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Hire and manage employees in Lithuania
Quick facts
Lithuania, a Baltic nation in Northern Europe, has a fast-developing economy and is a member of the European Union. Its economy is bolstered by sectors such as manufacturing, information technology, and financial services. Labor laws in Lithuania aim to protect employees while supporting business growth, with various employment options and a strong social security system.
Employment Contracts
The most common employment contract in Lithuania is open-ended, although fixed-term contracts are allowed, generally lasting up to 2 years or 5 years in special cases. Temporary agency contracts are also available for specific needs. Contracts must outline all key employment terms.
Probation Period
A probation period of up to 3 months is allowed to assess an employee’s suitability. If the employee does not meet job expectations, the employer can terminate the contract with a 3-business day notice during probation, without severance.
Working Hours
The standard workweek is 8 hours per day, 5 days a week, with start times around 8:00 or 8:30 am. Some roles may have a 6-day workweek with extended hours. Overtime is permitted only with written agreement and is paid at no less than 100% of the regular wage.
Vacation Days
Employees in Lithuania receive 4 calendar weeks of paid annual leave each year, which includes weekends. Many employees prefer taking vacations in the summer or around Christmas.
Sick Leave
For the first 2 days of sick leave, employers must pay 62.06% to 100% of average earnings. From the third day onward, sickness benefits are provided by the State Social Insurance Fund Board (SoDra) at 62.06% of average earnings.
Wages and Salary Payment
Salaries are typically paid once or twice a month in Lithuania. If twice, 30% by the 25th and the remainder by the 15th of the following month. The national minimum wage in 2024 is €924 per month.
Public Holidays
Lithuania has 16 national holidays, including:
- January 1: New Year's Day
- February 16: Independence Day
- March 11: Restoration of Independence
- June 24: Midsummer Festival
- December 24-26: Christmas
Additional holidays, like Easter Monday and St. John’s Day, are also widely observed.
Employer Taxes
Employers contribute 1.77% of an employee’s salary towards social security. Foreign employers contribute at a reduced rate of 1.61%.
Employee Taxes
Employees in Lithuania pay:
- 20% income tax for earnings up to €101,094 and 32% above this threshold.
- Social security contributions of 19.5% of income up to the SSC ceiling.
Employees participating in the second pillar pension system contribute an additional 2.7% or 3% based on their chosen rate.
Notice Period
The notice period is 1 month, with exceptions:
- 2 weeks if employed for less than a year.
- 2 months for employees close to retirement.
- 3 months for employees with dependents under 14 or a disabled child under 18.
Termination and Severance Pay
Employment can be terminated by mutual agreement. Dismissals can be based on objective reasons or employer’s discretion. Employees with over 2 years of service are entitled to 1 month’s severance pay.
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