Employer of Record in Lithuania

Businesses can only operate smoothly in Lithuania if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Lithuania below, to avoid any compliance issues.

Employment Contract Requirements

Employment contracts in Lithuania must be in writing, correspond to the formal requirements stipulated by Lithuanian labor law and include at least the following basic terms of employment:

• Identification of both parties
• Date of commencement (and employment duration for temporary contracts)
• Workplace
• Job description, duties and responsibilities
• Basic salary as well as other compensation or benefits
• Working hours
• Total number of holidays
• Notice periods for employment termination

Onboarding Process

We can help you get a new employee started in Lithuania quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Lithuania

In Lithuania, employees commonly work eight-hour shifts starting between 8:00 a.m. and 8:30 a.m., and ending between 5:00 p.m. and 5:30 p.m., Monday through Friday. This schedule totals 40 hours per week, inclusive of an unpaid lunch hour.

Overtime in Lithuania

Overtime exceeding the standard 40-hour workweek is compensated according to the employment contract or collective agreement. Employees can work up to 8 overtime hours over seven consecutive days, extendable to 12 hours with written consent. Overtime hours are paid at a rate of 150% of the regular pay rate.

Probation Period in Lithuania

Probation periods are not legally required, but if offered, commonly last for three months.

Fiscal Year in Lithuania

1 January - 31 December is the 12-month accounting period that businesses in Lithuania use for financial and tax reporting purposes.

Payroll Cycle in Lithuania

The payroll cycle in Lithuania is usually monthly , with employees being paid by the 10th of the following month..

Minimum Wage in Lithuania

The minimum wage for employees in Lithuania is typically 5.78 EUR per hour, amounting to ~924 EUR per month for a typical 40 hour work week.

Bonus Payments in Lithuania

In Lithuania, 13th-month payments are not mandated by law, but many employers offer performance-based bonuses as a common practice.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 1.77% on top of the employee salary in Lithuania.

Employee Payroll Tax Contributions

In Lithuania , the typical estimation for employee payroll contributions cost is around 19.5%.

Individual Income Tax Contributions

In Lithuania, individual income tax rates are either 20% or 32%, calculated at a flat rate.

Pension in Lithuania

In Lithuania, the pension system comprises both state and private components. The state pension is funded through social security contributions from employees and employers. Eligibility for state pension benefits is based on factors such as age, employment history, and contributions. Additionally, individuals can opt for private pension schemes to supplement their retirement income.

Mandatory Leave Entitlement in Lithuania

The annual leave entitlement in Lithuania is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Lithuania

Lithuania celebrates 15 national holidays. National public holidays include:

Paid Time Off in Lithuania

Full-time employees working five days a week receive 20 days of paid time off (PTO) annually, whereas those working six days a week receive 24 days. Part-time employees are entitled to 20 days of paid time off pro-rata. Paid time off accrues monthly at a rate of 1.67 days per month.

Maternity Leave In Lithuania

Female employees in Lithuania are entitled to 70 calendar days of maternity leave before childbirth and 56 calendar days after childbirth. In cases of complicated births or the birth of two or more children, this leave can be extended to 70 calendar days after birth. Maternity leave is paid at 77.58% of the mother's compensatory wage.

Paternity Leave In Lithuania

Employees meeting eligibility criteria for paternity leave in Lithuania are entitled to 30 days of paid leave, receiving 77.58% of their salary. The State Social Insurance Fund Board administers this payment. Eligibility conditions include being insured, following legal procedures for paternity leave, and having at least 12 months of social insurance record in the last 24 months preceding the leave.

Sick Leave In Lithuania

Employers must provide pay for the initial two days of illness at a rate not lower than 62.06%. From the third day onwards, employees can receive sickness benefits equivalent to 62.06% of their regular wages (subject to cap of insured amount) from SODRA, the State Social Insurance Fund.

Parental Leave In Lithuania

Parents in Lithuania are entitled to parental leave until the child reaches the age of three. If employee selects the one year option, payment is at 77.58% of the compensatory wage for the first year of leave. If employee selects the two year option, payment is at 54,31% for the first year and 31,03% for the second year. After the paid period ends (one or two years), parents can continue to take unpaid parental leave until the child turns three, but no financial benefits provided after 2 years.

Bereavement Leave

Employers in Lithuania are required to grant employees three days of paid leave upon the death of an immediate family member.

Termination Process in Lithuania

The employee must receive written notification detailing their performance shortcomings. Both parties must agree on a two-month performance improvement plan, which, if not fulfilled by the employee, may lead to further action.

Notice Period in Lithuania

After one year of employment, employees are entitled to a two-month notice period, reduced to one month for those employed less than a year. Special considerations apply to:

• Adoptive parents of children below 14
• Disabled employees
• Parents raising disabled children below 18
• Employees due to retire in two years or less

Severance in Lithuania

Severance packages in Lithuania is generally 2 months' average salary for employees who have worked for more than one year.