Lithuania

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KEY DEVELOPMENTS FOR 2024

Changes to childcare allowance regulations

In accordance with the changes to childcare (parental) leave duration, childcare allowance rates have been recently amended. Childcare allowance is granted to one of the parents, adoptive parents, or foster parents until a child is 18 or 24 months old (depending on the chosen length of the childcare leave), and is paid by the social insurance authority. Previously, a childcare allowance was granted until a child is 12 or 24 months old. Under the new regulation, if the childcare leave lasts until the child is 18 months old, the allowance rate is 60% of the insured income (subject to statutory thresholds). If childcare leave lasts until the child is 24 months old, the allowance is 45% of the insured income during the first 12-month period and 30% of the insured income during the second 12-month period (subject to statutory thresholds). For the two months of non-transferable childcare leave, an allowance is 78% of the insured income. The length of childcare leave (including the type of compensation) depends on the choice of parents. Previously, the rate of childcare allowance, until the child reaches 1 year of age, was 77.58% of the insured income (subject to statutory thresholds). If the insured person opted to receive the childcare allowance until the child reaches the age of 2 years, the amount of the childcare allowance, until the child reaches the age of 1 year, was 54.31% and 31.03% of the insured income until the child reaches the age of 2 years.

Self-study leave

In order to encourage lifelong learning and the improvement of qualifications, a self-study leave was established in the Labour Code in 2023. Employees who undertake self-study are granted up to 5 working days a year of study leave for self-study. Such leave is granted with at least 20 working days’ notice to the employer. Self-study leave is unpaid unless otherwise agreed in collective agreements or by agreement between the parties. Previously, the Labour Code did not provide for self-study leave. Employers should ensure that they have appropriate polices in place to set out the rights of employees in respect of self-study leave.

Legislative changes to the minimum wage

In order to ensure more socially equitable remuneration, taking into account the economic situation, the Lithuanian Government has decided to increase the minimum wage. From 1 January 2024, the minimum gross monthly salary increased from €840 to €924, comprising an increase of around 9%. The minimum gross hourly wage will increase from €5.14 to €5.65. It should be noted that minimum wage can only be paid for non-qualified work. Employers should update their template employment contracts and, if relevant, increase current employees’ monthly and/or hourly wage rates to reflect this change.

KEY DEVELOPMENTS FOR 2023

Prevention of violence and harassment at work

At the end of 2022, new requirements of the Labour Code came into force, requiring employers with the average number of employees of more than 50 to adopt, publish and implement a policy on preventing violence and harassment at work.

Although the requirements have already entered into force and employers have had some time to prepare, this is still a hot topic and has been receiving increased attention. Not all employers have yet implemented the requirements of the Labour Code, or have implemented them incompletely. In some cases, global HR policies on the topic may not be in line with the specific requirements of the Labour Code. The number of employee complaints about harassment and mobbing has been increasing and we expect this trend to continue in 2023; therefore, adopting internal procedures and conducting proper employee training should be given special attention by businesses.

Legislative changes for parents, caregivers and employees with health issues

The Directive on Work-Life Balance will be fully implemented in Lithuania from 2023.

From 2023, paternity leave, which is granted to fathers after the birth of a child until the child reaches the age of one year or one month after the adoption of the child, may be divided into two parts.

Also, each parent will be able to take a two-month non-transferrable period of paid childcare (parental) leave. The remaining part of childcare (parental) leave can be shared among the parents according to the family’s needs. This non-transferable part of childcare leave can be taken either all at once or in parts, however, it cannot be taken by both parents at the same time. Employees working at institutions funded by the state budget that have children under 3 years old will be entitled to a reduced working time of 32 hours per week; however, they will still be paid full-time salary.

In August 2022, changes on flexible working conditions came into force. These amendments extended the list of employees whose request for remote work, part-time work or preferred working time regime must be granted (e.g. it covers employees raising a child under 8 years old, caregivers, disabled employees, etc.).

Also, there are legislative proposals to introduce additional leave for employees to improve their health. Although the proposed amendment has not been adopted yet, it is possible that the revised proposal will be discussed more in 2023.

Legislative changes to the minimum wage

In order to ensure more socially equitable remuneration, it has been decided to increase the minimum wage. This increase is one of the most significant minimum wage increases in Lithuania’s history.

