Lithuania in English
- An introduction on employment contract
- What does it mean to have an employment contract?
- What includes employment contracts?
- What are the types of employment contracts?
- When the contract can be terminated?
An employment contract is an agreement between an employer and a worker whereby he offers his services to the employer in exchange for a salary.
The employment contract in Lithuania is regulated by the law. You can check https://leinonen.eu/lt-en/business-in-lithuania/employment
The example of the employment contract is presented there: https://rekvizitai.vz.lt/dokumentu-pavyzdziai/darbo-sutartis/
If you have any doubts about the legality of the contract, you can seek help and advice from the company's trade union, the company's lawyer, and if there are none, you should contact State Labour Inspectorate https://www.vdi.lt/
The essential conditions of the contract: a workplace (enterprise, agency, organization, structural subdivision, etc.); working functions (work of a certain profession, specialty, qualification or specific duties; wage; rights; responsibilities; duties; other).
Any employment relationship between an employer and a worker must be documented through a contract. This represents an agreement by which the worker, in exchange for remuneration, offers certain services to the employer under his control and direction.
The employment contract supposes rights and obligations for both the worker and the employer.
Lithuanian Labour Code foresees the opportunity to establish a probation period up to 3 months for the person to be employed. The duration and conditions of the probation period shall be specified in the employment contract.
Each employment contract must state the following mandatory conditions of the contract:
- place of work of the employee (enterprise, organization, structural division, etc.);
- work functions, i. e. a work requiring a certain profession, specialization, qualifications or a certain position);
- terms of payment for the work (wage system, size of pay, payment procedures, etc.).
- fixed-term - may be concluded for a certain period;
- temporary- concluded for a certain period of time during which the temporary employee undertakes to carry out employment activities;
- apprenticeship- concluded when an employee is employed for the purpose of acquiring qualifications or competencies necessary for the position by the form of an apprenticeship training program;
- project employment contract - the employee undertakes to carry out his work duty for the purpose of a specific project’s result;
- job-sharing employment contract- 2 employees can agree with the employer on sharing 1 job position.
- employment contract for work for several employers;
- seasonal- concluded for the performance of seasonal works.
- The dismissal of an employee is allowed for serious reasons; when employee’s functions of work become an excess due to changes of organization of work or because of other reasons related to the activity of the employer. In case of urgent termination, the employer notifies about the termination 3 working days in advance and pays compensation not lower than the size of 6 average monthly salaries.
- When an employee is being dismissed by the initiative of an employer without any fault on the part of the employee, also by the initiative of the employee because of important reasons, an employer should pay severance pay in the amount equal to 2 average salaries, whereas if the employment relations continue less than 1 year – a severance pay would be equal to half of 1 average salary.
- Health insurance
- When are you included into the national health incurrence?
- What falls under national health incurrence in Lithuania?
- Private health incurrence and migrant workers
- Unemployment benefits, and what and where to go
- Is there any Social/Financial assistance?
- Can foreigners apply for financial assistance?
- How to get sickness benefit?
Before arriving in Lithuania, foreigners with national visas (D) had to take out health insurance with private insurance companies for the entire period of validity of the visa, otherwise, they would not have been issued a visa. If necessary, they should apply to the company that issued the insurance policy for payment or reimbursement for the healthcare provided to them, the amount of which should have been provided for in the terms of the health insurance contract.
All persons (both insured and not covered by compulsory health insurance) have access to public and municipal as well as private health care institutions. The difference is that non-insured persons are required to pay for all healthcare services provided both in private and public as well as municipal health care institutions.
National Health Insurance Fund (Valstybinė ligonių kasa) is a public authority executing compulsory health insurance in the Republic of Lithuania.
The foreigners who have been granted a temporary residence permit in Lithuania are entitled to PSDF-reimbursed health care services only if he/she carries out an economic activity, for example, under a business license, or has employment, for example, employed under an employment contract.
The foreigners residing in the Republic of Lithuania, provided that they legally employed in the Republic of Lithuania, and minor members of their families shall be eligible for the compulsory health insurance, confirms National Health Insurance Fund under the Ministry of Health (http://www.vlk.lt/sites/en/about-us/)
Foreigners who are not considered as permanent residents of Lithuania (those with the Schengen visa, national (D) visa, temporary residence permit or a Temporary Residence card of a family member of a Union citizen) cannot be insured with compulsory health insurance, except if they are employed, or have worked in Lithuania for 6 months and registered with the Labour Exchange after that). In 2020, the monthly contribution is 42,37 EUR.
