Hiring Employees in Lithuania: A Practical Guide

Lithuania, a lively country in Northern Europe, is becoming a central location for businesses looking for new opportunities. The country has a solid digital infrastructure and a highly skilled workforce. Due to its cost effective and dynamic labor market ,Lithuania has become a favorite destination for the companies planning to hire across the EU. 

If you are expanding your business operations and planning to hire in this beautiful yet modern country, keep reading. This article will provide a step-by-step guide to help you understand the process of hiring in Lithuania.

Understanding Lithuanian Labor Laws

While employing workers in Lithuania, knowing and observing the local labor laws is indispensable. These rules ensure the universal treatment of employees and employers and guarantee the openness and equal conditions of the working activity. For more detailed information you can refer to the Lithuanian Labor code.

Anti-Discrimination and Equal Opportunity 

Lithuania has Anti-discrimination and equal opportunity laws in place to ensure that every individual gets equal treatment in employment, pay, and access to services. The country adheres equality among all, and does not support any form of discrimination whether on grounds of race, gender, language, origin or religion.

Health and Safety Regulations 

In Lithuania , each employer has the responsibility coded into the law to create a safe and healthy work environment for all employees.The strict regulations ensure that employers take the necessary measures for a safe and secure working environment. By not doing so , the employers might face legal actions.

Employment Contracts

In Lithuania, employees must have a written employment contract. The employment contract is a legal document that contains the job details such as the job title, job description, salary, working hours, and the contract duration. It is a matter of the employer and the employee that both sign it before the employee starts working.  

Types of Contracts

There are different types of job contracts offered in Lithuania, which are designed to meet the situational needs of employers and employees while adhering to the legal requirements of the Lithuanian labor code. Some common types of contracts offered are as follows.

• Permanent Contract: This type of contract is for long-term employment. It doesn't have an end date.

• Fixed-Term Contract: This contract has a clear start and end date, and employers use it for temporary projects or seasonal work.

• Part-Time Contract: This contract normally applies when employers want to hire someone for specific hours during a week or month.

• Probationary Contract: Under this arrangement, a Probation period clause is added to the permanent or fixed term contract in order to assess the employee suitability during a specified period of time.

Employee Benefits and Compensation

Employees' benefits in Lithuania are governed by the country's labor code. The government is responsible for setting up the minimum wage which is increased on a yearly basis. For 2024, the minimum wage is set at € 924 per month. Besides this, the employees have the right to the following benefits:

• Paid Sick Leave: Employees have the right to sick leave. For the first two days, the employer is responsible for the payment at 62.06% of the average monthly salary, while from the third day it is the state who is responsible for the payment.

• Annual Leave: Employees are entitled to an annual leave of  20 paid working days .

• Additional Benefits: Employers frequently offer supplements like health care, bonuses, and flexible working arrangements to draw and hold well-qualified employees.

Working Hours and Overtime

In Lithuania, the standard work week comprises 40 hours and is five days long. Most employees work for eight hours a day. However, sometimes you have to sit back and work late. But what motivates employees to work late? In Lithuania, employees who work overtime receive 1.5 times the regular hourly rate. 

However, the overtime hours worked per employee should not exceed 180 hours per calendar year as determined by the country labor code , unless it is determined in the collective agreement or specified in the relevant industry regulations.

Payroll and Taxes

Deductions and Social Security contributions are the employer's responsibility which is deducted from the employees' salaries. Most of the employees in the country have a 20% flat income tax rate? A 32% higher rate applies to the high earners and for 2024 the high earning threshold is set at  €120,000.

Employers are required to contribute 1.77% of the employee gross salary into the social security system while employees are required to contribute 19.5% of their gross salary 

In addition, Employers also participate in the Guarantee Fund, which provides insurance to employees if the employer faces the threat of bankruptcy.

Employment Termination

Ending an employment contract in Lithuania is a process that requires the implementation of statutory procedures to protect it from disputes. The Lithuanian labor code provides a legal framework for employment termination as it ensures that the process is fair and transparent. The labor code also balances the interest of employers and employees during the termination process and helps to avoid legal disputes by ensuring compliance.

The Bottom Line

Hiring employees in Lithuania can be a comparatively straightforward process due to the clear legal framework, digital infrastructure and the availability of a skillful workforce. However, due consideration should be given to the country's labor laws in order to avoid any legal disputes and this is where an EOR like Swapp Agency can help simplify the hiring process.

An Employer of Record (EOR) can streamline the hiring process in Lithuania, especially for foreign employers who are interested in expanding into the Lithuanian market without establishing a legal entity there.