Lithuania

The peculiarities of the Lithuanian labour market

Each labour market has some peculiarities. It may be tricky for foreigners to fully understand the payment methods, taxes and other related benefits. In TalentUp, we are starting a series of different blog articles, one for each country. This article analyses the Lithuanian labour market.

General data about the Lithuanian labour market

Payroll taxes in Lithuania

Social Security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.

Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries. 

Contingencies from self-employees

There are two ways to deduct expenses from income sourced from self-employment under an individual activity certificate: 

• deduct expenses actually incurred and documented; or 
• deduct 30% of the generated income (without documentation). 

Example of net salary in Lithuania

As a reference, we use the average salary of a software engineer. In Lithuania, software engineers earn an average of 41,400 € per year.

The employer contributes 732,78€ to social security, and the employee contributes 8,073€.

After paying the income tax, the employee has a net salary of 26,661.60€, coming from a gross salary of 41,400€. 

Unemployment regulation in Lithuania

Regarding employment regulations in Lithuania, it’s worth noting that the standard notice period for all employees who have worked for at least one year is 30 days. For those with less than one year of service, the notice period is reduced to two weeks.

In terms of severance pay, an employee who has worked for up to 12 months is entitled to receive one month’s salary. On the other hand, if an employee has worked for 20 years or more, they are entitled to six months’ salary as severance pay.

While probationary periods are not mandatory under Lithuanian law, it’s common practice for employers to impose a probationary period of three months for new hires.

Different kinds of leaves in Lithuania

The annual paid leave is 20 days, with three extra days if the employee has worked for the employer for more than 10 years. One day extra for each five-year worker after that.

There are 16 paid public holidays. The working day before a public holiday is shorter by one paid hour.

The first two days of illness are paid at 62.06% – 100% by the employer. From the third day on, the National Social Insurance Fund (SODRA) will pay 62.06% of the average salary. The sick pay is only paid for working days. Should an employee take time off from work to care for a patient, they will be entitled to a payment of 65.94% paid directly by SODRA.

Paid parental leave

Maternity leave lasts for 126 days at 77.58% of the employee’s standard rate of pay. The minimum maternity leave is 240 euros.

Maternity leave can be extended for 2 weeks in the case of multiple or complicated births.

Paternity leave lasts for 30 days during the first 3 months after birth. It is also at a 77.58% rate.

Parental leave for up to one year is also available. It is at 100% during the first year, 70% in the second year, and 40% after that.

Other common Lithuanian benefits

How to employ a Lithuanian worker

The main work authorization categories are the EU Intra-Company Transferee (ICT) Permit, suitable for transfers of managers, specialists, and trainees, and issued for up to three years; and the EU Blue Card, ideal for highly skilled local hires, and issued for up to three years.​