There are public and private healthcare institutions in Lithuania. All persons (both insured and not by compulsory health insurance) have access to the public, municipal as well as private health care institutions. The difference is that non-insured persons are required to pay for all healthcare services provided both in private and public as well as municipal health care institutions.
Public healthcare institutions are public institutions belonging to the Lithuanian national healthcare system. Provision of services for the persons covered by compulsory health insurance is free except in cases when certain medical tests or procedures are not paid for by the State Patient Fund. In many public clinics, you can get medical services in Russian, in some – also in the English language. Registration with a public healthcare facility is important, given the fact that in this healthcare institution you will be entitled healthcare service provision for free.
Private healthcare institutions work under a license issued by the Ministry of Health. These healthcare institutions provide paid services. Their prices are set according to an internal procedure.
Some private health institutions have concluded agreements with private health insurance companies concerning a direct reimbursement of fees for healthcare services. In private healthcare institutions it is more likely to get medical services in the English language.
A jobseeker is entitled to an unemployment social insurance benefit (commonly known as an unemployment benefit or nedarbo išmoka). Benefits are linked to earnings prior to becoming unemployed and to State Insured Income approved by Government.
In order to qualify for unemployment benefit, a jobseeker is required to have been employed for at least 12 months in the last 30 months prior to registration. This benefit may only be granted if the person’s last workplace is/was in Lithuania.
1. Financial assistance to disadvantaged residents (family allowances, social allowances, compensation for heating, cold and hot water expenses, and others).
2. Social services – assistance in various non-financial ways (care at home, hot food delivery, delivery of the necessaries, elderly/disabled care facilities etc.).
Foreigners can apply for financial assistance if they:
- hold a permanent residence permit;
- have been granted with asylum, except if they already are getting a financial aid for integration.
Sickness benefit (ligos išmoka) is awarded if the entitlement arose during the period of employment and if the insured person had the sickness and maternity social insurance record of not less than 3 months during the last 12 months or not less than 6 months during the last 24 months before the day of establishment of temporary incapacity for work.
The purpose of sickness and (temporary) incapacity for work benefits is to compensate the loss of personal income from work as a sick person cannot be available at his workplace.
The sick pay is paid only for the working days. The sick pay cannot be smaller or bigger than the set limits.
The maximum amount of sick benefit for one day is 71,02 euros (when 62,02 percent of the compensated wages are paid). The minimum amount of sick benefit for one day is 7,43 euros.
- Tax system
- The minimum wage
- What taxes must be payed?
- What are the payroll expenses/taxes?
The main taxes applied to employees are following:
State social insurance (Sodra taxes): 19.5%;
Personal income tax: 20%
Personal income tax
For contract employees, the personal income tax (gyventojų pajamų mokestis or GPM in Lithuanian) is deducted from the salary (this is done by the employer). It also has to be paid for other work non-related income (such as from selling property etc.) Lithuania imposes a flat rate of 20% on wages. 15% tax is applied for persons performing individual activities. Non-residents are taxed at the same rate as residents (for income obtained in Lithuania).
Corporate income tax
In Lithuania, the Corporate Income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year. The main tariff for the CIT is 15%, smaller tariffs are applied to small enterprises.
Value added tax (VAT)
VAT is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption. It is a tax paid by consumers. The standard VAT rate in Lithuania is 21 %. The reduced VAT rates are as follows: 0%, 5 % and 9%.
Social security tax
The main goal of the state social security system is to guarantee income for the insured when they are not able to work due to sickness, maternity, age, disability or other reasons. These taxes are paid both by the employer and the employee. In sum, the social security contributions take 40% of the gross salary. The social security tax has to be paid also by self-employed persons, athletes, artists, and others.
Mandatory health insurance
Mandatory health insurance (Privalomasis sveikatos draudimas or PSD in Lithuanian) gives access to free health insurance services (to the majority of them). If the person is not insured with PSD s/he has to pay for medical services.
