Hiring guide in Lithuania

What should I know about hiring in Lithuania?

Lithuania is a beautiful, historic country with a rich culture and a strong economy. If you’re considering hiring in Lithuania, you should know a few things. 

Firstly, being well-versed in the many frameworks of employment contracts that can be signed in Lithuania is crucial. In addition, Lithuania has two main types of employment contracts: fixed-term and open-ended. 

Secondly, if you want to attract and retain top talent in Lithuania, you’ll need to provide pay at least as high as the local minimum wage. 

Finally, being familiar with the Lithuanian tax and social security systems is essential, as these will impact your employees’ take-home pay. When it comes to business, Lithuania is a fantastic option. Many qualified people are looking for jobs, and the business climate is healthy.

Why is Lithuania a good choice for finding remote employees?

For a long time, Lithuania has been recognised as a source of highly trained and skilled employees. In addition, the country boasts an excellent infrastructure for remote work, including fast internet and pleasant offices. 

Lithuanian workers are also highly educated, with a large number of them having university degrees. This means that they can handle complex tasks and projects and are often able to work independently with little supervision. 

The government of Lithuania has been very encouraging of the growth of the remote work industry there. It has implemented various programmes to facilitate the establishment and operation of remote businesses in the nation. Several tax breaks and a special visa for remote employees help businesses hire people from foreign nations.

How can Native Teams help you hire in Lithuania?

As your business grows, you may need to look for new talent to keep up with demand. You may not have the time or resources to devote to an extensive search, so working with Native Teams can be a great solution. With the help of our Employer of Record services, your business may more easily hire new workers, pay them, and comply with Lithuanian labour laws.

Hire your first Lithuanian employee with Native Teams.

Legal requirements for hiring in Lithuania

Below, you can find the most important legal requirements for hiring employees in Lithuania.

Legal framework

Types of employment contracts

In Lithuania, employment contracts can be divided into a few types, depending on different employment scenarios and duration. Regardless of the type, every employment contract must be documented in writing and must clearly outline important terms such as the place of work, job function, and remuneration. 

Starting from indefinite or open-ended contracts, they’re mostly used for ongoing, long-term employment and provide employees with job security and stability. On the other hand, fixed-term contracts are typically used for temporary or project-based roles, as they have a specific duration limited to a maximum of five years.

Similar to fixed-term contracts, project-based employment contracts are used for the purpose of specific projects, and also have limited duration.

Temporary agency employment contracts are agreements between an employee and a temporary agency, where the employee engages in a client company for temporary assignments. 

Job-sharing employment contracts are flexible contracts that allow two employees to share the responsibilities of one full-time position. On the other hand, employment contracts for several employers regulate employment relationships where the employee works for two or more employers or performs the same job functions across different companies.

Finally, seasonal employment contracts are used for specific seasons or times of the year and typically last for eight months within any 12-month period.

Content of an employment contract

According to article 33 of the Lithuanian Labour Code, each employment contract concluded in the country must include three essential conditions, which are the job function, the salary, and the workplace.

Besides the three essential conditions, additional terms include a trial period, educational expenses, non-competition and confidentiality agreements, and others.

Download a free employment contract for Lithuania through Native Teams.

Oral, written or electronic employment contracts

In Lithuania, an employment contract is considered finalised once both parties agree on the terms of employment. According to Lithuanian labour law, each contract must be written following a prescribed model form. 

If an employee starts working based on a verbal agreement with the employer, the employment contract is still legally binding and must be promptly formalised into a written contract.

Working hours

As outlined in the Labour Code of the Republic, Lithuanian labour law establishes a well-defined framework that governs working hours and days for employees within the country.

The standard workweek in the country is 40 hours, with daily working hours being limited to a maximum of eight hours. The total working time, including overtime, is 48 hours per week, distributed over seven days. The minimum rest period between consecutive working days must be 24 hours.

Night work

Night work in Lithuania is defined as any work where at least three hours of the shift are between 10 pm and 6 am. 

Night shifts in Lithuania are generally reduced by one hour, prohibited for individuals under 18 and people restricted by health recommendations. Pregnant women and those caring for young children can only work night shifts with their consent.

Breaks and types of leaves

Employees in Lithuania are entitled to breaks for rest and meals during their working hours, lasting for a minimum of 30 minutes up to two hours. Within each 24-hour period between working days, employees must have at least 11 consecutive hours of uninterrupted rest. 

The standard work week in Lithuania includes five days, with Saturday and Sunday typically being rest days. Regardless of the working schedule, employees must receive at least 35 hours of uninterrupted rest weekly.

