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Employment Law in Lithuania

August 2020

HIRING OF EMPLOYEES (onboarding)

1. Mandatory employer requirements

In case the respective number of employees are working in the workplace, the employer in Lithuania must have in place the following policies:

  • Remuneration system. It has to be approved by the employer if such system is non determined in the collective agreement; and if average number of employees is 20 or more.
  • Policy on measures implementing employees’ equal rights and its monitoring principles. Such policy should be approved in case the average number of employees is more than 50.

Before individual start working, the employer should perform the following actions:

  • Conclude an employment contract;
  • Notify the territorial office of the Lithuanian State Social Insurance Fund Board (Valstybinė so-cialinio draudimo fondo valdyba or SODRA) at least 1 business day before the scheduled employment commencement date;
  • Introduce an employee with the working conditions, labour law provisions establishing workplace procedures and, safety and health at work requirements;
  • Provide the employee with information on employer’s full name, code, registered office address; place where work function will be performed; type of employment contract, etc.

2. Probation periods

According to the Labour Code of the Republic of Lithuania (hereinafter – Lithuanian Labour Code), probation period might be established in employment contract. The maximum probation period is 3 months but the parties are free to agree on a shorter period as well.

In case results of a probation period are unsatisfactory, the employer may dismiss the employee by giving a written 3 business days’ notice. The employee shall not be entitled to severance pay. However, in such case the employer should be able to substantiate that the employee was not suitable for work.

In case probationary period ends and parties are willing to continue the employment, employment contract continues to have effect and no additional actions are needed.

3. Hiring checks

Medical examination
Medical checks upon hiring and periodically medical checks during the validity of employment contract are mandatory for the following groups of employees:

  • employees under 18 years old;
  • employees whose results of workplace occupational risk assessment show that there is or might be a risk to their safety or health;
  • employees working at night and shift workers.

Disabled employees should perform medical checks upon hiring and each time their work conditions are changed.

Criminal background check
As a general rule, it is forbidden for the employer to perform individual’s criminal background check, except for specific cases established by laws.

Reference and education checks
Reference and education checks are permissible, except for reference check from the current employer where individual’s consent is required.

4. Diversity & inclusion

In implementing the principles of gender equality and non-discrimination on other grounds, the employer must apply equal selection criteria and conditions when hiring employees; create equal working conditions and opportunities to improve qualification, pursue professional development, retrain and acquire practical work experience, and also provide equal benefits; use equal work evaluation criteria and equal criteria for dismissal from work; pay the same remuneration for the same work or work of the same value, etc.

Moreover, employer with the average number of more than 50 employees has to approve measures to implement the policy of employees’ equal rights and its monitoring principals. This document has to be published in ways that are normally used for publishing in the workplace.

5. Types of employment contracts

The most common type of employment contract in Lithuania is open-ended employment contract (concluded for indefinite term). However, there are various other types of employment contracts which might be chosen by the business depending on its needs:

  • fixed-term employment contract which duration for the same function may not exceed 2 years with several exceptions (the maximum duration is 5 years);
  • temporary agency employment contract is concluded between employee and temporary work agency;
  • apprenticeship employment contract is a fixed-term contract, which is concluded when a person is employed for the purpose of either acquiring qualification and skills or gaining competences required for the profession;
  • project-based employment contract is a fixed-term contract whereby an employee undertakes to carry out his/her job functions for the particular project;
  • job-sharing employment contract under which 2 employees agree with an employer to share one job position;
  • employment contract for several employers according to which employee might work for two or more employers by performing the same job function;
  • seasonal employment contract might be concluded for up to 8 months during a year in case the work is seasonal in nature.

Irrespective of the type, employment contract should be concluded in writing and contain the following conditions:

  • place of work;
  • job function;
  • remuneration.

6. Specific rules for executives

Under Lithuanian laws, heads of companies (Managing Directors) have a dual role: the laws provide for an obligation to conclude with them employment contracts and state that Managing Directors are liable against companies as employees in accordance with the requirements of the labour laws. At the same time, Managing Directors are also subject to corporate duties, which they are liable for against the companies in accordance with the requirements of civil laws.

Due to specific status, non-standard rules comparing to other employees are applied to Managing Directors, i.e. rules related to payment for overtime, accounting of working time, termination of employment contract, etc.

The Lithuanian Labour Code also provides special rules regarding payment for overtime for employees having a status of managing employee (i.e. those who have a right to give mandatory instructions to subordinate employees). However, the number of such employees in company is limited, i.e. it might not exceed 20% of all employees on average.

7. Language requirements

HR related documents (i.e. employment contracts, policies, etc.) must be drawn up in Lithuanian language or in Lithuanian and other language(s) acceptable to the parties.

8. Covid-19 measures

No specific measures apply.

TERMINATION OF EMPLOYEES (Offboarding)

1. Kinds of dismissal

In addition to employment termination by mutual agreement between the parties, the most common ways to terminate employment upon employer’s initiative, when there is no fault of the employee, are: dismissal due to objective reasons (ordinary dismissal) (darbo sutarties nutraukimas darbdavio iniciatyva be darbuotojo kaltės) and dismissal upon the employer’s will (darbo sutarties nutraukimas darbdavio valia). The aforementioned kinds of dismissal differ with regards to the reasons for dismissal, the notice period and protection the employees have against the dismissal.

A fixed-term employment contract ends when the agreed term expires, however, the following rules on notice period and severance payment apply:

  • Notice period. If employment lasted for more than a year, notice period of 5 business days applies; if employment lasted longer than 3 years, notice period of 10 business days apply;
  • Severance payment. 1 average monthly salary should be paid if employment relations lasted for more than 2 years.

