Employer of Record in Lithuania

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

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.

Probation Period in Lithuania

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

The standard full-time workweek in Lithuania is 40 hours, with restrictions based on employee age and job role. 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.

Overtime refers to any work performed beyond the standard 40-hour workweek. Overtime compensation ranges from 1.5 to 2.5 times the regular hourly rate depending on timing and conditions. As of 2025, overtime work on public holidays, including overnight work, must be compensated at a rate of 2.5 times the employee's regular rate. Rest periods, night shifts, and weekend work also come with specific legal requirements aimed at safeguarding employee health and ensuring fair treatment.

Hiring in Lithuania means navigating local labor laws, mandatory employee benefits, payroll taxes, and strict employment regulations. These requirements aren’t always intuitive, especially if your team lacks in-country legal or HR expertise. An Employer of Record steps in as the legal employer for your hires, managing all compliance-related responsibilities. This includes issuing locally compliant contracts, registering employees with relevant authorities, processing payroll, and handling social security contributions and taxes in line with national laws.

By handing over these complexities to an EOR, your business avoids costly compliance errors and the time required to master local employment standards. You can focus on growing your team and operations while trusting that the legal and administrative foundation is solid. Whether you're making one strategic hire or building out an entire team, the EOR keeps you compliant, removes guesswork, and reduces the risk of legal or financial penalties, without requiring you to open a legal entity or maintain a local HR team.

Lithuanian payroll requires employers to manage social security (1.77–2.49 % employer; 19.5 % employee up to ceiling, then 6.98 %), personal income tax (20 % up to €126,532; 32 % above), and optional pension contributions. Employers must register with Sodra and VMI, collect employee documentation, calculate deductions correctly, submit monthly filings by the 15th, and issue payslips.

Using payroll software or services like Playroll can streamline these tasks, consolidate data, and help remain compliant with Lithuania's complex payroll landscape.

As of January 1, 2025, Lithuania's minimum wage rates are:

• Minimum Monthly Wage: €1,038 for a typical 40-hour work week.
• Minimum Hourly Wage: €6.35

Running payroll in Lithuania is complex, especially when you're hiring without a local entity. Local laws determine everything from tax withholdings and reporting deadlines to benefit contributions and currency requirements. Missteps can lead to fines, payment delays, or unhappy employees. An Employer of Record takes this burden off your plate by handling the full payroll process. Acting as the legal employer, the EOR ensures you remain compliant with all payroll-related obligations, while still allowing you to manage your team’s day-to-day work and performance.

Key Ways an EOR Supports Payroll in Lithuania:

• Compliance Assurance: Ensures payroll aligns with local tax laws, labor regulations, and statutory deadlines.
• Payroll Processing & Tax Management: Calculates salaries, applies correct tax withholdings, and submits required reports.
• Benefits & Social Security Contributions: Manages employer obligations for pensions, health insurance, and other legal entitlements.
• Contract Generation & HR Administration: Drafts compliant employment contracts and supports onboarding, terminations, and HR tasks.
• Currency Payments: Issues timely salary payments in local currency, ensuring employees are paid accurately and on time.

In Lithuania, work permits and visas are essential for employers hiring foreign workers. Non-EU/EEA nationals generally require a work permit to be employed legally, with several visa types available based on the nature of employment. These include the EU Blue Card for highly skilled workers, the Intra-Corporate Transfer (ICT) Card for temporary transfers within multinational companies, and the National Visa (D) for stays up to one year. The process involves submitting applications, conducting labor market tests, and meeting specific eligibility criteria.

As of 2025, Lithuania has implemented a quota system with 24,830 quotas available for migrant workers, reduced from 40,250 in the previous year. Highly qualified professionals earning at least 1.5 times the national average monthly salary (€3,020.70) can obtain permits outside this quota system.

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.

Administering employee benefits in Lithuania requires more than just offering a standard package. Local labor laws often mandate specific entitlements, from health insurance to paid leave, and the rules can change without warning. Lithuania also has unique standards for what an attractive, competitive benefits package looks like. For businesses without in-country expertise, meeting these obligations and expectations can quickly become risky and expensive. An Employer of Record acts as your compliance partner, ensuring all benefits are provided according to the latest legal requirements and without administrative strain on your internal team.

Beyond compliance, an EOR brings clarity and consistency to a process that’s often complex and fragmented. They handle enrollments, ensure accurate employer contributions, manage communications with local providers, and keep everything properly documented. This means employees get what they’re entitled to, and you avoid the headache of navigating benefits systems in a foreign market. Whether you're hiring one person or building a larger team, an EOR provides a clear, dependable structure that lets you offer competitive benefits without taking on unnecessary risk or workload.

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 one-month notice period, reduced to two weeks 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.