Employment Law in Lithuania

AT A GLANCE

Lithuanian employment law is governed by the Labour Code (Darbo kodeksas — DK), which entered into force on 1 July 2017. The 2017 Code significantly liberalised Lithuanian labour law — introducing more flexible employment models, broader contractual freedom, and more accessible termination grounds while maintaining substantial employee protections.
The Labour Code establishes mandatory minimum standards that cannot be reduced by contract — but many provisions are dispositive, meaning the parties can agree better terms for the employee. A contract term that is worse for the employee than the Labour Code minimum is replaced by the statutory minimum, not void.
Lithuania’s minimum wage (minimalioji mėnesinė alga — MMA) for 2025 is €1,038 gross per month. Employers must pay at least the MMA to every full-time employee regardless of what the employment contract states.
Employment termination in Lithuania is strictly regulated — employers cannot terminate without a valid ground under Article 57 of the Labour Code, and compensated terminations carry specific severance payment obligations.
We draft employment contracts, advise on termination procedures, represent employers in employment disputes, and prepare non-compete, confidentiality, and IP assignment provisions for Lithuanian employees.

Short answer

Employment law services in Lithuania cover the full range of workplace legal matters — from drafting employment contracts that comply with the 2017 Labour Code to advising on lawful termination grounds, preparing non-compete and confidentiality provisions, and representing employers in employment disputes before the Labour Dispute Commission and Lithuanian courts. We work with Lithuanian companies and the Lithuanian subsidiaries of international groups on all employment law matters, in English and Lithuanian, at fixed fees for defined engagements.

The Lithuanian Employment Law Framework

The Labour Code 2017 — a modern, flexible framework

The Lithuanian Labour Code (Darbo kodeksas) adopted in 2016 and in force from 1 July 2017 replaced the 2002 Code and represented the most significant reform of Lithuanian employment law since independence. The 2017 Code was designed to balance employee protection with labour market flexibility — introducing several new employment models (project-based employment, shared employment, remote working as a statutory right) and making termination more accessible for employers while increasing the role of individual agreement between employer and employee.

The 2017 Code distinguishes between imperative (mandatory) norms and dispositive norms. Imperative norms establish minimum protections that cannot be reduced by contract — the mandatory minimum wage, minimum annual leave entitlement, maximum working hours, and maternity leave rights. Dispositive norms are defaults that apply unless the parties agree otherwise — and they can only be displaced by a provision that is more favourable to the employee. A contract term worse for the employee than the statutory default is not void — it is replaced by the statutory default.

EU employment law — direct applicability

Lithuanian employment law has been substantially shaped by EU employment law directives transposed into national law. Key EU instruments include: the Working Time Directive (2003/88/EC) — implemented through the Labour Code working time and rest period provisions; the Equal Treatment Directive (2000/78/EC) — implementing the prohibition on discrimination based on age, disability, religion, and sexual orientation; the Temporary Agency Work Directive (2008/104/EC) — implemented through the Labour Code temporary work provisions; the Transparent and Predictable Working Conditions Directive (2019/1152/EU) — implemented through the 2021 amendments to the Labour Code; and the Whistleblower Protection Directive (2019/1937/EU) — implemented through the Lithuanian Law on the Protection of Whistleblowers.

The Labour Dispute Commission — the primary dispute forum

Employment disputes in Lithuania are primarily resolved through the Labour Dispute Commission (Darbo ginčų komisija — DGK), an administrative body that hears employment disputes without charge to the employee and must issue a decision within one month. DGK decisions are binding unless appealed to a regional court within 30 days. Most employment disputes — including termination challenges, wage claims, and discrimination complaints — must first be heard by the DGK before court proceedings can be initiated. The DGK is employer-friendly in that it operates quickly and predictably, but its decisions are frequently appealed by employers who receive adverse outcomes on procedural grounds.

Employment Law Services We Provide

Employment Contracts

Under Article 67 of the Labour Code, an employment contract must be concluded in writing before the employee begins work. A contract concluded orally or that begins before a written contract is signed gives the employee all statutory rights from the date work begins — and exposes the employer to administrative fines. The written contract must contain specific mandatory information under Article 67(2) DK.

