Remote’s guide to employing in Lithuania.
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The Republic of Lithuania (Lithuanian: Lietuvos Respublika) is a unitary semi-presidential republic in northeastern Europe bounded by Latvia, Belarus, Poland, and Russia.
Lithuania is filled with natural beauty including over 6,000 lakes. A third of its landmass is covered in lush woodland, home to 19% of the species identified across Europe. Beyond its incredible biodiversity, Lithuania has a passionate adoration for basketball a rich reserve of amber, and some of the fastest, cheapest, and most reliable internet on Earth.
For businesses looking for an Eastern European base, Lithuania holds much potential with an advancing economy, high human development rankings, and a burgeoning tech sector. Lithuania has a low cost of living compared to its Western neighbors, so setting up and running a team here is a relatively affordable option.
2,793,694 (est. 2020)
Ease of doing business
Cost of living index
VAT - standard rate
GDP - real growth rate
To employ in Lithuania, companies must own a local legal entity in the country or work with a global employment solution. Managing payroll, benefits, taxes, and compliance in Lithuania can get complicated, especially without established local relationships.
Remote’s global employment solution makes it easy for your company to employ workers in Lithuania quickly, efficiently, and in full compliance with all applicable labor laws. We take on the responsibility and legal risks of international employment so you can focus on hiring great talent and growing your business.
Employment regulations in Lithuania are spelled out in the Labor Code of 2017 which defines provisions for employee protections and workers’ rights for Lithuania’s workforce of 1.3 million. Employees in Lithuania enjoy protections against discrimination based on age, religion, sexual orientation, gender expression, and race.
Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off. Remote can help you offer a complete, competitive, and compliant benefits package to your employees in Lithuania.
At Remote, we’re obsessed with helping you craft the best possible employee experience for your team. We are leading the way in practicing “fair equity,” which means making sure employees everywhere have access to both the required and supplemental benefits they need to thrive (and that will allow you to attract the best local talent).
Our benefits packages in Lithuania are tailored to fulfill the local needs of your employees. Typically, our packages contain some or all of the following benefits:
Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Lithuania.
0.32% - guarantee fund and long-term unemployment fund
1.47 – 3.5 % - social security contributions including unemployment social security (lit. nedarbo socialinis draudimas) and social insurance against accidents at work and occupational diseases (lit. nelaimingų atsitikimų darbe ir profesinių ligų socialinis draudimas)
19.50 - 22.5% - social security contributions (lit. socialinio draudimo įmokos)
20% or 32%* - personal income tax (lit. gyventojų pajamų mokestis), noting that the 32% personal income tax rate in Lithuania is applicable only to employment income exceeding an annual salary of EUR 81,162.
8.72% - pension insurance (lit. pensijų draudimas)
2.4% - 3%- additional pension insurance (optional) (lit. papildomas pensijų draudimas)
6.98% - health insurance (lit. privalomasis sveikatos draudimas)
2.09% - sickness social security (lit. ligos socialinis draudimas)
Taxation of salaries is divided into two parts: the Employer Taxes listed below are paid on top of the gross salary whereas the Employee Taxes listed below are withheld from the gross salary. The total cost of employment consists of the gross salary amount indicated in the employment contract plus the taxes paid on top of the gross salary.
Employees are entitled to at least 20 business days of paid annual leave (if working 5 days per week) or at least 24 business days (if working 6 days per week). If the number of working days per week is less or different, the employee must be granted leave of no less than 4 weeks. Leave is calculated in business days.
It is relatively common practice in Lithuania to provide more than the minimum number of leave for key employees. Additional PTO is commonly used as a supplemental benefit to motivate and retain top talent.
There are 11 public holidays annually and employees are entitled to end work an hour earlier on each working day before a public holiday.
Employers are required to pay employees full wages for the first two days of an illness. Starting on the third day, employees can draw sickness benefits equivalent to 62.06% of their normal wages from SODRA, the State Social Insurance Fund.
Employees who’re taking time off work to nurse ailing relatives are entitled to sickness benefits equivalent to 65.94% of their normal wages.
Female employees in Lithuania are entitled to 70 calendar days of maternity leave before childbirth and 56 calendar days after childbirth (in case of a complicated birth or birth of two or more children this can be extended to 70 calendar days).
If the employee does not take maternity leave, the employer must grant 14 days of leave immediately after giving birth. Employees appointed as guardians of newborns are granted a leave for the period from the date on which custody is established until the child reaches the age of 70 days.
Parents are entitled to 30 calendar days of uninterrupted parental leave granted after the birth of a child. This leave can be taken at any time from the birth of a child until the child reaches the age of one.
Within three months of the entry of the decision on adoption, employees are granted 30 calendar days of uninterrupted paternity leave. In the case of the adoption of two or more children, this leave is granted within six months from the date of entry of the decision. This leave shall not be granted if the child of the spouse has been adopted or if the adoptive parent has already been granted paternity leave.
Any relative who is raising a child (or a child’s official guardian) is granted child care leave until the child reaches the age of three. Leave can be taken all at once or in instalments. Employees entitled to this leave may take it alternately. When an employee intends to take child care leave or to return to work before the end of such leave, they must notify the employer in writing at least 14 calendar days in advance. A collective bargaining agreement may provide for a longer notice period in some cases.
The employee must be notified in writing of their specific shortcomings in performance, the parties must have concluded a performance improvement plan for two months, and the employee must have failed to fulfill the plan.
We advise that the following documents be prepared to complete a termination due to non-performance: termination notice, notice explaining performance shortcomings, and a written performance improvement plan.
After completing a year of employment, employees are entitled to one month’s notice period. This is reduced to just two months for workers who have been employed for less than a year.
Special considerations are made for:
The aforementioned category of employees is entitled to three times the standard notice period to help them plan as to any disruption a termination may create in their lives.
Severance packages range from one month’s wages for workers who have been employed for an entire year, to six months’ wages for workers who have worked with their employer for up to 20 years.
There are no provisions for mandatory probation periods in Lithuania, but otherwise, it’s a widespread practice and typically lasts around three months.