The work culture in Lithuania focuses on work-life balance and flat hierarchies. The country offers a highly educated, multilingual workforce, a mature digital infrastructure, and a fast-growing technology scene. For job seekers, Lithuania combines competitive pay, strong statutory protections, and a comparatively low cost of living.
Employers should understand that employment law in Lithuania is codified in the labor code and enforced by several state agencies, so compliance is non-negotiable. This guide walks you through the minimum wage in Lithuania, contracts, payroll, benefits, working hours, leave, the hiring and onboarding process, termination rules, and the official resources you will need.
Key Facts About Employment in Lithuania
Information Category | Details |
Minimum Wage in Lithuania | €1,153 gross per month and €7.05 per hour. |
Standard Workweek | 40 hours standard. |
Payroll Frequency | Monthly processing. |
Fiscal Year | Calendar year (January-December). |
Main Employment Laws | Lithuanian Labour Code (Darbo kodeksas) |
Employment Contracts in Lithuania
Lithuanian employment law recognizes several contract types, and choosing the right one is the foundation of compliant hiring.
- An indefinite-term contract is the default and most common arrangement, and it continues until either party lawfully terminates it.
- A fixed-term contract may be used for temporary needs, but it is generally limited to two years for the same function, and such contracts cannot exceed a set share of the employer's overall workforce.
- A temporary agency work arrangement allows a staffing agency to employ a worker who performs duties for a client company.
- Project-based, seasonal, and part-time contracts are also permitted where the nature of the work justifies them.
Every employment contract must be concluded in writing before work begins, and it should be drafted in Lithuanian to be fully enforceable. The labor code requires that the contract clearly state the job title and a description of the work, the place of work, the agreed salary and payment arrangements, and the date on which employment starts. Employers may also agree on a probationary period of up to three months, which must be expressly written into the contract. The notice period that applies on termination and any confidentiality, non-compete, or training-cost provisions should likewise be set out in writing so that both parties understand their obligations from the outset.
Payroll, Taxes, and Social Security in Lithuania
Payroll in Lithuania involves personal income tax (GPM) collected by the State Tax Inspectorate and social insurance contributions (Sodra) shared between the two parties. A major reform took effect on January 1, 2026, replacing the former two-tier income tax with a three-tier progressive system. The tables below separate the employee and employer obligations.
Employer Contributions
Contribution Type | Rate |
Social insurance (Sodra) | Employers pay approximately 1.77% of gross salary for an indefinite contract, rising to about 2.49% for fixed-term contracts. |
Included funds | The employer rate includes contributions to the Guarantee Fund and the Long-Term Employment Fund. |
Employee Contributions
Contribution Type | Rate |
Social insurance and health (Sodra) | Employees generally contribute 19.5% of gross salary: 8.72% pension insurance, 1.99% sickness insurance, 1.81% maternity insurance, and 6.98% compulsory health insurance. |
Optional pension accumulation | Employees enrolled in second-tier pension saving contribute an additional percentage of salary on a voluntary basis. |
Contribution ceiling | Once annual income exceeds roughly €38,729, only the 6.98% health contribution continues on the excess. |
Income Tax Brackets
Annual taxable employment-related income | Tax rate |
Up to €882,962, equal to 36 average national wages | 20% |
Over €82,963 and up to €138,270, equal to 60 average national wages | 25% |
Above €138,270 | 32% |
Compensation and Benefits in Lithuania
The minimum wage in Lithuania sets the legal pay floor, and most employers layer additional benefits on top to attract talent in a competitive market. The table below outlines the statutory baseline and the perks employers commonly offer.
Benefit Type | Details |
Health insurance | Public healthcare is funded through mandatory contributions, and employers frequently add private medical insurance as a sought-after perk. |
Allowances | Employers commonly provide meal subsidies or vouchers, learning and development budgets, and statutory per diems for business travel. |
Bonuses | Performance-related and annual bonuses are widespread, though they are determined by the employer rather than mandated by law. |
Thirteenth or fourteenth salary | Lithuania does not require a thirteenth or fourteenth salary, so any such payment is purely discretionary. |
Working Hours and Overtime in Lithuania
Working time is regulated firmly under employment law in Lithuania, and accurate record-keeping is mandatory.
Item | Rule |
Standard workweek | The standard is 40 hours per week and eight hours per day across a five-day week. |
Maximum hours | Total working time, including overtime, must not exceed 12 hours per day or 60 hours per week. |
Overtime limits | Overtime may not exceed 8 hours in seven consecutive days, or 12 hours with the employee’s written consent. The maximum average working time of 48 hours per week must not be exceeded. Work schedules generally must not exceed 52 hours within each seven-day period, with exceptions such as additional work or on-call arrangements. |
Overtime pay | Overtime is paid at 1.5 times the regular rate, two times for night or rest-day work, and 2.5 times for work performed on public holidays. |
Flexible and remote work | Remote and hybrid arrangements are legal and increasingly common, and eligible employees may request remote work that the employer must reasonably consider. |
Leave and Statutory Time Off in Lithuania
Lithuania provides generous statutory leave, much of which is income-replaced through Sodra. The table below summarizes the main entitlements.
