Employer of Record Guide in 

Lithuania

Vacation Leave

• Minimum entitlement: 28 calendar days (20 working days) per year
• Accrual: Earned monthly, can be taken after 6 months of employment
• Additional leave: Some employees may be entitled to additional days based on working conditions or collective agreements
• Payout: Unused vacation must be paid out upon termination

Sick Leave

• Duration: Up to 120 calendar days per year for temporary incapacity
• Payment:
  • First 2 days: Unpaid (waiting period)
  • Days 3-7: Paid by employer at 80% of average salary
  • From day 8: Paid by Sodra at varying rates (40-80% depending on insurance period)
• Medical certification: Required from day 1 of illness

Maternity Leave

• Duration: 126 calendar days total
  • 70 days before expected birth
  • 56 days after birth (70 days for complicated birth or multiple children)
• Payment: 100% of average salary for first 77 days, 75% for remaining days
• Funding: Paid by Sodra (social insurance), not employer

Parental Leave

• Duration: Until child reaches 2 years of age
• Eligibility: Available to either parent (not simultaneously)
• Payment:
  • First year: 77.58% of average salary
  • Second year: Flat rate benefit
• Job protection: Position must be held or comparable role offered upon return

Other Statutory Leave

• Paternity leave: 30 calendar days (can be taken flexibly within first 6 months)
• Adoption leave: Similar to maternity leave for adoptive parents
• Bereavement leave: 2 days for immediate family members
• Marriage leave: 2 days for employee's own wedding

Summary

Termination Categories

Termination by employer with cause:

• Serious breach of employment duties
• Criminal conviction affecting work ability
• Loss of required qualifications
• No notice period required

Termination by employer without cause:

• Economic reasons (redundancy)
• Reorganisation or liquidation
• Notice period and severance required

Termination by employee:

• Voluntary resignation with notice
• Immediate termination in cases of employer breach

Notice Period Requirements

Notice periods depend on employment duration and termination reason:

Special cases:

• Probationary period: 3 days notice
• Economic redundancy: Additional consultation period required
• Mass layoffs: Extended notice and government notification required

Severance Pay

Severance is required for certain types of termination:

• Economic reasons: 2-6 months' average salary depending on length of service
• Employer breach: Compensation as determined by courts
• Voluntary resignation: No severance required
• Termination with cause: No severance required

Final Pay Requirements

Employers must provide final payment including:

• Outstanding salary
• Unused vacation pay
• Any applicable severance
• Other accrued benefits

Payment must be made on the last working day or within 7 days of termination.

Legal Protections

Employees are protected against termination based on:

• Pregnancy or parental leave
• Trade union membership or activities
• Filing complaints about working conditions
• Discrimination based on protected characteristics

National Holidays

Lithuania observes the following national holidays:

Holiday Pay Rules

• Eligibility: All employees are entitled to holiday pay
• Payment rate: Regular daily wage
• Working on holidays: 2× regular pay plus additional day off
• Holiday falling on weekend: Substitute day off provided on next working day

Regional Variations

Lithuania does not have significant regional variations in statutory holidays, as it's a unitary state with consistent national labour laws across all territories.

Required Documentation

Employment contract must include:

• Job title and description
• Salary and payment terms
• Working hours and location
• Vacation entitlement
• Notice periods
• Probationary period (if applicable)

Employee documentation:

• Personal identification (passport or ID card)
• Social insurance number
• Tax residency certificate (if applicable)
• Educational certificates (if required for role)
• Work permit (for non-EU citizens)

Legal Compliance

Work authorisation:

• EU citizens: No work permit required
• Non-EU citizens: Work permit and residence permit required
• Highly skilled workers: EU Blue Card available

Registration requirements:

• Employee must be registered with Sodra within 3 days of employment start
• Tax registration completed through employer
• Health insurance registration automatic with Sodra registration

Contractual Elements

Mandatory contract clauses:

• Probationary period (maximum 3 months for most positions)
• Intellectual property assignment
• Confidentiality obligations
• Non-compete clauses (limited scope and duration)

Data protection:

• GDPR compliance required for all personal data processing
• Employee consent for data processing beyond employment requirements
• Data retention and deletion policies must be established

Implementation Process

Typical onboarding timeline:

• Day 1: Contract signing and document collection
• Day 1-3: Sodra and tax registration
• Week 1: Workplace orientation and training
• Month 1: Probationary period review (if applicable)

Worker Classification

Lithuania distinguishes between employees and independent contractors based on:

Employee characteristics:

• Works under employer's direction and control
• Uses employer's equipment and facilities
• Integrated into employer's business operations
• Receives regular salary and benefits

Contractor characteristics:

• Operates independently with own business registration
• Uses own equipment and bears business risks
• Invoices for services provided
• Responsible for own taxes and social insurance

Misclassification risks:

• Back payment of social insurance contributions
• Penalties and interest charges
• Automatic conversion to employment relationship
• Potential legal action by misclassified workers

Collective Bargaining

• Coverage: Approximately 10-15% of Lithuanian workforce
• Sectors: More common in public sector, manufacturing, and transportation
• Impact: Collective agreements can provide more favourable terms than minimum legal requirements
• Negotiation: Conducted at company, sector, or national level

Cultural Considerations

Communication style:

• Direct but polite communication preferred
• Punctuality highly valued
• Formal address common in initial business relationships

Work-life balance:

• Standard business hours respected
• Vacation time fully utilised
• Family obligations generally accommodated

Diversity and inclusion:

• Anti-discrimination laws cover age, gender, nationality, religion, and sexual orientation
• Reasonable accommodations required for disabilities
• Equal pay requirements enforced

Remote Work Framework

Legal status:

• Remote work regulated under Labour Code amendments
• Written agreement required specifying remote work conditions
• Employee rights to disconnect recognised

Employer obligations:

• Provide necessary equipment or compensation
• Ensure workplace safety standards (even at home)
• Maintain regular communication and performance management
• Cover additional costs related to remote work setup

Cross-border considerations:

• Social insurance typically remains in Lithuania for Lithuanian residents
• Tax implications may vary for employees working from other countries
• Work permit requirements still apply for non-EU remote workers

What Borderless AI Handles:

• Employment contract drafting and management
• Sodra registration and ongoing compliance
• Monthly payroll processing and tax withholding
• Leave management and statutory compliance
• Termination procedures and documentation
• Local legal representation and support