G-P’s Employer of Record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.
Our global employment products, including G-P Meridian Prime™ and G-P Meridian Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.
As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Employment contracts in Lithuania
Employment contracts in Lithuania must be in writing, in the local language or bilingual, and outline the employee’s place of work, duties, and remuneration.
Typically, employment contracts must comply with legal requirements and usually include clauses covering any probationary period, the date of commencement, the place of work (or an indication of remote work), the job title, job functions, wage, and payment schedules.
In Lithuania, it is not common practice for employers to issue offer letters in addition to employment contracts.
A fixed-term employment contract can be enforced for a specific period of time or for the duration of a particular task. The maximum duration for a fixed-term employment contract in Lithuania is 2 years, except when substituting a temporarily absent colleague. For consecutive fixed-term contracts with the same employee but for different roles, the maximum duration is 5 years. If the reason for the fixed-term contract no longer exists, the contract will automatically become permanent. Situations where the scope of work cannot be accurately predicted are not considered temporary needs.
Fixed-term contracts may apply for:
- Temporary positions, such as a specific project or substituting an absent colleague, with brief justification required.
- Permanent positions where the work is ongoing. No justification is needed, but these contracts must not exceed 20% of the employer’s total headcount.
Working hours in Lithuania
In general, the standard workweek is 40 hours, with 5, 8-hour days.
Holidays in Lithuania
Lithuania celebrates 13 national holidays:
- New Year’s Day
- Day of Re-Establishment of the State of Lithuania
- Day of Restitution of Independence of Lithuania
- Easter
- Easter Monday
- Labor Day
- St. John the Baptist’s Day
- State Holiday Lithuania
- Assumption Day
- All Saint’s Day
- Christmas Eve
- Christmas
- St. Stephen’s Day
Vacation days in Lithuania
The minimum duration of annual leave is 20 working days per year. Some groups of employees have higher legal protection and, consequently, longer minimum annual leave. If the employee is using annual leave in instalments, at least 1 part per year should be no less than 10 working days (or 2 weeks) of uninterrupted vacation.
Single parents of children under the age of 14 are entitled to 35 days of paid annual leave.
Lithuania sick leave
Employees are eligible to receive between 62.06% and 100% of their salary from their employer for the first 2 days of illness. Starting on the third day, employees are eligible to receive 62.06% from the National Social Insurance Fund (Sodra).
Maternity and paternity leave in Lithuania
Companies must retain the job for an employee on maternity or paternity leave. Employees are required to inform their employer of any planned maternity/paternity leave at least 14 days before the start of the leave. A person on maternity or paternity leave will continue to accrue sickness and social insurance record.
Maternity benefit equals 77.58% of the worker’s compensated salary. The minimum monthly maternity benefit may not be below 6 basic social insurance benefits (bazinė socialinio draudimo išmoka or BSI) applicable in the quarter preceding the date of entitlement. And there is no cap to the benefit.
Maternity benefit is paid as a lump sum for the entire leave, which may vary from 28 to 126 calendar days. The maximum length of maternity leave is 3 years, but no maternity benefit will be paid for the third year.
Paternity benefit also equals 77.58% of the worker’s compensated salary. The length of paternity leave is 30 calendar days. This leave may be taken at any time before the child turns 1. The minimum paternity benefit is at least 6 basic social insurance benefits per month, while the maximum compensated salary for paternity benefit purposes may not exceed 2 average national monthly salaries. The paternity benefit is also paid as a lump sum.
Health insurance in Lithuania
Like many other European states, Lithuania has put in place compulsory health insurance (privalomasis sveikatos draudimas) system. All citizens and nationals of other countries living in the Republic of Lithuania, permanently residing in the country, or persons who are legally employed and temporarily residing in Lithuania must pay monthly health insurance contributions.
In the event of an insured event, individuals have the right to receive personal healthcare services covered by the budget of the fund. The individuals not covered with the compulsory health insurance are required to pay for healthcare services.
Lithuania supplementary benefits
Common benefits include:
- Supplemental health insurance
- Car allowance
- Phone allowance
- Fitness allowance
Performance-based bonuses are also common in Lithuania.
Termination/severance in Lithuania
Probation periods of up to 3 months are allowed and may be terminated within 3 working day’s written notice. The notice period starts on the next business day after delivering the termination notice and it is very important to have evidence that the employee has received both the notice and the decision
In Lithuania, the most common and preferred termination procedure is by mutual agreement. This agreement must be made in writing, detailing the terms and conditions agreed upon by both parties. If the agreement is not documented in writing, the employer bears the burden of proof in any dispute. Employees must be informed in writing about their termination, including the legal and factual reasons and the effective date.
The termination process should also include documentation of the notice period to be served. Employers are required to notify SODRA of the termination by submitting the 2-SD form within 1 working day. All outstanding payments, including remuneration, compensation for unused holidays, and severance pay, must be settled by the last day of employment. Any delay in payments incurs daily interest.
For a disciplinary dismissal to occur, the employee must have committed repeated misconduct and received prior warnings within the last year. The employer must act within 1 month of becoming aware of the misconduct, and no later than 6 months after the misconduct occurred. For gross breaches of duty, immediate termination is possible after allowing the employee to explain the breach.
Paying taxes in Lithuania
In general, employees pay income tax of 20% on income below EUR 82,162, and 32% on any income that exceeds this amount as well as social security of 19.5%.
Employers pay a social insurance tax of 1.45% to 2.71%, a long-term employment fund contribution of 0.16%, and a contribution to the Guaranteed fund of 0.16%.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading global employment platform. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
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