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An Employer of Record (EOR) in Lithuania provides a convenient solution for companies that want to hire local talent and expand their operations without establishing a legal entity in the country.
Lithuania has a complex set of EU and Lithuanian employment laws that employers must adhere to. Any non-compliance can result in hefty fines and penalties. Additionally, the Lithuanian Ministry of Health and State Social Insurance Fund Board (SODRA) regulations oversee employee benefits like maternity and paternity benefits, pensions, insurance, etc. EORs familiar with these laws can help you navigate the complexities easily. Gloroots Lithuania EOR can also help you comply with the strict GDPR and Lithuania’s Personal Data Protection Law regulations. Non-compliance with these laws can result in fines as high as EUR 20,000,000.
Overall, by partnering with an EOR, you can access a skilled workforce and streamline your hiring process. Moreover, employers can offload the nitty-gritty of taxes and legal compliances, saving you penalties and hefty fines. As the official employer, Gloroots EOR can also handle other essential tasks such as payroll administration, employment contracts, benefits administration, etc.
By partnering with an EOR, you gain access to Lithuania’s talent pool effortlessly. You can onboard employees faster and avoid the complexities of establishing legal entities, employment contracts, tax compliance, and payroll administration. Gloroots, a SaaS-based EOR, simplifies your global expansion. Our platform enables onboarding, paying, and managing employees seamlessly. We also assist with localized benefits and insurance plans for your global workforce, which you can offer using the Gloroots platform to retain talent. In short, you can streamline operations and keep up with the changing compliance scenario with Gloroots as your trusted EOR partner in Lithuania.
Generally, EOR pricing is structured either as a percentage of the employee's salary or as a fixed monthly fee per employee. The pricing range for EOR services in Lithuania typically falls between 5% to 15% of the employee's total compensation. However, note that additional fees may apply for specific services or customization.
EOR pricing in Lithuania can vary depending on the number of employees, the scope of services required, and the specific EOR provider. When considering EOR services, ensure getting custom pricing quotes to assess and choose the most suitable option for your business needs.
Gloroots’ pricing model is simple and provides an optimum return on investment. We manage administrative tasks and legal compliance support associated with employment. Gloroots offers a live dashboard that helps you track Lithuania workforce expenses in real-time. It also offers HR support and benefits management to the employees hired through EOR.
Key Metrics for Foreign Employers
The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Lithunia.
Source: The Global Talent Competitiveness Index 2022
Through the Gloroots’ Recrew platform, you can discover amazing talent in Lithunia.
Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Lithuania must have a local legal organisation and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Lithuania demands compliance with employment laws.
With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.
Misclassifying workers can expose businesses to a host of perils, encompassing legal entanglements and financial liabilities. In Lithuania, accurate classification of employees in accordance with local labor laws is paramount to ensure compliance and avoid potential setbacks.
By forging an alliance with a reputable PEO/EOR like Gloroots, you can effectively mitigate the risks associated with misclassification. Gloroots' profound expertise in employment regulations and precise employee categorization ensures that your workforce is accurately classified, significantly reducing the likelihood of legal disputes and penalties.
The source for Lithuania's labor laws is quite varied. Firstly, Lithuania derives most of its employment laws from the Constitution of the Republic of Lithuania. Additionally, Lithuania also aligns itself with many international organizations and thus its labor laws are heavily influenced by recommendations made by the European Union and the International Labor Organization.
Employment Contract
When hiring in Lithuania, employers are mandated to offer a written employment contract. The contract must be in the local language and should clearly state terms around salaries, benefits, work hours, and termination.
These contracts should encompass the following essential terms:
- Identification of both parties involved in the employment agreement.
- Commencement date of the employment (and duration for temporary contracts).
- Specification of the workplace where the employee will perform their duties.
- Clear delineation of the job description, outlining the duties and responsibilities of the employee.
- Provision of the basic salary, along with any additional compensation or benefits.
- Determination of the working hours expected from the employee.
- Indication of the total number of holidays the employee is entitled to.
- Stipulation of the notice periods required for termination of the employment relationship.
It is possible to hire employees in Lithuania through either permanent or fixed-term contracts. Fixed-term contracts should not exceed a duration of five years. It is advisable to draft the employment contract in Lithuanian, the official language of the country, to ensure clarity and comprehension by all parties involved.
Get an overview of what you need to know when hiring in Lithuania. Contact us.
Working Hours
In Lithuania, the customary work week entails a total of 40 hours, with a daily duration of 8 hours.
Overtime
Any work exceeding the established standard of 40 working hours per week in Lithuania is considered overtime and is subject to regulation by the employment contract or collective agreement. Within a span of seven consecutive days, an employee may work up to a maximum of 8 overtime hours. However, with written consent from the employee, this limit can be extended to 12 hours over the same consecutive period.