Standard employment contract — Article 67 DK-compliant; all mandatory information including position, workplace, remuneration, working time regime, leave entitlement, notice period, and probationary period
Fixed-term employment contract — Article 68 DK: permitted for a maximum of 2 years (or longer where justified by the nature of the work); specific rules on renewal apply
Remote work agreement — Article 52(3) DK: remote work can be agreed in the employment contract or by supplementary agreement; specific workplace, equipment, and cost reimbursement provisions
Project-based employment contract — Article 77 DK: for defined project work; automatically terminates on project completion without the standard termination procedures
Part-time employment contract — Article 146 DK: minimum 4 hours per day or 20 hours per week; equal rights with full-time employees proportionally
Job-sharing arrangement — Article 76 DK: two employees sharing one full-time position; specific coordination obligations
Director service agreement — distinguishing between employment-based (Labour Code) and civil service-based (Civil Code) director engagement

Non-Compete, Confidentiality, and IP Provisions

Post-employment non-compete clauses and confidentiality obligations are permitted under Lithuanian law but are subject to strict mandatory conditions under Articles 37 and 196(2) of the Labour Code. A non-compete clause that does not satisfy these conditions is unenforceable — regardless of what the contract states.

Non-compete clause requirements — Article 37(3) DK: the restriction must be in writing; limited in time (maximum 2 years after employment ends); limited in geographic scope and activity scope; and the employer must pay compensation of at least 40% of the employee's average salary during the entire non-compete period
Non-compete compensation — the 40% minimum applies to the gross average salary; payment must be made throughout the restriction period, not as a lump sum at termination
Confidentiality and trade secret provisions — consistent with the Law on the Legal Protection of Trade Secrets (implementing EU Directive 2016/943); defining the specific categories of confidential information
IP assignment clauses — ownership of work-related intellectual property created by employees; Article 5(2) of the Law on Copyright: works created by an employee in the course of employment belong to the employer unless the employment contract provides otherwise
Non-solicitation provisions — restrictions on soliciting clients or colleagues after departure; enforceable without compensation requirement if reasonably limited in scope
Garden leave provisions — requiring the employee to remain available but not attend work during the notice period; consistent with Article 59 DK notice provisions

Employment Termination

Employment termination is the most legally sensitive and frequently disputed area of Lithuanian employment law. The Labour Code specifies the permitted grounds for termination by the employer and the procedures that must be followed. A termination that does not comply with the Code — even on a procedural technicality — is unlawful, and the employee is entitled to reinstatement or compensatory damages.

Termination by mutual agreement — Article 55 DK: the safest termination method; no ground required; compensation as agreed; no challenge right for the employee
Termination during probation — Article 56 DK: 3 business days' written notice; no ground required during the probationary period; maximum probationary period 3 months (6 months for managers)
Termination at the employee's initiative — Article 55(1) DK: employee gives the contractual notice (minimum statutory: 14 days); no employer action required
Employer termination — employee fault grounds (Article 58 DK): serious breach of work duties; repeated violation after warning; breach of prohibition on competition during employment
Employer termination — no-fault grounds (Article 57 DK): position abolished (redundancy); insufficient skills or qualifications; long-term incapacity; fundamental change in working conditions not accepted by the employee
Redundancy procedure — Article 57(1) DK: employer must notify the employee in advance (notice period varies by seniority, up to 4 months for employees with 10+ years' service); pay severance; the position cannot be filled for 6 months after the redundancy
Severance pay — Article 57(6) DK: mandatory severance on no-fault termination; amount varies by length of service (1 average monthly salary after 1 year, up to 6 months' salary after 10+ years)
Wrongful termination remedies — DGK challenge within 1 month; reinstatement or 6 months' average salary compensation; additional compensation for moral damages

Workplace Policies and HR Documentation

Lithuanian employers with 10 or more employees must adopt internal workplace rules (vidaus tvarkos taisyklės) under Article 227 of the Labour Code. Additional policies are required by law in specific circumstances — anti-harassment policies, whistleblowing procedures, and data protection documentation. We prepare the full set of HR documentation required for Lithuanian employers.