From 2023, the minimum monthly salary will increase from EUR 730 to EUR 840 gross, which means that it will increase by EUR 110 or around 15%. The minimum hourly wage will increase from EUR 4.47 to EUR 5.14 gross. It should be noted that minimum wage can only be paid for non-qualified work.

As a consequence, employers should review the salaries of their employees and ensure that the employees performing non-qualified work are paid at least the above-mentioned minimum wage and that the employees performing qualified work are paid more than the new minimum wage.

KEY DEVELOPMENTS FOR 2022

Restriction from paying salary and per diems in cash

In 2020, the State Labour Inspectorate recovered over EUR 9 million for the benefit of the employees, in connection with fraudulent payments. Journalistic research carried out in 2021 revealed that cash transactions with employees in transport companies is one of the most significant problems from a fraud perspective.

For many years now, all state institutions have been urging politicians to limit the payment of salaries and per diems in cash. Following the scandal in 2021, the Parliament of the Republic of Lithuania had to act and make necessary changes. The Parliament adopted amendments to the Labour Code, which restrict the possibility of paying remunerations and per diems in cash. From 1 January 2022, salary must be paid by electronic transfer to the bank account specified by the employee.

New draft laws to balance family and work interests

The balance of family and work interests is a key priority of the Government. Even though it seems like the number of fathers taking parental leave is increasing, the tendency is still that they continue to work and the child is cared for by the mother. The implementation of the EU directive on work-life balance for parents and carers will introduce certain changes in parental leave arrangements which should help to balance childcare responsibilities between both parents.

Although the legislation in force today provides ample scope of reconciling work and family responsibilities, and Lithuania already meets almost all the minimum provisions of the EU directive on work-life balance for parents and carers, its full implementation will introduce some fundamental changes.

Two drafts laws have been proposed for 2022: 

• The draft Law on Sickness and Maternity Social Insurance, which adjusts the procedure for payment of sickness, maternity, paternity, and childcare favours.

• The draft Labour Code, which provides that each parent takes parental leave, part of which cannot be transferred to the other parent, until the child reaches the age of two. 

Employers should review their policies to ensure they comply with these new laws to the extent they come into force.

Increase to minimum wage rates

In Lithuania, there is a large gap between the average and minimum wage, which has created income inequality. This issue has been compounded by the global pandemic which worsened the unemployment rate in Lithuania.  The Government has set a goal of reducing unemployment rates and pay inequality.

To help maintain an appropriate ratio to the average wage and improve the economic situation, Parliament has adopted a decision to increase the minimum wage rate. As of 1 January 2022, the minimum monthly wage is increased from EUR 642 to EUR 730, and the minimum hourly wage is increased from EUR 3,93 to EUR 4,47.  Employers should update their template employment contracts and, if relevant, increase current employees’ monthly/hourly wage rates to reflect this change.

KEY DEVELOPMENTS FOR 2021

Remote work likely to continue

The positive experience of teleworking, bringing flexibility in work organisation, time planning, opportunities to reconcile family, and professional responsibilities, have led many to believe that remote work will remain widely used post‑pandemic. However, there are still disputable questions regarding remote work, especially when employees request to work from abroad (e.g., reimbursement of expenses (electricity, internet, etc.), occupational safety and health and tax‑related issues when working abroad, overworking and burnout, increased number of cyber‑attacks).

Changes to business immigration introduced

Many changes regarding business immigration were introduced in 2021. From 2021, foreigners can receive Lithuanian e‑resident status and Lithuanian e‑signature without obtaining a residence permit. The e‑resident status enables foreigners to set up business electronically, open bank accounts, declare taxes, or use other services provided remotely. The employment of foreigners was liberalised. For example, persons working remotely are no longer required to obtain a work permit, declaration of a place of residence was simplified, and employment of highly qualified employees became more efficient. On the other hand, business immigration procedures must be carefully observed as stricter liability of employers was established.

Mobbing at the workplace

The growing number of disputes regarding psychological violence at work, the need for a smooth integration process of employees entering the labour market while working from home, gave rise to the initiative to include the notion of mobbing in the Labour Code. According to the data of the survey conducted in the EU countries, Lithuania is among the three countries whose business managers care least about the prevention of psychological violence at work. Considering the ongoing vaccination process in Lithuania, it is anticipated that mobbing issues will become a highly discussed topic.