up to 3.03%
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If you are looking for new members for your remote team, Lithuania should definitely be on your list of potential markets to go talent hunting! Here’s why: Not only is there a large pool of highly skilled workers but due to the low employment costs, this talent is also available at very competitive rates.
What’s more, Lithuania comes fourth in the ranking of the EU countries with the highest share of young workers holding a degree. As around 85% of the country’s young professionals are proficient in English, communication to ensure a smooth workflow will definitely not be a problem.
Employment contracts in Lithuania must be in writing, correspond to the formal requirements stipulated by Lithuanian labour law and include at least the following basic terms of employment:
Identification of both parties
Date of commencement (and employment duration for temporary contracts)
Job description, duties and responsibilities
Basic salary as well as other compensation or benefits
Total number of holidays
Notice periods for employment termination
Employees can be hired either on the basis of a permanent or a fixed-term contract. The latter cannot be concluded for a period exceeding five years. It is advisable to draft the employment contract in Lithuanian.
Employees and employers can agree on a probationary period which must not be longer than three months.
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Employees in Lithuania usually work 40 hours per week, i.e. five eight-hour days. After five hours of consecutive work, employees should have a rest break of at least 30 minutes – but not longer than two hours.
With regard to daily and weekly rest periods, the following regulations apply:
weekly rest periods should not be shorter than 35 consecutive hours – usually Saturdays and Sundays are non-working days
daily rest periods should not be shorter than eleven consecutive hours
Unless certain special conditions are met, overtime work is only permissive upon the employee’s consent and should not exceed eight hours within one single week, bringing the maximum weekly working time to a total of 48 hours.
Furthermore, employees are not allowed to work overtime for more than 180 hours per year. Overtime work on normal working days must be remunerated at a rate of 150% of usual wages – 200% on rest days and 250% on public holidays.
It is possible to pay employees in Lithuania either once or twice a month.
The national minimum wage in Lithuania currently (February 2023) stands at EUR 840 per month.
Employees who are unable to work because of sickness or injury are entitled to sick pay. The employer is obligated to cover sick pay during the first two days of sick leave at a rate of at least 62.06% of the employee’s normal salary.
From the third day onwards, sick pay is provided by the Social Insurance Fund. Sick leave is limited to 120 consecutive days – or a total of 140 days within one calendar year. After this period, employers may terminate the employment.
Although there are no legal provisions for a 13th salary, it is quite common for employers to offer performance-based bonuses.
Learn about tax reporting, compensation laws, registration requirements and more in our free Payroll Guide for Lithuania.
Employees and employers in Lithuania are subject to the following tax and social security contribution rates (last review February 2023):
up to 15%
0% – 15% corporate tax rate
21% VAT (standard rate)
Individual income tax rates:
up to EUR 101,094: 20%
additional 32% on income exceeding EUR 101,094
up to 3.03%
1.31% to 2.03% unemployment insurance
0.16% to Lithuanian Guarantee Fund
0.16% to Long-term Employment Benefit Fund
around 0.14% occupational accident insurance
8.72% to pension scheme
1.99% to sickness insurance fund
1.81% to maternity fund
6.98% to health insurance
Optional additional contribution of 2.4% – 3% to pension fund
Rates may vary depending on the employee’s position
Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).
Employers must grant their employees no less than 20 calendar days of paid leave per year – 24 days for employees with a six-day week. In addition, the country observes twelve public holidays where employees are not required to work.
Pregnant employees have the right to 126 calendar days of maternity leave which is split into 70 days before and 56 days after birth – twice 70 days in case of multiple births. Maternity benefits are paid by the Social Insurance Fund based on the employee’s usual wages.
Fathers can take up to 30 days of paternity leave during the first three month after their child’s birth. Benefits are also paid by the Social Insurance Fund.
In addition to maternity and paternity leave, mothers and fathers can take parental leave until their child reaches the age of three. Parental allowance is paid either for one year (at a rate of 77.58%) or for two years (at a rate of 54.31% in the first year and at a rate of 31.03% in the second year).
Other types of leave provided for by Lithuanian law include:
Leave for official or public duties
Furthermore, employees with children are entitled to special childcare-related leave. For instance, employees with at least one child younger than 12 years of age can take an additional day of rest once every three months.
In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, Lithuanian labour law establishes the following grounds for termination (non-exhaustive list):
redundancy or other reasons involving the business’ situation
summary dismissal due to gross misconduct
breach of employment contract
employee’s long-term illness
The 2017 revision of Lithuania’s Labour Code saw a reduction of the statutory notice periods which are now set as follows:
three days during the employee’s probation period
two weeks if the employee’s length of service is less than one year
one month if the employee’s length of service exceeds one year
Statutory notice periods are twice as long if the dismissed employee is close to retirement – i.e. less than five years until he or she reaches retirement age – and three times as long for an employee who has a child under 14.
Severance payment is required if the employment is terminated due to any reason apart from the employee’s behaviour. However, payment rates have also been reduced by the 2017 Labour Code revision and are now defined as follows:
two months’ wages for employees with a length of service exceeding one year
half a month’s wages for employees whose length of service is shorter than one year – excluding the employee’s probation period where no severance pay is required
Legislation stipulates additional payment in order to value an employee’s long-term service. Employers can also opt for a short-notice dismissal – requiring only three days of notice – by offering increased severance pay equal to six months’ wages.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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