Lithuania Employee Benefits

Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Lithuania might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Lithuania including local benefits. 

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. 

What Compensation Laws exist in Lithuania?

In Lithuania, compensation laws are set by the Labor Code and national legislation, but the compensation may vary according to the sector the employees are in, the regulations of the relevant collective agreements and internal regulations of the company.

For example: 

• The 13th month salary is not required to be paid, but companies may pay the salary as a yearly bonus 
• Compensation is also required for business trips that includes a flat-rate daily allowance for the employees for all days of the trip.

Lithuanian legislation also mandates employee compensation for overtime, work on weekends (depending on the job) and public holidays.

There are, however, other benefits/compensation which are guaranteed by national legislation:

• National Minimum Wage

The minimum wage was changed from EUR 607 (2020) to EUR 642 (2021). Employees must be receiving at least this amount from their employers (although this will vary according to the position and qualifications).

• Social Insurance Contributions

Employees in Lithuania are entitled to social security benefits. Social security contributions are paid monthly to the Social Security Fund (SODRA) through contributions by the employee and the employer (employee contributions are withheld by the employer). The contribution percentage varies according to the employee’s pay. Social security contributions include pension, healthcare, unemployment, and maternity/paternity.

• Notice Periods

Notice periods in Lithuania are mandatory and vary according to the termination type. For indefinite employment, the standard notice period after a year is month, and increases gradually.

• Redundancy, Termination and Severance

Employees are entitled to severance pay after the probation period is passed. If the employment period was less than a year, the employee is entitled to half a month’s payment; for over a year they are entitled to 2 months of their average salary. If the employee is dismissed to due to employer’s will, they are entitled to 6 months’ worth of their average salary.

• Work Hours and Breaks 

Average working hours is 8 hours a day, 5 days a week. Working time cannot exceed 48 hours within a 7-day consecutive period. Breaks are between 30-60 minutes in an average workday.

Social Security in Lithuania

Social security contributions is Lithuania are split according to health insurance, pensions, sickness, and maternity – these contributions are granted on an employee’s salary (which is withheld by the employer). An employer’s contribution is typically split into unemployment insurance and accident insurance. Both are paid monthly by the employer.

Employer’s social security contributions, however, can vary according to the “floor” or “ceiling” attributes:

THE SOCIAL SECURITY CONTRIBUTIONS “FLOOR” 

Companies must pay both employer and employee social security contributions for their employees whose monthly salary is lower than or equal to the national minimum wage.

THE SOCIAL SECURITY CONTRIBUTIONS “CEILINGS” 

If an employee’s income from the same employer exceeds 60 average monthly salaries, the social security contribution “ceiling” (i.e., exemption) for the employee becomes applicable. If the employment income exceeds this threshold, the employer will only have to contribute the mandatory health insurance rate (6.98%) monthly from the employee’s salary.

Contributor Social Security Contribution (%)

• Employee: 19.5
• Employer:1.77 (indefinite), 2.49 (definite)

Statutory Employer Costs in Lithuania

The National Minimum Wage: Employee wages must at least be equal to the national minimum wage of EUR 642 per month. This wage is determined upon by the Tripartite Council and the Government of Lithuania.

Statutory social security costs to be made by the employee (and in certain cases, the employer) also include these monthly contributions:

Contribution Percentage (Employers and Employee) 

• Pension 8.72%
• Maternity 1.09%
• Pension 8.72%
• Maternity 1.09%
• Healthcare 6.98%
• Sickness 2.09%