Internal workplace rules (vidaus tvarkos taisyklės) — Article 227 DK: mandatory for employers with 10+ employees; must cover working hours, rest periods, workplace discipline, safety procedures, and the procedure for raising workplace grievances
Anti-harassment and equal treatment policy — implementing the Law on Equal Opportunities and the Law on Equal Treatment; complaint procedure for harassment and discrimination
Whistleblower protection procedure — Article 9 of the Law on the Protection of Whistleblowers: companies with 50+ employees must establish an internal whistleblowing channel by December 2023; smaller companies may voluntarily adopt
Remote work policy — covering the conditions, equipment provision, cost reimbursement, and health and safety obligations for remote workers
Data protection and employee monitoring policy — GDPR-compliant provisions for employee personal data processing; lawful basis for monitoring; employee notification obligations
Disciplinary procedure — the formal process for imposing disciplinary sanctions (reprimand, last written warning, termination) under Article 58 DK; procedural compliance to avoid unlawful dismissal claims
Collective redundancy notification — where 10+ employees are made redundant within 30 days, specific advance notification to the Labour Exchange is required under Article 57(3) DK

Employment Disputes and Representation

We represent employers before the Labour Dispute Commission (Darbo ginčų komisija) and in Lithuanian courts on all categories of employment dispute. Most disputes involve termination challenges, unpaid wages, or discrimination claims. The DGK is the mandatory first step — court proceedings can only be initiated after a DGK decision.

Labour Dispute Commission representation — preparing the employer's written response; attending the DGK hearing; managing the procedural timeline
Termination challenge defence — the employer must prove the legal ground for termination and that the correct procedure was followed; preparing documentation and argumentation
Unpaid wages and overtime claims — statutory entitlements; maximum working hours; overtime rates; employer record-keeping obligations
Discrimination and harassment claims — prohibited grounds under the Law on Equal Opportunities (gender, age, disability, national origin, religion, sexual orientation); employer liability for workplace harassment
Misclassification disputes — distinguishing genuine employment from civil contracts; consequences of misclassification (retroactive SoDra contributions, employment rights)
Collective labour disputes — trade union negotiations; collective agreements; strike action procedures
Court appeal of DGK decisions — appealing unfavourable DGK decisions to the regional court within 30 days; representing the employer through the full court process

Key Mandatory Minimums Under the Lithuanian Labour Code

The following table summarises the most important mandatory minimum entitlements that cannot be reduced by employment contract or company policy. All employers must comply with these standards regardless of size, sector, or the nationality of ownership.

Entitlement	Statutory Minimum	Legal Basis
Minimum wage (2025)	€1,038 gross/month (full-time); €6.34/hour	Government Resolution No. 1297 (reviewed annually)
Annual paid leave	20 working days per year (minimum); employees with 10+ years’ service: 25 days; employees with ≥3 dependants: 30 days	Article 127 DK
Probationary period	Maximum 3 months for standard roles; maximum 6 months for managers; must be agreed in the employment contract	Article 56 DK
Termination notice by employee	Minimum 14 days (may be increased by contract)	Article 55(1) DK
Termination notice by employer (no-fault)	From 2 weeks (less than 1 year’s service) up to 4 months (10+ years’ service)	Article 57(4) DK
Severance pay (no-fault termination)	From 1 average monthly salary (1 year) to 6 months’ average salary (10+ years)	Article 57(6) DK
Non-compete compensation	Minimum 40% of average monthly salary for each month of the restriction period	Article 37(3) DK
Maximum daily working hours	8 hours/day; extended work day of up to 12 hours permitted by written agreement	Article 112 DK
Maximum weekly working hours	40 hours/week regular; up to 52 hours/week with employee consent (including overtime)	Article 114 DK
Overtime premium	150% of hourly rate (or time-off in lieu); maximum 8 overtime hours/week	Article 144 DK
Parental leave	Child care leave until child reaches 3 years; father’s paternity leave: 30 days within 3 months of birth	Articles 134–136 DK
Sick leave pay	1st–2nd day: no employer obligation; 3rd–7th day: 62.06% of average salary (employer); from 8th day: SoDra pays 62.06%	Article 140 DK; Law on Sickness and Maternity Social Insurance

Employment Termination: Grounds, Procedure, and Severance

Termination is the most legally complex and most frequently contested area of Lithuanian employment law. The consequences of an unlawful termination — reinstatement, back-pay, and compensation for moral damages — make procedural compliance essential.

