Hiring Talent And Managing Payroll In Lithuania?

Agreements

• Employment contracts must be well-written with all the necessary employment information. Conditions like termination, duty, employment length, and rights should be mentioned.
• Lithuania has two types of employment contracts: definite or fixed contracts and indefinite or open-ended contracts.
• Indefinite or open-ended contract - A contract with no fixed end date is called an indefinite contract. It is mutually agreed upon and can be terminated by both parties. It is a widely used contract and hires permanent employees.
• Definite or fixed-term contract - A contract that ends on a fixed date is called a fixed-term contract. It is agreed upon for a definite type of work and a fixed time. The definite contract in Lithuania must not exceed 2 years. In some exceptional cases, the tenure can be extended to 5 years.

Onboarding Process

• The company collaborates with its HR team if there is a job vacancy. A job description is prepared, which has details about the job.
• Once the appropriate description is prepared, it is uploaded on the company's official sites and other platforms.
• The employer may choose to publish the vacancy in local newspapers and magazines.
• Candidates submit their applications by verifying their eligibility criteria.
• The HR team shortlists candidates on the given criteria and rounds of assessments.
• Final shortlisted candidates can negotiate with the employer regarding the job. Once both parties reach an agreement, the candidate is hired as an employee.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• The employer is responsible for maintaining the health and safety of its employees.
• An employee must declare health issues if any.
• Employees in Lithuania contribute to health insurance facilities. The national government also bears some specific health insurance.

Working Hours and Overtime

• Work hours: The work hours in Lithuania must not exceed 8 hours per day. An employee must not work more than 40 hours per week. The standard working week starts from Monday to Friday.
• Break:An employee is entitled to unpaid break time of 30 minutes. The break time can be extended to 2 hours if required. An employee must get a continuous rest time of about 8 to 10 hours.
• Overtime: An employee must not work more than 8 hours of overtime in a week. The employer has to pay 150% of the regular salary to the employee for overtime.

Social Security

Taxes for Employees

• Social security contributions - 19.50% to 22.5%
• Pension insurance - 8.72%
• Additional pension insurance - tax ranging from 2.4% to 3%
• Health insurance - 6.98%
• Sickness social security - 2.09%
• Income tax - on gross annual salaries below EUR 81,162 - 20%
• Income tax - on an annual salary above EUR 81,162 - 32%

Termination

• The termination process in Lithuania is complex.
• An employer must provide a written notice to the employee before termination.
• The notice period depends on the tenure of the employee.
• The notice must also mention the valid reason for the termination.
• An employee can resign from the work with a written notice stating the reason.

Severance Pay

Employees or Contractors

• A person who works for a company and gets paid is called an employee.
• An organization or company that hires employees is the employer.
• There are two types of recognized employment in Lithuania - employees and self-employed.
• A penalty is imposed if an employer is found guilty of an employee's misclassification. The penalty can range between 868 Euros to 5,792 Euros for each misclassification.
• The employer has to pay all legal benefits to such a misclassified employee.
• The employer has to pay all taxes and other contributions on behalf of the employee.

Final Words