Leave type | Details |
Paid annual leave | Employees working a five-day week receive at least 20 working days of annual leave. Employees working a six-day week receive at least 24 working days. Employees under 18, employees raising a child, under 14 or a disabled child under 18, as a single parent, and employees with disabilities receive 25 working days for a five-day week or 30 working days for a six-day week. |
Additional leave for long service | Employees with more than 10 years of continuous service at the same workplace receive three additional working days. They receive one additional working day for each subsequent five years of continuous service. |
Sick leave | The employer pays sickness benefit for the first two calendar days of illness at 62.06% to 100% of the employee’s average salary. From the third day, Sodra pays sickness benefit at 62.06% of compensatory earnings, subject to eligibility rules. |
Maternity leave | Mothers receive 126 calendar days, taken as 70 days before and 56 days after the birth, paid at 77.58% of the average wage through Sodra. |
Paternity leave | Fathers are entitled to 30 calendar days of paternity leave, which may be split into two parts and used before the child turns one. Sodra pays the paternity benefit at 77.58% of compensatory earnings. |
Parental (childcare) leave | Childcare benefit may be selected until the child is 18 months or 24 months old, with different Sodra benefit rates and non-transferable months for each parent. Employers should distinguish between labor-law leave rights and Sodra benefit-payment rules. |
The full list of public holidays in Lithuania is as follows.
- New Year's Day (January 1)
- Day of Restoration of the State of Lithuania (February 16)
- Day of Restoration of Independence of Lithuania (March 11)
- Easter Sunday (April 5)
- Easter Monday (April 6)
- International Labor Day (May 1)
- Mother's Day (May 3)
- Father's Day (June 7)
- St. John's Day, also known as Midsummer or Joninės (June 24)
- Statehood Day, marking the coronation of King Mindaugas (July 6)
- Assumption Day (August 15)
- All Saints' Day (November 1)
- All Souls' Day (November 2)
- Christmas Eve (December 24)
- Christmas Day (December 25)
- Second Day of Christmas (December 26)
Hiring and Onboarding Process in Lithuania
- The employer should first choose an engagement model, deciding between establishing a local entity such as a private limited company or partnering with an Employer of Record that hires the worker on the company's behalf.
- A foreign company that hires directly must register with the State Tax Inspectorate (VMI) for tax purposes and with the State Social Insurance Fund Board (Sodra) as an employer before payroll can run.
- The employer must draft a written employment contract in Lithuanian that complies with the labor code and includes all mandatory terms.
- The employer must submit the electronic hiring declaration (the 1-SD form) to Sodra no later than one day before the employee's first working day.
- The employer should collect onboarding documents, including identification, bank account details, and the employee's application for the non-taxable income amount.
- For onboarding success, the employer should set up compliant payroll, provide a workplace safety induction, confirm any remote or hybrid arrangement in writing, and explain how social insurance and health coverage work.
Work authorization is relevant when hiring non-Lithuanian and non-EU/EEA nationals. EU citizens generally do not need a work permit to work in Lithuania. Third-country nationals generally need the appropriate residence and/or work authorization, with the Migration Department and Employment Service involved depending on the route and applicable exception.
Termination and Notice Periods in Lithuania
Ending employment must follow the labor code precisely, and the requirements depend on the reason and the employee's length of service.
For dismissal on the employer’s initiative without employee fault, such as redundancy or certain organizational reasons, the general notice period is one month. If the employment relationship has lasted less than one year, the notice period is two weeks. These notice periods are doubled for employees who have less than five years left until old-age pension age and tripled for employees who have less than two years left until old-age pension age. Notice periods are also tripled for employees with disabilities.
- Valid reasons for dismissal include employee misconduct, poor performance, economic or organizational grounds, the liquidation of the business, mutual agreement, and the natural expiry of a fixed-term contract.
- For employer-initiated termination without employee fault, severance is generally two average monthly remunerations, or half of one average monthly remuneration if the employment relationship has lasted less than one year. Termination at the employer’s will is a separate labor code ground and requires at least six months’ average remuneration as severance. Fixed-term employees whose contracts lasted more than two years may also have a separate severance entitlement when the contract expires.
- Pregnant employees and employees raising children under three have special dismissal protections; employers should verify any exception before issuing notice or termination.
Useful Resources
Disclaimer: This article is provided for informational purposes only and should not be relied on as legal advice or used as a substitute for advice from qualified legal counsel.