Termination grounds — an exhaustive list

Under the Labour Code, employment can only be terminated by the employer on one of the following grounds. This list is exhaustive — there is no general ground of ‘at will’ termination as exists in some common law jurisdictions.

Article 55 DK — Mutual agreement: both parties sign a termination agreement specifying the date and any agreed compensation. No statutory ground is required. This is the lowest-risk termination method.
Article 56 DK — Termination during probation: 3 days’ written notice; no reason required; applies only within the agreed probationary period (maximum 3 months standard; 6 months for managers).
Article 57(1) DK — Position abolished (redundancy): the employer must show the position genuinely ceases to exist; the position cannot be re-created for 6 months; statutory notice and severance apply.
Article 57(2) DK — Insufficient skills or qualifications: requires evidence that the employee cannot perform the work to the required standard after training opportunities have been offered.
Article 57(3) DK — Long-term incapacity: the employee has been continuously incapacitated for more than 120 consecutive days or more than 140 days in any 12-month period.
Article 57(4) DK — Fundamental change in working conditions: the employee refuses to accept a substantial change to working conditions that the employer is entitled to make.
Article 58(1) DK — Serious breach of work duties: a single severe violation (gross misconduct) — specific examples listed in the Code include theft, physical assault, and wilful damage to company property.
Article 58(2) DK — Repeated violation after warning: a second violation of work duties within 12 months of a formal disciplinary warning for the first violation.

Redundancy procedure — the most common termination route

Position abolition (redundancy) under Article 57(1) DK is the most frequently used no-fault termination ground. The procedure involves: (1) identifying that the position genuinely ceases to exist — a restructuring decision supported by company documentation; (2) giving the required advance notice (from 2 weeks for employees with less than 1 year’s service to 4 months for those with 10+ years); (3) paying the statutory severance; and (4) not recreating the position for 6 months. Employees who are made redundant and challenge the termination frequently argue that the position was not genuinely abolished — that the same duties continued under a different job title. Employers must be able to demonstrate that the position and its duties genuinely ceased.

Severance payments — statutory amounts

Severance (išeitinė išmoka) is mandatory on no-fault termination under Article 57(6) DK. The amount depends on the employee’s length of service with the company:

Less than 1 year of service: 0.5 average monthly salaries
1 to 3 years of service: 1 average monthly salary
3 to 5 years of service: 1.5 average monthly salaries
5 to 10 years of service: 2 average monthly salaries
10 to 20 years of service: 3 average monthly salaries
More than 20 years of service: 6 average monthly salaries

 Additional SoDra severance supplement

In addition to the employer’s statutory severance, employees terminated on no-fault grounds with at least 3 years of service with the same employer are entitled to an additional payment from SoDra (the State Social Insurance Fund). The SoDra supplement equals 1 average monthly salary for 3–5 years of service, scaling up to 2 average monthly salaries for 5+ years of service. This supplement is paid by SoDra directly to the employee and is separate from the employer’s severance obligation. Total severance (employer + SoDra) can therefore exceed what the employer alone calculates — we advise on the total cost of each redundancy before the termination decision is made.

Employees with enhanced protection

Certain categories of employee have enhanced protection against termination under the Labour Code — meaning the employer cannot terminate even on a valid ground without additional steps or court approval:

Pregnant employees and employees on maternity/parental leave — cannot be terminated except on grounds of company liquidation (Article 135 DK)
Employees on sick leave — termination is prohibited during incapacity leave under Article 140 DK
Employees raising children under 3 years alone — enhanced protection against position abolition
Trade union representatives — termination requires trade union consent under Article 180 DK
Employees with disabilities — specific procedural requirements under Article 57(5) DK

Key Ongoing Employer Compliance Obligations

SoDra registration and contributions

Every employer must register with SoDra (State Social Insurance Fund — Valstybinio socialinio draudimo fondas) before the employee’s first day of work. Employee registration with SoDra must be made on or before the day work begins — late registration results in administrative fines. Monthly SoDra contributions must be declared and paid by the 15th of the following month. The employer’s SoDra contribution rate is approximately 1.77% for health insurance plus 2.49% for social insurance (pension, sickness, and maternity components), totalling approximately 4.26% on the employee’s gross salary. The employee’s contribution (deducted from gross salary) is 19.5%.

