What you need to know before hiring in Lithuania: A guide to terminations

When making your first Lithuanian hire, termination policies might be far from your mind. But if you don't know the basics about terminations, you might find yourself in a tough spot when you later decide part ways with a Lithuanian employee.

Employees in the Republic of Lithuania have strong protections against hasty or unwarranted dismissals. If you don’t adhere to minimum notice or remuneration requirements, all while failing to prove a just cause for involuntary termination, you could be subject to wrongful dismissal claims from Lithuanian courts.

Read on to learn everything you need to know before hiring Lithuanian employees—and how hiring through an Employer of Record (EOR) can spare you from bungling any local dismissal requirements.

6 essential things to know before hiring in Lithuania

• You must establish terms of dismissal in your employment agreement. The offer letter to your Lithuanian employee must include the obligations of the employer and employee, including place of work, salary, working days and hours, duties and job functions, working conditions, annual leave, termination, notification period, and any other legal rights of both parties. You must also notify the Lithuanian State Social Insurance Fund of the hire. Make sure you’re complying with minimum statutory requirements. Otherwise, the fired employee may be entitled to longer notice periods or bigger compensation packages under Lithuanian law.
• There are several types of employment contracts in Lithuania. Lithuania has a number of employment agreements for different situations. The most common is the indefinite (open-ended) contract. Other agreements cover circumstances like fixed-term employment contracts, apprenticeships, seasonal work, and job sharing. You must use the right contract for the right situation.
• Lithuanian laws don’t recognize at-will employment. You can only immediately terminate employees (disciplinary dismissal) for just cause.
• You can only dismiss without cause if you give notice. In the case of an employee dismissed at the initiative of the employer, a notice period of three business days is required. If the employee agrees, the employer may release them from their duty to work during the notice period. Even if the employee is exempted from work, the employer is still required to pay the employee's salary.
• Dismissed employees can choose where and how to pursue wrongful dismissal claims. Lithuanian employees have the right to be informed of reasons for dismissal. They must file their appeal within 30 calendar days of receiving their termination paperwork.
• Severance pay in Lithuania is based on the type of termination and length of service. In Lithuania, employees who are dismissed from their job are entitled to severance pay. The amount of severance depends on the circumstances of the dismissal. For example, in the case of a regular dismissal, the employee is entitled to receive severance pay equal to two average monthly salaries. However, if the employee's length of service was less than one year, they are paid half of their average monthly salary.

Termination rules in Lithuania: What are acceptable grounds for firing an employee?

Lithuanian employees can leave their job voluntarily for any reason, so long as they give the advance notice stipulated in their employment agreement—usually 10-20 business days but as few as five in an urgent situation. Here are the reasons an employee can be terminated involuntarily in Lithuania:

• Termination during the probationary period. Probationary periods need to be defined in the contract of employment, and they typically last three months. They allow employers to evaluate a new hire’s suitability for a new job. If the employer decides the employee isn’t a good fit, they can be dismissed at the end of the probation. There is no right to severance. The employee can quit the probation period at any time with three days’ notice.
• Termination without cause. In the case of dismissal upon the employer’s will—for example, economic reasons—notice must be three business days. If the employee agrees, the employer has the option to release them from their obligation to work during the notice period. Nonetheless, in such situations, the employer must still compensate the employee with their salary. An employee who has been terminated must be provided with a severance payment that amounts to no less than six months of their average monthly salary. This payment increases dramatically depending on the length of the employment relationship—up to 36 months’ pay for 20 years of service.
• Termination for cause. The employer must initiate termination within a month of discovering the breach of contract. Examples include gross misconduct, conflict of interest, theft, or violence. If employment is terminated with just cause, the labor code stipulates what, if any, notice and severance pay is required.

Note that certain groups of employees are entitled to special protection from dismissal. This includes pregnant women who are employees, employees on maternity, paternity, or parental leave, and those with children under three years of age.

Lithuania’s termination requirements might differ from those in other countries where you hire, and it’s crucial to keep your global hiring compliant with local laws.