Annual leave

Employees in Lithuania are entitled to 20 days of paid annual leave after completing six continuous months of service with their employer. Certain employee categories, such as those under 18, single parents, and disabled people, can be entitled to extended annual leave of 28 up to 35 business days.

Public holidays

The Lithuanian Labour Code designates 11 public holidays, spanning 13 calendar days, to provide time off for national and cultural observances. Some of these holidays are New Year’s Day, the Day of Re-establishment of the State of Lithuania, the Day of Re-establishment of Lithuania’s Independence, International Labour Day, and Christmas Day.

Salary

In Lithuania, the term wage includes all forms of compensation given to an employee in return for their work, whether in cash or kind. The compensation can be structured on an annual, monthly, weekly, daily, hourly, or piece-rate basis.

Employees’ total remuneration consists of their base wage plus any additional payments. However, overtime and night work must be compensated at least one and a half times the hourly rate while working on rest days or holidays at double the normal rate.

To calculate the salary and taxes in Lithuania, click here.

Sick leave

Employees in Lithuania are entitled to sick leave and comprehensive coverage for sickness benefits. However, they are entitled to retain their position if their absence doesn’t exceed 120 consecutive days or 140 days within the past 12 months. 

Some of the criteria to qualify for sickness benefits are being covered by sickness social insurance, having an electronic incapacity certificate, having a documented history of work or insurance contributions, and other criteria.

Parental leave

Parental leave in Lithuania extends to a wider range of family members, including the mother, the father, the grandparents, and any other relatives actively raising the child. Parental leave can be taken until the child reaches the age of three, and hence, employees can alternate their leave or divide it into parts to get more flexibility.

Payments for parental leave coverage are administered by The State Social Insurance Fund (SoDra).

Paternity and maternity leave

Maternity leave in Lithuania is split into two parts – up to 70 business days before and 56 days after childbirth. In case of complicated deliveries or the birth of multiple children, the postnatal leave can be extended to 70 days. Adoptive parents are entitled to parental leave from the day of adoption until the baby is 70 days old. 

Fathers in Lithuania are entitled to paternity leave from the birth of their child until the child is one month old. During maternity and paternity leave, both parents receive an allowance from the State Social Insurance Fund.

Methods of employment termination

Termination of employment contracts in Lithuania can occur due to various reasons, including mutual agreement, expiry of the contract term, or on the initiative of either party.

Mutual termination is a method where either party may propose ending the contract, and if the other party agrees, a formal termination agreement must be drafted. 

Employment contracts can also end upon reaching their specified end date, which applies to fixed-term arrangements. However, if neither party acts to conclude the employment relationship, the contract is automatically converted into an indefinite-term contract.

Employees in Lithuania have the right to terminate their contracts under specific conditions, with a termination notice depending on the type of contract. Employers can also terminate employment contracts for reasons that fall into two broad categories – without fault and with fault.

Ordinary dismissal by the employer

Article 61 of the Lithuanian Labour Code provides the legal framework for employers to terminate employment contracts without attributing fault to the employee. Hence, this termination can occur under several circumstances, such as economic or organisational reasons, employee incompatibility, and business closure or relocation.

Based on the employee’s length of service, the Lithuanian Labour Code mandates specific notice periods and outlines the eligible severance pay.

Also, certain categories of employees receive special protection against termination under Article 61, such as pregnant women, employees on parental leave, employees close to retirement, trade union representatives, and disabled people.

Notice period and challenging the dismissal

When the employer terminates the employment contract, they must give the employee advance notice. The standard notice period is one month, except for employment relationships that have lasted for less than one year, where the notice period is two weeks.

Some groups of employees are protected under Lithuanian law with extended notice periods. Such groups include employees within a few years of reaching the statutory pension age, employees raising a child under the age of 14, employees raising a disabled child under 18, and disabled employees.

Apart from the general notice period requirements, Lithuanian employment laws also allow for termination with significantly shorter notice and adequate compensation for specific sectors, as well as termination without prior notice in some instances.

The notice of termination must clearly specify the reason for termination, the legal basis for the action, and the effective date of termination.

Rights and obligations of unemployed individuals

The social security system in Lithuania provides unemployment benefits and financial support to individuals who have lost their jobs. However, some eligibility criteria apply, including unemployment social insurance paid during employment in Lithuania, registration with the local labour exchange, and not receiving any other social security benefits. 

Some special provisions may apply to individuals who have completed military or alternative national defence service.

Severance pay

Upon terminating an employment contract, the Lithuanian labour law mandates that employers must settle all financial accounts with the departing employee on the day of the dismissal. The settlement includes payments for any wages due, compensation for unused annual leave, and any other owed amounts. 