Income tax (GPM) withholding

The employer is responsible for withholding Lithuanian personal income tax (gyventojų pajamų mokestis — GPM) from each employee’s salary and remitting it to VMI by the 15th of the following month. The standard GPM rate is 20% on earnings up to the social insurance threshold (60 average wages per annum in 2025) and 32% on earnings above that threshold. The non-taxable income allowance (NPD) reduces the taxable base for lower-income employees — its application is the employer’s responsibility based on the employee’s declaration.

Working time records

Article 108 of the Labour Code requires employers to keep records of each employee’s working time — daily and weekly hours worked, overtime, and rest periods. These records must be maintained for at least 10 years and must be available for inspection by the State Labour Inspectorate (Valstybinė darbo inspekcija — VDI). Failure to maintain adequate working time records is one of the most frequently cited violations in VDI workplace inspections and results in fines of €100–€3,000 per violation.

Occupational health and safety

Employers are responsible for providing a safe working environment under the Law on Safety and Health at Work. For companies with 50+ employees, a designated safety and health officer (darbų saugos ir sveikatos specialistas) is mandatory. All employers must conduct a workplace risk assessment, provide safety and health training to employees, and maintain accident records. Remote workers are entitled to the same safety protections as office-based employees — the employer’s safety obligations extend to the remote workplace.

Employment Law Services Pricing

Standard employment law engagements are priced at fixed fees. Employment disputes, collective bargaining, and complex restructuring projects are quoted individually.

Service	Price
Employment contract — standard Labour Code Article 67-compliant; English + Lithuanian; all mandatory terms	€750
Employment contract — manager / director (employment basis) Extended authority, IP provisions, non-compete, garden leave, and enhanced notice terms	€850
Fixed-term employment contract Article 68 DK-compliant; justification for fixed term; renewal provisions	€750
Remote work agreement / addendum Equipment provision, cost reimbursement, health and safety, working time monitoring	€650
Director service agreement (civil contract basis) Civil Code mandate; scope, remuneration, authority, liability, termination	€650
Non-compete clause (standalone or within contract) Article 37(3) DK-compliant; time, scope, geographic limits; compensation calculation	€500
IP assignment and confidentiality provisions Work-for-hire clause; trade secret definition; post-employment obligations	€650
Internal workplace rules (vidaus tvarkos taisyklės) Article 227 DK-compliant; working hours, discipline, grievance, safety, leave procedures	€800
Anti-harassment and equal treatment policy Complaint procedure, investigation process, and remedies under the Law on Equal Opportunities	€650
Whistleblower protection procedure Internal reporting channel design; Article 9 Law on the Protection of Whistleblowers compliance	€700
Remote work policy Conditions, eligibility, equipment, reimbursement, and monitoring framework	€500
Full HR documentation package Employment contract + workplace rules + anti-harassment policy + remote work policy + IP provisions	€1,700
Termination advisory (single employee) Written advice on applicable ground, procedure, notice period, severance, and risk assessment	€600
Termination agreement (mutual agreement basis) Article 55 DK-compliant termination agreement; agreed compensation; waiver of claims	€500
Redundancy procedure management Full procedure: documentation, notice, severance calculation, 6-month re-hire restriction advisory	€900
Collective redundancy (10+ employees) Labour Exchange notification; collective consultation; quoted by number of affected employees	On request
Labour Dispute Commission representation Written response + hearing attendance; standard single-issue employment dispute	€900
Court appeal of DGK decision Regional court appeal proceedings; quoted by complexity	On request
Employment audit (existing documentation) Reviewing all employment contracts and policies for Labour Code compliance; written gap report	€900

Frequently Asked Questions

No. Lithuanian employment law does not recognise at-will termination. An employer can only terminate an employment contract on one of the grounds specifically listed in the Labour Code — primarily Articles 55–58 DK. The most accessible employer-initiated no-fault ground is position abolition (redundancy) under Article 57(1) DK — but even this requires the position to genuinely cease to exist, advance notice to be given, and statutory severance to be paid. The termination method with the fewest procedural requirements is mutual agreement under Article 55 DK — where both parties agree in writing to end the employment. We advise on the most appropriate termination route for each situation before the employer acts.

