How to hire and fire employees in Lithuania according to Labour Law: General principles and Hiring the Employee
Forums For Adjudicating Employment Disputes
The Labour Disputes Commission has exclusive jurisdiction for most claims, but in certain cases and when the parties fail to reach the agreement in Labour Disputes Commission, the case can be brought in the civil court (Circuit Court depending on defendants residence address). Both parties are entitled to appeal to the court against decisions of the Labour Disputes Commission.
The Main Sources Of Employment Law
The sources of employment law are the Constitution of Lithuania, International agreements of Lithuania, the Labour Code, other legislation and regulatory provisions of collective agreements. Government resolutions and other regulations may regulate labour relations only in such cases as and to the extent determined by the Labour Code and other laws.
National Law And Employees Working For Foreign Companies
Statutory rights under national law will usually apply to all individuals physically working in Lithuania. Foreign law will be applied to labour relations where this is established by the international agreements of Lithuania, Lithuanian laws or agreements between the parties to the employment contract. Therefore parties to the employment contract may also choose the law applicable both to the entire employment contract and to a part thereof.
National Law And Employees Of National Companies Working In Another Jurisdiction
Statutory rights under national law will usually apply when the employee is physically working within the Lithuanian jurisdiction. However parties to the employment contract may also choose the law applicable both to the entire employment contract and to a part thereof.
Hiring The Employee
Legal Requirements As To The Form Of Agreement
An employment contract must be concluded in writing. Each employment contract shall have the following terms: workplace and functions of the employee. Two copies of the written employment contract must be drawn up and signed by the employer (or his authorised person) and by the employee. One signed copy must be handed to the employee, whereas the other copy must be kept by the employer. The employment contract must, on the same day, be registered in the employment contracts record book. Such a book is not mandatory if the employer is an individual employing three or less employees. Before the commencement of work, the employer must issue an identity card (work certificate) to the employee. The model form of employment contract, the registration rules, the form of an employee’s identity card, the procedure for its issuance, and its carrying and presentation to control institutions is all regulated by the Lithuanian Government.
An employer is responsible for the proper drawing up of an employment contract. When concluding an employment contract, the employer or his authorised person must ensure the person being employed is aware of theterms of his perspective employment, the collective agreement, work regulations, and any other acts regulating his work, which are in force at the workplace. Unless otherwise agreed by the parties, the employee must commence his work on the next day following the conclusion of the employment contract.
- Trial Period
The parties may agree on a trial period. It may be used to assess the suitability of an employee for the agreed work, as well as, at the request of a person taking on a job to see if the job is for him. The trial period must be set in an employment contract. A trial period may not be longer than three months. Longer trial periods may be applied in certain cases specified by laws but the trial period cannot exceed six months. A trial to assess the suitability of an employee for the agreed work may not be established when employing persons: 1) under 18 years of age; 2) to a post by competition or elections, as well as those who have passed qualification examinations for a post; 3) due to a transfer by agreement between employers, to work for another employer; 4) in other cases specified by labour laws. If an employer is not satisfied with the performance of an employee during the trial period, he may dismiss the employee from work before the expiry of the trial period by giving the employee 3 business days written notice, without paying him a severance pay. Currently there are no laws which specify when trial period can exceed six months.
- Hours Of Work
Working time may not exceed 40 hours per week. A daily period of work must not exceed 8 working hours. Exceptions may be established by laws, Government resolutions and collective agreements. Maximum working time, including overtime, must not exceed 48 hours per 7 working days. Employees working in specific sectors (e.g. health care, care (custody), child care institutions, specialised communications services and specialised accident containment services and security may be required to work up to 24 hours per day. The duration of working time of such employees must not exceed 48 hours per seven-day period, and the rest period between working days must not be shorter than 24 hours. The list of such jobs is approved by the Government. For employees employed in more than one undertaking or in one undertaking but under two or more employment contracts, the working day (including breaks to rest and to eat) may not be longer than 12 hours.
There is a restriction prohibiting employees from earning below a minimum wage, which in Lithuania currently is 300 EUR per month and minimal hourly rate – 1.82 EUR. Both of the rates are shown before taxes. The Governmental Decision ruling the above rates was adopted on 1st October, 2014.
- Holidays / Rest Periods
The minimum annual holiday is normally a period of 28 calendar days. 35- days holiday are granted to certain groups of employees (under 18 years of age, single parents, disabled persons, etc.) Annual leave may not be shortened for part-time employees. The holiday for part time employees is calculated proportionally to how much they work, however annual holiday may not be shortened for parttime employees and must last at least 28 calendar days.
- Minimum/Maximum Age
The minimum age is 16, below which employees cannot work. There are exceptions to this rule. A list of list of jobs which can be performed by persons as young as 14 years old is approved by the Government. There are no maximum age limits.
An employer may request an applicant to undergo a health examination. Disabled persons as well as ill persons in the meaning of Lithuanian labour laws enjoy wider protection in the employment relations.