Read more: https://www.renkuosilietuva.lt/en/taxes/
The objective of the minimum wage is to protect workers against unfairly low pay. They help ensure a just and equitable share of the fruits of progress to all, and a minimum living wage to all who are employed and in need of such protection.
Lithuania has a government-mandated minimum wage.
In the year 2020 national minimum wage - 3.39 EUR per hour; 607 EUR per month
Working hours: Days per week specified: 5.5; Hours per week specified: 40
The minimum wage is increasing and for 2021 year foreseen 642 EUR.
The amount of taxes directly depends on the form of activities a person has chosen. Lithuania imposes a flat rate of 20% on wages. Non-residents are taxed at the same rate as residents (for income obtained in Lithuania).
Every person is obliged to pay the personal income tax in the amount of 15 % if this person is employed or self-employed.
Persons receiving a salary lower than the minimum non-taxable income are practically exempt from the personal income tax.
Currently, the standard non-taxable income amount is 300 EUR.
These taxes are destined for Social Security and Medicare taxes. In Lithuania, the coordination of social insurance schemes operates at a relatively high level. Social insurance contributions are paid by both employers and employees. The basic contributions amount to 33.7 % of the total income before tax, thus covering all risks (except for accidents at work and occupational diseases), out of which 30.7 % is paid by an employer, but the remaining 3 % – by an employee.
- An introduction on unions
- The role of the unions on the labour market
- Services to union members
- Collective bargaining and collective agreements
- About the unions in Lithuania
- Workplace representation
- Other important organizations that migrant workers can reach for help or information
The law in Lithuania provides for the right of workers to form and join independent unions, bargain collectively, and conduct legal strikes, but law enforcement is not effective. The Trade Union members may not be less than one-fifth of all the employees in a company.
There are three main trade unions in Lithuania: the LPSK (Lithuanian Trade Union Confederation - LPSK), the Solidarumas and the LDF (Lithuanian Labour Federation - LDF), plus some independent trade unions.
About 8% of the active population. However, as Lithuanian legislation does not provide for obligatory registration of trade union membership, the exact number of employees represented is only an estimated figure.
Their main roles on the labour market are:
- Decision making around labour rights of workers.
- Negations with employers
- Collective bargaining
- Support, legal advice and awareness
The unions provide a vast service to union members. Employees can in most cases go to the union and seek help on all issues regarding the employment market.
They provide services or information on:
- Legal or legal proceedings
- Legal assistance
- Administrative assistance
- Social action and funds
The funds and help differ between unions but members can always seek help from their services in regard to those or visit their website. Most of them however provide help in funding for education and health issues.
In collective bargaining is when representatives from the unions and the employer negotiate salary, working hours, holiday, bonuses etc.
Different agreements are made depending on the unions involved in the agreements and this is why it is important that workers know what unions they are a part of.
However, even members who are not in a union still fall under the collective agreements made in the workplace, and any contracts made that do not fall under that are not valid.
The Lithuanian Trade Union Confederation (LPSK) is the biggest trade union centre in Lithuania. At the moment it comprises 25 branches of trade unions. LPSK was set up on 1st May 2002 after the merger between two trade union centres: Lithuanian Trade Union Unification (LPSS) and Lithuanian Trade Union Centre (LPSC).
Lithuanian Trade Union Confederation is an independent organization from government and managing authorities, from employers and their organizations and also from public organizations and movements.
The employee representatives in Lithuania are more common in larger companies and organisations.
The rights of workplace employee representatives include: negotiating collective agreements at workplace level; making proposals both to the employer and the state; ensuring compliance with legal obligations with a right to appeal to a court where necessary; protecting the interests of employees when the business is transferred; and being informed and consulted.
Lithuanian legislation provides for employees at workplace level to be represented by a company-level trade union, by an external union, to which they have transferred their representational rights, or by a works council. Both company-level unions and works councils have almost identical functions. In practice, most workplaces in Lithuania have neither.
Labor Dispute Committee
Individual labour disputes are considered to be a conflict between an employer and an employee over unpaid wages, uncompensated material damage, disciplinary penalties, not provided holidays, and so on. The Labor Dispute Committee also deals with disputes concerning the dismissal of a worker, legality of removal from work, and non-pecuniary damage, which was previously settled by the courts.