An employee who is wrongfully terminated — either without a valid ground or without following the correct procedure — can challenge the termination before the Labour Dispute Commission within 1 month of the termination date. If the DGK finds the termination unlawful, it can order reinstatement of the employee to their former position and payment of back-pay for the period of unlawful termination. Alternatively, if reinstatement is not possible or the employee does not wish to be reinstated, the DGK can award compensation of up to 6 months’ average salary. Additional compensation for moral damages may also be awarded. The risk of wrongful termination liability is one of the most commercially significant reasons why employers seek legal advice before initiating a termination.

Only if it satisfies all three conditions of Article 37(3) of the Labour Code: it must be in writing; limited to a maximum of 2 years; and the employer must pay compensation of at least 40% of the employee’s average salary for each month of the restriction period. A non-compete clause that does not include the compensation obligation is unenforceable regardless of what the contract states. The compensation must be paid throughout the restriction period — it cannot be paid as a lump sum at the time of termination. A clause that specifies no payment, or payment only at termination, does not meet the statutory requirement. We draft non-compete provisions that satisfy all three conditions while being proportionate to the genuine risk the employer is protecting against.

The distinction between employment (darbo sutartis) and a civil services contract (paslaugų sutartis or civilinė sutartis) determines which legal framework governs the relationship. An employment contract is governed by the Labour Code — which provides significant mandatory protections for the employee (minimum wage, leave, severance, unfair dismissal protection). A civil services contract is governed by the Civil Code — it offers more flexibility in terms of how and when the work is performed and is less regulated. Lithuanian authorities — VMI and the VDI — actively test whether purported civil contracts actually conceal employment relationships. The key indicators of employment are: regular work for a defined employer; integration into the employer’s organisation; personal performance; and employer control over how the work is done. A contractor who works primarily for one client, on the client’s premises, using the client’s equipment, and under the client’s direction is likely to be reclassified as an employee — with retroactive SoDra contribution liability for both parties.

Remote work (nuotolinis darbas) is explicitly regulated under Article 52(3) of the Labour Code as amended in 2021. Remote work arrangements must be agreed in writing — either in the employment contract or by a supplementary agreement. The employer is obligated to provide the equipment needed for remote work (or compensate the employee for using their own equipment) and to compensate for home working costs (energy, internet — typically agreed as a fixed monthly amount). Remote workers have the same rights as office-based employees to the company’s social and amenity facilities where these exist. The employer’s health and safety obligations extend to the remote workplace — the employer must assess the risks of the home working environment and take reasonable steps to manage them.

Under Article 56 of the Labour Code, the maximum probationary period is 3 months for standard employees and 6 months for managers. The probationary period must be agreed in the employment contract — a contract that does not mention a probationary period has no probationary period. During the probationary period, either party may terminate the employment by giving 3 business days’ written notice without providing grounds. After the probationary period ends, the full termination protection provisions of the Labour Code apply. A probationary period cannot be imposed on employees who are pregnant, who have a child under 3 years, or who have been recruited directly from educational institutions.

Yes — under Article 144 of the Labour Code, overtime must be compensated at 150% of the employee’s hourly rate (i.e., the standard hourly rate plus a 50% overtime premium). Alternatively, with the employee’s agreement, overtime can be compensated by providing time-off in lieu at the same ratio. Employers cannot require employees to work unlimited overtime — the maximum overtime is 8 hours per week, and total working time (including overtime) cannot exceed 52 hours per week even with the employee’s consent. Working time records must reflect all overtime worked — failure to record overtime is itself a labour inspection violation, independently of whether it was paid correctly.

Ready to discuss your employment law matter?

Contact us with the specific issue — whether it is a new employment contract, a termination you are planning, a dispute that has been brought against you, or a review of your existing employment documentation. We will confirm the applicable Labour Code provisions, assess the risk, and provide a fixed-fee quote. For urgent termination situations, we are available for same-day advice.