a Lithuanian home for the first time, it is traditional to bring something for the host such as a bottle of wine/liquor and a box of sweets or chocolate. Any family gifts should also be accompanied with small gifts for the children and/or grandparents.
Avoid giving white flowers (reserved for weddings) or chrysanthemums (typical flowers for funerals).
Gifts are normally opened in front of the guest upon receiving them.
- Dress code:
Conservative/classical clothing is common business attire in Lithuania – men tend to wear dark suits, and women tend to wear trouser suits, or jackets and skirts. It is expected of foreign business associates to be well-dressed in the appropriate business attire for most formal occasions.
During normal business hours, the dress code is less formal – and in small and medium-sized companies, there is often no dress code. However, the general dress-code is business casual, unless a business meeting or formal event is taking place.
In Lithuania, people are first addressed by their honorific title and their surname. Colleagues and supervisors are referred to as “Ponas” (Mr.), “Panele” (Ms.), or “Ponia” (Mrs.) and their first name, or by their title (Doctor, Professor, Director etc.), sometimes including last names. It is important not to address a person by their first name until invited to do so.
- Personal Space:
Personal space is very important to Lithuanians. An arm’s length is the norm, although this does not apply to people they are comfortable with. Lithuanians are generally affectionate with their family, friends, and colleagues.
The business culture of Lithuania is hierarchical, so it is important to show respect to people of authority and senior business members. In some cases, senior-level business members only speak with fellow senior members. Junior members should not address a senior member directly.
Lithuanians prefer face-to-face meetings, as it is important to them to build relationships of mutual understanding and like to turn business relationships into friendships.
Lithuanians generally speak softly, are good listeners, and are not very emotive speakers. They do not touch others whilst speaking and can appear reserved upon the first meeting. They are modest, and do not take well to bragging. It is important not to show any anger or frustration.
Any topic of discussion can be used to start a conversation – let your business associates get to know you and talk about your family, work, hobbies, and sports.
Lithuania Minimum Wage
In October 2020, the Tripartite Council (which brings together the government, employers, and trade unions) announced a new national minimum wage of EUR 642 per month in 2021, which increased from EUR 607 in 2020.
Probation in Lithuania
According to the Labor Code, the probation period can be established in employment contract. The maximum period is 3 months, but if requested by the employer, this limit can be increased to 6 months. This could also be decreased if both parties agree.
If the probationary period ends with both parties willing to continue the employment, the contract will continue to have effect with no additional actions needed.
However, if the results of the probation period are proving unsatisfactory, the employer can dismiss the employee with a written 3 business days’ notice and is not entitled to severance pay. The employer should, however, verify the reasons for an employee’s dismissal.
Working Hours in Lithuania
In Lithuania, a typical working day is 8 hours, 5 days a week. The working day starts at 8 or 8:30am and ends at about 5:30/6pm. Office hours can vary, and Friday is often a short day with people leaving at about 4pm or earlier. In some cases, the working day is extended to 6 days and/or 48 hours. Workers in the private sector commonly stay late at work and may also work on weekends.
Daily lunch breaks can last between 30-60 minutes.
Overtime in Lithuania
Overtime work for employees generally does not exceed 8 hours in 7 executive working days and must give written consent work up to 12 overtime hours per week. Employees also cannot exceed 180 hours per year in overtime, unless established under the respective collective agreement.
Notice period in Lithuania
The standard notice period in Lithuania for open-term employment due to dismissal without fault is 1 month. In case of employment for less than a year, a notice period of 2 weeks applies. These notice periods are doubled for employees entitled to their retirement pension in less than 5 years, and tripled in cases of:
• Employees raising a child under 14 years of age.
• Employees raising a child under 18 years of age.
• Pregnant employees.
• Disabled employees.
• Employees entitled to pension in less than 2 years.
The employer may exempt the employee from the obligation to work during the notice period if they have written consent from the employee. In this case, the employer must still pay the salary to the employee.
For fixed-term employment – if employment lasts more than a year, there is a notice period of 5 business days. If employment lasts longer than 3 years, a notice period of 10 business days apply.
If the dismissal is happening with fault or at the employer’s will, the notice period is 3 business days.