Labour dispute committee is a mandatory pre-trial dispute settlement body specialized in individual labour disputes. Lithuania has 19 labour dispute committees: 6 in Vilnius, 4 in Kaunas, 3 in Klaipeda, 2 in Siauliai and Panevezys, 1 in Alytus and Telsiai. Utena, Marijampole, Taurage Counties are represented by (respectively) Panevezys, Alytus and Telsiai labour dispute committees. The committees are set up at the National Labour Inspectorate (NLI) territorial divisions.
Both employees and employers can refer to the labour dispute committees if their rights are violated.
- Safety at work
- Organizations you can go for a help
- What is work and rest time of the worker?
- What about employee’s professional development?
- What are security standards at work?
Every employee must be provided with safe and healthy working conditions, regardless of the type of activity, type of employment contract, number of employees, profitability of the company, workplace, work environment, nature of work, length of working day or shift, nationality, race, nationality. , gender, sexual orientation, age, social origin, political or religious beliefs. It is the employer's responsibility to create safe and healthy working conditions for employees in all aspects of work. Occupational safety and health measures in the company are financed by the employer.
The main indicators of occupational safety and health, information on occupational safety and health in the country can be found in State Labour Inspectorate.
Occupational safety and health are regulated by the Labor Code, the Law on Occupational Safety and Health, other laws, Government resolutions, orders of the Minister of Social Security and Labor or this Minister with another (other) minister (ministers), orders of the Minister of Health, orders of the Chief State Labor Inspector.
1. State Labour Inspectorate
deals with labor disputes over psychological violence at work. Most of them are related to the pressure of the employer on the employee to terminate the employment contract on his own initiative and the illegal dismissal of the employee. Because of the shock and fear experienced, employees often make hasty wrong decisions. Labour inspectors perform prevention of violations of standard acts regulating occupational safety and health, labour relations as well as the prevention of accidents at work and occupational diseases in enterprises, by controlling the compliance with these standard acts. Furthermore, the State Labour Inspectorate is actively encouraging and striving at the consolidation of relations between employers and employees and their organisations, based on the social dialogue and collective agreements.
2. The Equal Opportunities Ombudsperson
In a case of equal rights, bullying or sexual harassment each natural and legal person shall have the right to file a complaint with the Equal Opportunities Ombudsperson concerning a violation of equal rights.
Working time. Standard working time: 8 hours per day and 40 hours per week; shorter working time regime is obligatory for: persons under 18 years of age; persons working at night; employees performing work involving higher mental, emotional strain.
Maximum working time, including overtime, must not exceed 48 hours per week. Maximum working time including overtime and additional work must not exceed 60 hours per 7 days and 12 hours per day. When working on a summary recording of working time, maximum weekly.
Overtime. Generally, overtime work is prohibited. An employer may apply for overtime work only in exceptional cases, e.g. the work to be performed is necessary for national defense and for preventing accidents or danger, when work is necessary for the public, for the elimination of unforeseen or accidental circumstances due to an accident, natural disasters, etc., when it is necessary to finish the work that could not have been finished during the working time because of an unforeseen or accidental obstacle, if interruption of work may result in the deterioration of production materials or breakdown of working equipment etc.
Public Holidays. The Labour Code enumerates 11 public holidays (in total 13 calendar days) when there shall be no work at enterprises, offices and organisations.
The minimum annual leave is 20 working days per year if the employee is working five days per week and 24 working days if the employee is working six days per week. ... The average salary should be paid for Annual Leave.
For employees attending non-formal adult education courses, up to five working days of educational leave are provided per year to attend non-formal adult education courses.
For employees who have had an employment relationship with the employer for more than five years, at least half of the employee’s salary is left for educational leave (for formal or non-formal education) of up to 10 working days per working year if participation in the non-formal adult education programme is related to the employee’s professional development.
Safety at work is a right and a duty for both workers and employers and must always be present regardless the sector, company or job function.
The following aspects must be clear for every worker in every job position:
- Keeping track concerning your job position rights and responsibilities. Knowing the necessary safety procedures of your role, being informed of the changes, regulations, as well as be involved in your own safety and promote a good environment at work.
- Receiving job orientation and training concerning your workplace and job position risks. Every company must have training workers specialized in occupational risk prevention to ensure workers have the adequate knowledge to carry out their activities safely and effectively.