What are the mandatory notice periods and termination pay for Lithuanian employees?

The Lithuanian Labour Code sets dismissal requirements and establishes notice periods and severance pay. These are based on the length of employment. In most cases, workers are entitled to up to 10 business days of notice and up to two months of severance pay. In certain cases, the notice periods can be doubled (for example, an employee entitled to an old-age pension within five years) or tripled (if the employee is pregnant, a parent or single parent raising a child (under 14) or disabled child (under 18), or pensionable within two years).

The easiest way to comply with Lithuanian termination requirements

Managing termination requirements for a global workforce can be complex and challenging. Employers must navigate conflicting just-cause considerations, probationary periods, notice periods, and severance pay laws that differ both within and between countries. Without assistance, it can be difficult for employers to keep track of these varying requirements.

An alternative is to hire through an EOR, which can monitor termination requirements for you.

Frequently asked questions about terminating employees in Lithuania

Do you need a reason to terminate an employee in Lithuania?

There are several ways an employee can be dismissed in Lithuania. If the termination is a mutual agreement, then no reason is required. If either party desires termination of the employment contract, then a reason is required. If the employee terminates, the reason may be that the employer breached the conditions of the agreement. In the case of the employer terminating, performance issues could be considered the cause. Lithuanian labor regulations cover notice periods, severance, and other legal obligations.

What is considered just cause for terminating an employee in Lithuania?

In Lithuania, termination with just cause is when an employee is let go for actions related to serious misconduct. This can include:

• Theft
• Sexual harassment and bullying
• Fraud
• Sabotage
• Disclosure of confidential information
• Court sentence
• Being under the influence of alcohol or drugs at work
• Unexplained absences
• Severe breaches of company policies

Poor performance or incompetence can be just cause for termination, but Lithuanian laws encourage employers to consider other disciplinary proceedings first. Most workplaces try to correct less severe misconduct with verbal and written warnings before firing an employee outright.

Employers should ensure they have strong evidence of any serious breach of conduct before terminating an employee without the minimum required advance written notice.

What qualifies as wrongful dismissal in Lithuania?

According to Lithuanian employment law, wrongful dismissal is when an employee is terminated without a legitimate reason. It can happen when an employer:

• Is unable to prove the reason for dismissal.
• Terminates employment relations for reasons not related to their professional qualifications (for example, age, political ideology, or religious views).
• Breaches the terms of the employment contract.
• Breaches Lithuanian labor law.

Employees who think they’ve been wrongfully dismissed can appeal to Lithuania’s State Labour Inspectorate or the Labour Dispute Committee for reinstatement or compensation.

What is always required when an employer terminates an employee in Lithuania?

Once a Lithuanian employee is terminated, they must be given the reason for termination, notice (where applicable), severance pay (where applicable), and information on their legal rights and how to appeal the termination.

What is the law for dismissing a contractor in Lithuania?

The termination process for independent contractors in Lithuania can vary depending on the terms of the contract. Typically, either party may terminate before the contract’s expiry by providing notice as specified in the contract. Contractors are not entitled to most protections and benefits like sick leave, extended health care, additional social security contributions, minimum wage, and maternity leave.

If an independent contractor is found to be misclassified, they may be entitled to employment standards legislation protections and notice and/or termination pay.

What are layoffs in Lithuania?

A layoff is called a collective dismissal or collective redundancy in Lithuania and is based on the number of employees. Terminations are considered to be collective if, in a 30-day period:

• 10 or more workers are made redundant from a company with between 20 and 99 employees.
• 10% or more workers are dismissed from a company with between 100 and 299 employees.
• 30 or more workers are dismissed from a company with 300 or more employees.

In the event of a collective termination, employers must:

• Consult with employee representatives.
• Send information in writing to labor authorities.
• Present dismissal notices to the groups of such employees.

Additional notification requirements may apply. These include labour councils and in the case of a collective agreement, trade unions.

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Rippling and its affiliates do not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.