Redundancy, Termination / Severance in the Lithuania
For indefinite employment, termination can be done by mutual agreement, at no fault of the employee or at fault of the employee. In the case of no fault of the employee, it can be categorized as for objective reasons (darbo sutarties nutraukimas darbdavio iniciatyva be darbuotojo kaltės), or dismissal upon the employer’s will (darbo sutarties nutraukimas darbdavio valia). These kinds of dismissal differ with regards to severance payment and notice period:
- Upon ordinary dismissal (at no fault) – the employee is entitled to severance pay of 2 of their average monthly salaries. If employed for less than a year, the employee must be paid half of their average salary. The employee may also receive a severance pay from the State Social Insurance Fund Board (SODRA), the amount depending on their seniority.
- In case of termination upon the employer’s will – the employee must be paid at least 6 of their average monthly salaries.
For fixed-term employment, the contract ends when its validity expires (the agreed term ends). However, there are rules that that apply to severance payments - if employment relations have lasted more than 2 years, 1 average monthly salary applies.
According to the Lithuanian Labor Code, dismissal is considered collective redundancy when the following criteria are met:
1. The dismissal is initiated by the employer or as a result from employer’s bankruptcy
2. Notice is given within 30 days and is intended to terminate: 10 or more employees in an average of 20-99; no less than 10% of employees in an average of 100-299; and 30 or more employees in an average of 300 or more.
Severance payments are 77.58% of the employee’s average salary, the amount (1-3 months) will depend on how long the employee has been working at the time of redundancy.
Pension Plans in Lithuania
Pensions are available to everyone that has made social security contributions in a particular period, but pensions are also available through other means. The pension system in Lithuania is made up of 3 pillars:
- Pillar I (Public) – The State Social Security System where individuals are insured or insure themselves for a social insurance pension.
- Pillar II (Private) – A mix of the employee’s private contributions and the state’s contributions.
- Pillar III (Supplementary) – the voluntary supplementary contribution of a pension fund or participation in a life insurance scheme. Everyone can participate in a Pillar III scheme, including those who do not pay social insurance contributions or participate in the first two pillars.
Public Holidays in Lithuania
Employees in Lithuania are also entitled to paid leave for 13 public holidays. The day before the holidays, work ends an hour early, but employees are still paid for the full day. The holidays are as follows:
• 1 January – New Year's Day
• 16 February – Day of Re-establishment of the State of Lithuania
• 11 March – Day of Re-establishment of Lithuania's Independence
• (Western Church) 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 – Midsummer and St. John’s Day
• 6 July – Day of the State (Coronation of King Mindaugas)
• 15 August – Assumption Day
• 1 November – All Saints’ Day
• 2 November – All Souls' Day
• 24 December – Christmas Eve Day
• 25 and 26 December – Christmas Days
Sick Leave in the Lithuania
Employees are entitled to paid sick leave for up to 6 months of illness (120 days). For the first two days of sickness, employees receive between 80-100% of their pay from their employer. From the third through the seventh day, employees are eligible for 40% of their pay. After that, the State Social Security Fund pays 80% of the employee’s salary.
Vacation / Holiday in Lithuania
Employees in Lithuania are entitled to a minimum of 20 days paid annual leave when working a five-day week, and increases depending on the length of an employee’s service. This minimum is increased to 24 days if an employee is working six-day weeks.
Annual leave may be taken in parts, no less than 10 or 12 days at a time, according to the length of workdays in a week. Single parents with children under the age of 14 are entitled to 35 days of annual paid leave.
Maternity/Paternity & Parental Leave in Lithuania
Mothers are entitled to maternity leave as follows: up 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.
Lithuania also enjoys parental leave. Parental leave is paid by the State Social Security Fund, and the mother, father, grandmother, grandfather, or other relatives participating in the care and raising of a child are granted parental leave of 1 year until the child reaches the age of 3. The leave can be taken all at once or in instalments.
Bonus in Lithuania
Employee bonus payments in Lithuania are associated as incentives or with a distinct purpose:
• Special bonus payments for overtime and night work, as well as during the weekends and holidays.
• Annual bonuses paid to the employees by some companies, known as the 13th month salary (Christmas salary – a full month’s salary).
• Annual bonuses based on employee’s productivity.
• Annual bonuses related to profit-sharing schemes (based on company’s achievements, for high-level employees).
Car allowance Lithuania (if applicable)
Car allowances can be given in Lithuania, but they are not common.
Get in touch with Bradford Jacobs
To expand into Lithuania fruitfully, an understanding of the local business culture is vital for your business’ success. With Bradford Jacob’s expertise and knowledge of employment through our Employer of Record (EOR) service, as well as our experience with Lithuania laws, we can assure the recruitment of the right people to make your expansion goals a reality.