Overtime hours are compensated at a rate of 150.00% of the employee's regular pay rate. If the overtime work is performed during the nighttime hours between 10:00 pm and 6:00 am, the employee is entitled to receive compensation at a rate of 200.00% of their regular pay rate.
Public Holiday
Lithuania has 16 public holidays. On the business day before a public holiday, working hours are shortened by one hour (with pay, but reflected as one hour less on the timesheet). Public holidays that fall on a weekend are typically not observed.
Minimum Wage:
The minimum wage in Lithuania is set at 840 EUR per month.
Annual Leave
In Lithuania, the number of annual leave days an employee receives is based on their years of service. The standard entitlement is 20 working days of paid annual leave, with at least one installment of leave lasting at least 10 working days. If leave days go unused, they can be carried over.
Once an employee reaches 10 years of service with one employer, they gain an extra three days of paid leave. An additional day of leave is earned every five years thereafter.
Maternity Leave and Paternity Leave
Employees in Lithuania have the right to enjoy 126 days of paid maternity leave, which is compensated by the social security system for eligible individuals. The maternity benefit provided amounts to approximately 77.58% of the employee's regular rate of pay. It is important to note that the minimum monthly maternity benefit must not be lower than 242 EUR. This calculation is based on the average of six basic social insurance benefits applicable in the last quarter prior to the commencement of the right to maternity benefit.
In situations involving multiple or complicated births, an additional two weeks of leave is granted to the employee.
Annual leave
Employers in Lithuania are obligated to provide their employees with a minimum of 20 calendar days of paid annual leave each year, or 24 days for employees working a six-day week. Additionally, the country recognizes twelve public holidays when employees are not required to work.
Sick Leave:
In Lithuania, the onus falls upon the employer to shoulder the initial two days of illness, exercising their discretion and adhering to the terms agreed upon in the employment contract. During this period, the employer may opt to provide a benefit rate varying from 62.06% to 100%. Subsequently, commencing from the third day of illness, the employee is entitled to receive remuneration amounting to 62.06% of their regular salary, which is duly disbursed by the esteemed National Social Insurance Fund (SODRA).
It is essential to note that sick pay is exclusively granted for the days that would have normally constituted the employee's active working days. In instances where an employee undertakes leave to dutifully care for an ailing individual, they are accorded the privilege of receiving a payment of 65.94% directly from the esteemed SODRA.
INCOME TAX
Employee Income Tax
Other Taxes and Social Security contribution:
Employee Payroll Contributions in Lithuania :
Please note that the percentages provided for the Total Employee Cost range from 19.5% to 26.48% depending on specific factors. The Social Insurance contribution is 19.50% of the employee's salary, up to a ceiling limit of 90,246 EUR. For any salary amount exceeding the ceiling, the Social Insurance contribution is reduced to 6.98%.
Termination Process:
The notification of termination must be presented in written form, encompassing details such as the rationale behind the termination, the legal grounds supporting the decision, and the precise date of termination.
In the case of terminating a fixed-term contract, employers may do so for various reasons, including business-related factors, personal considerations, or instances of worker misconduct. However, it is essential to provide notice and furnish a written explanation justifying the termination.
When dismissing an employee due to misconduct, it is customary to issue a prior warning and afford the employee an opportunity to present their perspective and provide an explanation for their actions.
Notice Period
In Lithuania, the customary notice period is 30 days for all employees who have completed at least one year of service. For employees with less than one year of service, the notice period is two weeks.
In cases where employees have less than five years remaining until they reach the statutory pension age, the notice period is doubled.
Additionally, the notice period may be subject to extension in certain circumstances. This includes situations where the employee is caring for a child under the age of 14, caring for a disabled child under the age of 18, or if the employee is entitled to receive retirement pension within the next two years.
Severance Pay
For employees with less than 12 months of service, the entitlement to severance pay is equivalent to half of their average monthly salary. In the case of employees who have served between one and 20 years, the severance pay entitlement is set at two months of salary. However, for those employees who have completed a remarkable 20 years of service, the entitlement increases to six months of salary. The calculation of severance pay is based on the average salary figure earned by the employee.
Probation Periods
In Lithuania, probation periods are not obligatory, but it is a common practice to have a standard probation period of three months.
Global hiring comes with challenges, from navigating employment laws to ensuring compliance with payroll processes, data protection regulations, and more. Setting up infrastructure abroad and staying updated on evolving compliance requirements can be overwhelming. But with Gloroots, there’s no need to worry anymore.
Gloroots simplifies the process of cross-border hiring by offering a centralized solution. The EOR solution handles everything – from onboarding, payments, administrative activities, tax compliance, and more. Our in-market expert team absorbs all employment and payroll-related risks by providing compliant employment contracts, timely payments, and tailored benefits. In short, Gloroots, lets you focus on finding the right talent while we handle the complexities.
Contact our experts today to launch your global hiring campaign effortlessly.
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