Expand your organization into Lithuania with or without a Lithuanian entity
The Eastern European nation of Lithuania is a success story of the 21st Century. Since leaving the Soviet Union in 1990 and joining the European Union in 2004, Lithuania’s economy has grown dramatically and is now one of the strongest in the region. As such, Lithuania is a popular country for foreign businesses looking to expand.
If your organization is planning an expansion into Lithuania, then you should be prepared for potential delays. The local regulations are often difficult to navigate, and the language and cultural differences can cause issues for those unfamiliar with the country and its customs.
New Horizons provides a full suite of targeted outsourcing solutions to assist organizations of all kinds with their expansion into Lithuania. We offer comprehensive professional employer organization (PEO), employer of record, and payroll services to help you expand faster and more successfully into Lithuania, without the hassle. In addition, our dedicated in-house recruitment branch can also help you to source, hire, and onboard new workers locally, even if you don’t have an entity in Lithuania.
Our services give you everything you need to start operating in the Lithuanian market, potentially saving you thousands of euros in expansion costs and getting you up and running faster.
How can New Horizons help you expand into Lithuania?
New Horizons enables your business to expand its operations into Lithuania without setting up a legal subsidiary.
Hiring in Lithuania: Employment law overview
Employment contracts in Lithuania
Employment contracts in Lithuania are usually indefinite-term, and a formal contract of employment is required for all employees. Any contracts should include all the relevant details of employment, such as salary/wage, benefits, terms of termination and severance, and so on. They should also be written in Lithuanian and use the local currency of the Euro.
Working hours in Lithuania
The standard working week in Lithuania is 40 hours, made up of five eight-hour days.
Public holidays in Lithuania
There are several annual public holidays in Lithuania, and most employees are given the day off work for them. The following are the most commonly celebrated:
Vacation leave in Lithuania
Employees in Lithuania are entitled to four weeks (20 days) of paid vacation leave each year. This leave must be taken in different parts, with a maximum of 14 days taken at a time.
Sick leave in Lithuania
Employees in Lithuania are entitled to paid sick leave from work. The first two days of absence are compensated at a minimum of 80%, covered by their employer. The third to the seventh day must be compensated at a minimum of 40% of normal pay, then the government covers any further absence at a rate of 80% of normal pay.
Employers cannot terminate an employee who is absent due to sickness for 120 days.
Parental leave in Lithuania
Employers in Lithuania are usually required to give employees 70 days of maternity before they give birth and 56 days after they give birth. Employees on maternity leave are compensated by the country’s social security scheme.
It is also possible for employees to take parental, or caregiver leave to raise a child, which is also compensated by the state.
Terminations and severance in Lithuania
Employees in Lithuania can terminate an employment contract with 14 days of written notice. Employers must provide two months of written notice. Employees terminated when not at fault cause are generally entitled to a severance payment of between one and six months of pay, depending on their length of service.
Probation periods in Lithuania can last for a maximum of three months, and the notice period is three days during this time.
Taxation in Lithuania
Employees usually need to pay a health insurance contribution of 6% of salary, and a social insurance contribution of 3%.
Employers must pay 27.98% of salaries to social insurance, as well as a health insurance contribution of 3% and a State Guarantee contribution of 0.2%.
Income tax in Lithuania is generally set at 15% or 20%, depending on income level.
Corporate tax in Lithuania is 15% for most companies.
Health coverage in Lithuania
Mandatory health insurance from employers and employees, as well as state funding, cover the public health system, so employers do not need to offer private insurance. Some employers may still choose to offer supplementary private insurance to their employees.
Lithuania compensations & benefits
Compensation laws in Lithuania
The minimum wage in Lithuania in 2020 is €607 per month for full-time workers.
Benefit management in Lithuania
Building a benefits system for your Lithuanian workforce can be difficult and complicated to navigate if you are not familiar with the country, its customs, and its employment laws. To set it up independently, it can take several weeks and potentially lead to unexpected delays.
New Horizons can simplify your Lithuania benefits management. Our Lithuania experts can handle everything for you, helping you focus on a successful expansion operation.