Recruiting Top Talent in Lithuania

Lithuanian Top Talent

Hiring the right talent in Lithuania to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Lithuania yet. Our PEO and EOR service can be the solution for your company.

At Bradford Jacobs, we believe that the core of every business is its employees. Happy employees result in a team that aims at success and growth. However, labor regulations in Lithuania can divert from other countries and creating a compliant work contract that is satisfying for an employee as well as the company, can therefore be complex.

The Recruitment Process in Lithuania

A foreign company expanding into Lithuania does not require the assistance of a local entity to hire their employees. It is, however, vital to your recruitment efforts to know where you can find the right talent, as well as which local and international employment organizations they can collaborate with to access the right talent pools. This, however, does not come easily – and once the right employee is found, the employer must follow thorough staffing and registration procedures. These include:

• Registering employees with the State Tax Inspectorate for a Lithuanian Tax Identification Number (VMI).
• Registering with the State Social Insurance Fund Board (SODRA).
• Registering employees’ information with the Labor Inspectorate and Employment Services.
• Creating employment contracts and translating them to Lithuanian.
• Applying for employees’ work permits.
• Applying for employee’s visas or special expatriation status (if applicable)
• Calculating employees’ monthly salary and creating payslips.
• Researching for any available tax-free allowances or benefits.
• Submitting wage tax returns and national insurance forms.
• Corresponding with the involved parties (organizations, trade unions, etc.).
• Creating annual accounts, financial administration, and year-end statements.
• Creating a payment schedule for wage tax, national and social insurances, and net wages.

Legal Checks on Employees in Lithuania

The Lithuanian law follows the EU Law Constitution, which require employers to implement equal treatment in the workplace, and protect employees against discrimination based on several characteristics, such as race, nationality, gender, sexual orientation, religion, age, disability, family status or membership in political or public organizations.

This includes background checks, which are only considered fair and legal if they relate directly to a job and are necessary for reaching a decision on recruitment. Such data can only be collected directly from the candidate, following the Data Protection Directive 95/46/EC put in place by the EU. Personal data also concerning a candidate’s health falls under similar restrictions, and is only necessary for:

• Assessing a candidate’s suitability. 
• Fulfilling the employer’s health and safety obligations. 
• Establishing employees’ rights and providing welfare benefits. 

Nevertheless, employers recruiting in Lithuania may ask for the following checks (following certain conditions):

• Reference and educational checks – these checks are permissible except for reference checks from current employers – the individual’s consent is required.
• Criminal background checks – It is prohibited to perform an individual’s criminal background check, except for specific situations that are established by labor laws.

Medical checks/examinations – Medical checks are mandatory upon an employee’s hiring, as well as periodic medical checks during the validity of the employment contract for the following groups:

• Employees under 18 years old.
• Employees working at night.
• Shift workers.
• Employees whose workplace occupational risk assessment results show that there is or might be a risk to their safety or health.
• Disabled employees – checks should be performed upon hiring and each time their work conditions change.

Basic Facts on Hiring in Lithuania

• An employer’s questions during an interview are regulated and restricted by EU data legislation – they must directly relate to job specifications and requirements.
• Terms and conditions of employment in Lithuania are regulated by the Labor Code. Collective agreements and trade unions also play a vital role in work conditions, so it is best to check if your industry/sector is covered by one.
• It is obligatory for an employer to present two copies of the employment contract to the employee in writing. The contract must also be translated to Lithuanian and any other relevant language.
• The essential conditions of the employee contract (work function, wage, and place of employment) must be agreed to separately, and any changes cannot be acted upon without the employee’s written consent.
• The employer must register new employees with the 1-SD form to the Social Security Tax Office no later than one day before the employee’s first day of work.
• Employers must apply for work permits for foreign employees with the Lithuanian Labor Exchange.
• In Lithuania, payment is regulated for idle time (when an employee is not provided with work and is not at fault for this time).
• The standard length of work hours is 8 hours a day and 40 hours a week, but this can be altered according to the type of employment contract and work.
• Employers must at least meet the minimum wage (currently at EUR 642), but the average monthly salary can differ according to the industry and sector.
• Overtime is permitted but must not exceed 48 hours within 7 days, and employees are compensated with a one and half hourly pay bonus.
• Employers are obligated to with-hold and pay employees’ personal income tax and social security contributions monthly. 
• The standard notice period for employee termination is 1 month – if the employee has been working under a year, the notice period is 2 weeks.
• The Lithuanian Labor Code establishes that a probation period must be at about 3 months, but this may be specified in the employment contract.