- Location Of Work/Mobility
The employee’s normal place of work can be specified by the employer in the employment contract. Mobility clauses can be included in the contract of employment, but they cannot be operated unreasonably. Where the job requires travel to other temporary locations,
it is normal for the employer to reimburse all reasonable travel expenses.
- Pension Plans
A person qualifies for state social insurance old-age pension if he is a permanent Lithuanian
resident, attains the retirement age as specified by the law and has the minimum 15 year social pension insurance record. Additionally may have a private Pension Fund (particular pensionē scheme) and transfer 2,5% of his/her state social insurance payment to that fund.
- Parental Rights (Pregnancy/Maternity/Paternity/Adoption)
A range of “family-friendly” rights are widely available to employees. Women are entitled to maternity leave of 70 calendar days before child birth and 56 calendar days after child birth (in the event of complications or the birth of two or more children – 70 calendar days). This leave is added up and granted to the woman as a single period, regardless of the days used prior to the birth. Employees who have adopted newly born babies, or who have been appointed as their guardians, are granted leave for the period from the date of adoption, or guardianship, before the baby is 70 days old. Parental leave before the child has reached the age of three is available to the mother/adoptive mother, father/adoptive father, grandmother, grandfather, guardian or any other relatives who is actually raising the child. Employees who have adopted newly born babies, or who have been appointed as their guardians, are granted leave for the period from the date of adoption, or guardianship, before the baby is 70 days old. Lithuanian Labour Code does not provide adoption leave for parents adopting a baby who is older than 70 days. However the parties to the employment relationship may agree on more beneficial conditions than is prescribed by law.
- Compulsory Terms
In every employment contract, the parties must agree on the essential terms of the contract:
the employee’s place of work (enterprise, establishment, organisation, structural subdivision,etc.), and job functions. In respect of certain types of employment contracts labour laws and collective agreements may also provide for other essential terms, which are agreed by the parties in concluding such an employment contract (agreement on the term of the contract, the nature of seasonal work, etc.). In every employment contract, the parties must agree on the terms of remuneration for work (system of remuneration for work, amount of wages, payment procedure, etc.). Other terms of an employment contract may be established by agreement between the parties unless labour laws, other regulatory acts or the collective agreement prohibit doing so (trial, combination of professions, liability, etc.).
- Non-Compulsory Terms
The employer and the employee are free to agree on any other terms in addition to the compulsory provisions. It is worth mentioning that parties to the employment agreement may agree on more favourable employment regime than established by Lithuanian laws. However it is highly advisable to include the agreed provisions in an employment contract.
Types Of Agreement
Employment contracts may be non-term, fixed-term, temporary, seasonal, on additional work, secondary job, with home workers, on the supply of Services and other. As a rule, an employment contract is concluded for an indefinite period of time (non-term).
There are rules relating to secrecy and confidentiality that are implied into the employment relationship. Upon written agreement during the employment relationship an employee is under duty to respect the confidentiality of the employer’s commercial and business information. After employment, confidential information as well as trade and profession secrets are protected by the implied duty of confidentiality. In addition to the above duties, employers will often include in the employment contract or in a separate document an express term specifying the type of information that is a trade secret, and therefore protected, to prevent future disclosure.
Ownership of Inventions/Other Intellectual Property (IP) Rights
In the absence of any contractual terms, there are statutory provisions which will apply to determine ownership of IP rights.
There is a certain procedure which shall be applied when employing a non-national. One month prior to employment commencing, the Lithuanian registered enterprise must register vacancies at the local labor exchange and apply for the issue of a work permit. In cases where the established company in the Republic of Lithuania is bankrupt the right to apply for the work permit is not enforceable. The procedure goes as follows: labor exchange passes a positive decision and its conclusion is submitted to the Lithuanian Labor Exchange, which passes a final decision and issues a work permit to the non-national. The application, depending on qualification of the future non-national employee may take from one to two months. If the application is approved, the work permit for a non-national employee will be valid up to 2 years.
Hiring Specified Categories Of Individuals
There are restrictions on who can be employed to carry out certain hazardous activities and restrictions on the types of work that vulnerable groups (e.g. children or pregnant women) can be required to undertake.
Outsourcing And/Or Sub-Contracting
It is prohibited to refuse to employ a person if there is a written agreement between employers concerning the transfer of an employee to another workplace. The employees must generally remain on exactly the same terms of employment as they enjoyed prior to the transfer. Additionally to this, it is important to note that uninterrupted period of Service covers the period of employment in one enterprise, establishment, organisation or several enterprises, establishments or organisations if the person is transferred from one place of employment to another by agreement between the employers or on other grounds without interrupting the length of service or provided that the break in employment is within the set time limits.
Jovita Valatkaite, lawyer of the Gencs Valters Law Firm in Vilnius
Practising in fields of Labour Law in Latvia, Lithuania and Estonia
T: +370 52 61 10 00
F: +370 52 61 11 00