Lithuania
Table of Contents
Lithuania PEO & Employer of Record
WeHG provides an International PEO and global Employer of Record service in Lithuania to companies willing to enter the Lithuanian market or hire local/expat employees in this country.
Traditional approach requires establishing a subsidiary in Lithuania. However our solution allows you to start the operations in Lithuania within days hence save time and money. WeHG would recruit applicants on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. .
Lithuania fast facts
Population, million: 2,722,289
Land area: 65,300 km²
Capital: Vilnius
Local currency: Euro (EUR)
GDP per capita:$ 16,489.7
GDP in currency:$ 48,35 billion
Relations between hirers and workers are governed by the Labour Code of Republic of Lithuania and the other legal acts that contain regulations relating to employment and labour.
The Lithuanian Labour Code determines the minimum rights of an worker with respect to the core terms and conditions and material aspects of his/her employment, e.g.: working time, payment for overtime, holiday leave entitlement and other types of leave of absence, parental leaves and benefits, termination of a contract and, in particular, special protection against dismissal, etc.
Importantly, the Lithuanian Labour Code provides that no employment contract may stipulate conditions that are worse than the minimum provisions provided for under Lithuanian labour legislation.
Hiring, Negotiating, and Doing Business in Lithuania: A Comprehensive Guide for Employers
Lithuania, a dynamic EU member state with a robust economy and strategic location, provides unique opportunities for businesses looking to expand in the region. Employers must familiarize themselves with Lithuanian labor laws, tax obligations, and employment practices to ensure compliance and success. This guide outlines the key aspects of hiring, managing employees, and navigating the Lithuanian business environment, including how WeHireGlobally can simplify the process for international employers.
Necessity of a Written Employment Contract
In Lithuania, a written employment contract is mandatory and must be signed before the employee begins work. Contracts should be drafted in Lithuanian if:
- The employee resides in Lithuania, and
- The contract will be executed in Lithuania.
Although additional language versions can be prepared, the Lithuanian version is legally binding and takes precedence, especially for employees of Lithuanian nationality.
Employment Contracts in Lithuania
Types of Employment Agreements
Lithuanian labor law allows for various types of employment contracts to suit different needs, including:
- Indefinite-Term Contracts (most common)
- Fixed-Term, Temporary, or Seasonal Contracts
- Secondary Job Contracts
- Teleworking Contracts
Working Hours and Overtime
- Standard Workweek: 40 hours.
- Overtime Limits: Up to 60 hours per week, capped at 120 hours per year. Employers must compensate overtime at the agreed rate in compliance with labor laws.
Vacation Leave
Employees are entitled to 28 days of paid annual leave for a full year of service. Holiday pay is typically pro-rated and included in monthly salaries, but any unused leave must be compensated when:
- The employee takes time off, or
- The employment contract is terminated.
Maternity and Sick Leave
- Maternity Leave: Fully funded by the state, maternity leave can last for one or two years, depending on the employee’s choice.
- Sick Leave: The employer pays 80% of the employee’s salary for the first two days, with subsequent payments covered by the state.
Termination of Employment
Notice Periods
An employment contract may be terminated by mutual agreement or by one party with a formal notice. The length of the notice period varies depending on:
- The type of contract,
- The employee’s position, and
- Employment conditions, ranging from 3 days to 4 months.
Special Regulations
Employees with special protections, such as pregnant women or individuals with disabilities, are subject to additional termination rules to safeguard their rights.
Taxes and Social Contributions in Lithuania
Income Tax
- Flat Tax Rate: 15%.
- Social Security Contributions: All employees are covered under the social security scheme.
The total social security rate ranges from 39.98% to 41.6%, divided as follows:
- Employers: 30.98%–32.6% (depending on workplace accident rates).
- Employees: 3%, plus an additional 6% mandatory health tax.
Employee Benefits and Holidays
Health Insurance
All permanent residents in Lithuania are required to have health insurance. Employers must register their employees with their company’s health insurance fund to provide access to public healthcare services.
Additional Benefits
While bonuses and fringe benefits are not regulated by law, many companies offer these as part of their competitive employment packages.
Public Holidays
Lithuania recognizes 13 national holidays, which include:
- New Year’s Day
- Easter and Easter Monday
- Labor Day (May 1)
- St. John the Baptist’s Day (June 24)
- State Holiday Lithuania (July 6)
- Christmas Eve and Christmas Day (December 24–25)
These holidays are typically paid days off, promoting a healthy work-life balance.
Economic Overview of Lithuania
Lithuania is an attractive destination for businesses seeking growth in the Baltic region:
- Population: ~2.8 million.
- Territory: 65,300 square kilometers.
- GDP (2024 estimate): $68 billion.
- Inflation Rate: 7.4% (2023 estimate).
- Key Industries: Biotechnology, logistics, and manufacturing.
Why Choose WeHireGlobally?
Navigating Lithuania’s labor laws and administrative requirements can be complex. WeHireGlobally provides comprehensive Employer of Record (EOR) services to simplify the process. Our solutions include:
- Onboarding: Drafting compliant employment contracts.
- Payroll Management: Ensuring accurate tax filings and timely salary payments.
- Compliance Monitoring: Staying updated on labor law changes to minimize risks.
- Termination Support: Handling offboarding processes with legal precision.
By partnering with WeHireGlobally, businesses can focus on growth while we manage the operational challenges.
FAQs About Hiring in Lithuania
1. Is a written employment contract required in Lithuania?
Yes, employment contracts must be written and signed before the start of work.
2. What are the standard working hours in Lithuania?
The standard workweek is 40 hours, with strict limits on overtime.
3. How much vacation leave is provided in Lithuania?
Employees are entitled to 28 days of paid annual leave.
4. Who covers social security contributions in Lithuania?
Social security contributions are split between employers (30.98%–32.6%) and employees (3% + 6% mandatory health tax).
5. Does Lithuania provide universal healthcare?
Yes, Lithuania has a mandatory health insurance system for all residents.
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