If the dismissed employee is entitled to severance pay, the payment must be made in equal instalments over three months from the day of the dismissal. The payments should be made at least once a month to provide a steady source of income for the employee during their initial period of unemployment.

The amount of severance pay depends on the length of continuous service with the employer. Lithuanian labour law outlines a progressive scale for calculating severance pay, ranging from one month’s average wage for employees with less than one year of service up to six months’ average wage for employees with over 20 years of service.

Probationary period

According to Lithuanian labour law, the employer and the employee may agree to include a probationary period in their employment contract. The maximum duration of the probationary period can be three months, with the possibility of setting a shorter period, which is sufficient for the evaluation process.

When it comes to the classification of probationary periods, Lithuania recognises two types – employer-initiated probationary period, which is for employee evaluation purposes, and employee-initiated period, for assessing the work environment, career objectives, and personal preferences.

While probationary periods are common in Lithuania, there are some exceptions, such as in the case of employment of minors, transfer between employees, positions filled by official tenders or elections, and positions requiring qualification examinations.

Prohibition of competition

Employers use restrictive covenants to protect their business interests by limiting certain employees’ activities during and after employment. Lithuania has a few restrictive covenants, including non-compete clauses, non-solicitation agreements, and confidentiality agreements. 

Non-compete clauses prevent employees from joining competing organisations or starting similar businesses that could threaten their former employer’s market positions. Such clauses must be reasonable regarding duration, geographical scope, and the type of restricted activities and must include compensation for the employee.

Non-solicitation agreements prevent former employees from soliciting clients, customers, or employees from their previous employers to maintain client relationships and organisational stability. Such clauses must be specific about the individuals or entities and have reasonable duration. 

Finally, confidentiality or non-disclosure agreements (NDAs) protect proprietary information, trade secrets, and sensitive data from being disclosed or used by former employees for competitive purposes. These agreements can be extended indefinitely.

Remote working policy

Lithuania’s Labour Code has recently been expanded to address the rights of employees who work remotely. 

Remote work, as defined by the Lithuanian Labour Code, refers to work arrangements where employees perform their job functions from a location other than the employer’s premises by utilising information technology. 

Hence, remote work should be mutually agreed upon by both parties and clearly documented in the employment contract. The contract must specify the terms and conditions of conducting remote work, including working hours, expectations, and any compensation for expenses while working remotely. 

With the recent amendments to the Labour Code, certain categories of employees are entitled to request remote work, and employers are generally obligated to accommodate these requests unless they can result in excessive costs or operational difficulties. Such categories are pregnant women, women who have recently given birth or are breastfeeding, employees raising young children, and employees with health issues.

Health and safety at home

In Lithuania, the Law on Safety and Health at Work provides a framework for maintaining safe and healthy work environments. Following these laws, employers must create and maintain a work environment that poses no threat to the health and safety of their employees. This includes provisions such as risk assessment and safety measures, provision of safe working equipment, health and safety training, chemical safety, and compliance with safety regulations.

Intellectual property rights

Intellectual property rights in Lithuania are regulated not only by national laws but also by EU directives and international agreements. 

Under these laws, employees retain intellectual property rights to their creations, such as publications, artistic work, and other productions, unless a specific agreement states otherwise. However, the employer is automatically granted the exclusive right to use such productions.

Employee data privacy

Under Lithuanian laws, “personal data” in the employment context includes any information relating to an identifiable individual, including names, addresses, social security numbers, and even behavioural characteristics and biometric information. 

Employers who engage with employee personal data must notify and submit an application with the Commission for Personal Data Protection before processing such information. The law also mandates implementing adequate security measures to prevent unauthorised access, maintaining up-to-date records of data processing activities, and ensuring that the data is processed lawfully and fairly. 

The State Data Protection Inspectorate (SDPI) and the Inspector of Journalist Ethics are Lithuania’s primary regulatory bodies for enforcing data protection laws. They are responsible for investigating breaches and imposing administrative fines on entities that violate these regulations.

What are the advantages of hiring employees from Lithuania vs other countries?

Firstly, Lithuania is home to a highly educated and multilingual workforce with strong proficiency in English and other European languages. The country’s strong IT and engineering sectors are highly supported by a solid education system focusing on STEM (science, technology, engineering, and mathematics) disciplines, which results in very skilled tech talent across the country.

Lithuania also has a very strategic location in Europe, which allows for efficient access to both Western and Eastern European markets to build and support international business operations. 

Finally, Lithuania offers very competitive labour costs and a business-friendly environment with favourable tax policies, as well as strong government support for startups and innovative companies.

Why use Native Teams for hiring in Lithuania?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.