2. Dismissal motivation

Dismissed employees should be informed about the reason(s) that have led to his/her dismissal in writing. In case of a dispute, employer is obliged to prove that these reasons are real and that due to them the employee was dismissed.

In all cases the reasons have to be real and concrete. In case of ordinary dismissal, the reasons justifying termination of contract may be that:

  1. the employee’s work function is no longer required due to the changes of work’s organization or other reasons related to activities of the employer;
  2. the employee does not reach the results agreed on with the employer in the plan on improvement of work results;
  3. the employee does not agree to change the key or additional terms of his/her employment agreement, place of work or working regime;
  4. the employee does not agree to continue employment after transfer of business or a part thereof; and
  5. a court or an authorized body of the employer adopts a decision on employer’s liquidation.

Employers may also terminate the employment due to other than abovementioned reasons (dismissal upon employer’s will). The latter are not explicitly specified by the Lithuanian Labour Code.

It should be noted that a legitimate reason to terminate employment may not be: (i) participation in the proceedings against the employer accused with violations of laws; or (ii) appealing to administrative bodies due to discrimination by employer on any grounds.

In the event the dispute resolution body decides the dismissal is unlawful, the following are possible legal consequences:
 

  1. the obligation to pay to the employee his/her average monthly salary for a period of forced absence from work counting from the dismissal date to date to the enforcement of final judgement (not longer than a year);
  2. the employee might be returned to his/her work;
  3. in case the employee might not be returned to his/her work, he/she is entitled to a compensation in amount of 1 employee’s average monthly salary for each 2 years of seniority at work (but not more than 6 employee’s average monthly salaries);
  4. obligation to compensate other financial and other damages to employee (if any).

3. Notice period

In case of a dismissal due to objective reasons, the standard notice period (jspėjimo terminas) is 1 month. When the employment continues for less than a year, a notice period of 2 weeks will apply. The abovementioned notice periods are doubled for employees who will be entitled to the retirement pension in less than 5 years, and are increased three times for:

  • employees raising a child (also adopted) under 14 years of age;
  • employees raising a disabled child under 18 years of age;
  • pregnant employees;
  • disabled employees;
  • employees, who will be entitled to the retirement pension in less than 2 years.

In case of dismissal upon employer’s will, the notice period is 3 business days.

The employer may, upon consent of the employee, exempt the employee from the obligation to work during the notice period. However, in the latter case the employer still has to pay the salary to the employee.

4. Severance pay

Upon ordinary dismissal, the dismissed employee is entitled to a severance pay of his/her 2 average monthly salaries. If the employment relationship lasted less than a year, the dismissed employee has to be paid 1/2 of his/her average monthly salary. Additionally, the dismissed employee may receive a severance pay from the State Social Insurance Fund Board (SODRA), with the amount depending on his/her seniority.

In case of termination of the employment contract upon employer’s will, the dismissed employee has to be paid a severance pay of at least 6 of his/her average monthly salaries.

5. Dismissal formalities

All dismissals have to be in written form to be valid. In case the warning letter is required, it should be presented to the employee in writing and should contain: the legal and factual reasons of the dismissal and the date the dismissal takes effect.

The employer shall inform the State Social Insurance Fund Board (Valstybinė socialinio draudimo fondo valdyba or SODRA) on the termination of employment not later than the day after the termination of employment contract.

6. Special dismissal protection

The dismissal in both cases (i. e. ordinary dismissal and dismissal upon employer’s will) is not allowed during the period of the employee’s temporary disability (sick leave) and during the employee’s annual leave.

Protection against dismissal also applies to the following categories of employees:

  • pregnant employees: protection applies as of the day on which the employee submits to the employer a medical certificate confirming pregnancy until the child reaches the age of 4 months, except for ordinary dismissal when a court or an authorized body of the employer adopts a decision on employer’s liquidation;
  • employees who are called up for military service or alternative services;
  • employees on maternity, paternity, parental leave;
  • employees raising a child (or children) under 3 years of age: a contract may not be terminated due to objective reasons (ordinary dismissal), except for two cases, i.e. the employee does not agree to continue employment after transfer of enterprise or a part thereof; and a court or an authorized body of the employer adopts a decision on employer’s liquidation. Dismissal upon employer’s will is allowed.

7. Legal means of employees

The employee may appeal against the dismissal at Labor Dispute Committee within 1 month and claim that the dismissal is not valid.

Decisions made by the Labor Dispute Committee are binding upon the parties and enforceable in accordance with the regulations of civil procedure. However, either party may appeal to the court.

8. Specific rules for executives

Specific rules on termination apply to the head of the company (Managing Director). The Lithuanian Labor Code and Lithuanian Company Law establish that the governing body in the company, which has the right to appoint the Managing Director of the company, may revoke him/her from this position at any time without application of notice periods.

Such dismissal is not subject to any substantiation and/or prior written notification thereabout. The dismissed Managing Director is entitled to compensation amounting up to 1 of his/her average monthly salary, provided that he/she had at least 2 years’ seniority (unless otherwise agreed in the employ-ment contract). Severance pay is not paid if the Managing Director is revoked due to his/her faulty actions.

9. Collective dismissals

According to Lithuanian Labour Code, a dismissal is considered to be the group dismissal when the below criteria are met:

  1. the dismissal is initiated by the employer or results from employer’s bankruptcy (i.e. the dismissal is not reasoned by employee’s initiative or fault);
  2. within 30 calendar days it is intended to terminate:
  • 10 or more employees in a workplace, where the average employees' number is from 20 to 99; 
  • no less than 10% of employees, where the average employees' number is from 100 to 299;
  • 30 or more employees, where the average employees' number is 300 or more.

10. Covid-19 measures

No specific Covid-19 measures related to the end of the employment contract were implemented.

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