Lithuania Employment Law & Compliance Guide for Employers
Key employment laws in Lithuania: business implications
Employment in Lithuania is governed mainly by the Darbo kodeksas [Labour Code], in force since July 2017. Foreign employers are often surprised that most social insurance (19.5%) is withheld from the employee’s pay while the employer adds only about 1.77–3.75%, that from 2026 salaries are taxed at three progressive rates (20%, 25% and 32%), and that most non-EU hires now go through the Migration Department rather than the Employment Service. This page summarises the core employer rules for 2026 with official sources.
Lithuania employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | EUR 1,153 gross a month and EUR 7.05 an hour in 2026. The Government has approved EUR 1,245 a month and EUR 7.61 an hour for 2027, an 8% increase. | Ministry of Social Security and Labour – Minimum monthly wage to increase in 2027 |
| Standard working hours | 40 hours a week. Including overtime, work may not exceed 12 hours a day, 60 hours in any 7 days or 48 hours a week on average. Overtime is capped at 8 hours per 7 days (12 with written consent) and 180 hours a year. | State Labour Inspectorate – Maximum working time and minimum rest time |
| Overtime pay | At least 1.5 times regular pay for overtime and night work, 2 times for work on an unscheduled rest day or a public holiday and for overtime at night or on a rest day, and 2.5 times for overtime on a public holiday. | State Labour Inspectorate – Remuneration |
| Paid annual leave | At least 20 working days on a 5-day week (24 on a 6-day week). Employees under 18, single parents of a child under 14 (or a disabled child under 18) and disabled employees get 25 working days (30 on a 6-day week). | State Labour Inspectorate – Minimum annual paid leave |
| Public holidays | 16 public holidays, including 1 January, 16 February, 11 March, Easter Sunday and Monday, 1 May, 24 June, 6 July, 15 August, 1–2 November and 24–26 December, plus Mother's and Father's Day (Sundays). The working day before a holiday is 1 hour shorter. | Labour Code (Darbo kodeksas), Art. 123 – e-TAR register |
| Sick leave | The employer pays the first 2 days of each sickness at 62.06%–100% of the employee's average pay. From day 3, Sodra (the State Social Insurance Fund) pays the sickness benefit. | Ministry of Social Security and Labour – Social insurance benefits |
| Maternity and parental leave | Maternity leave is 126 calendar days (70 before and 56 after birth), paid by Sodra. Fathers get 30 calendar days of paternity leave. Either parent may take childcare leave until the child turns 3, with a Sodra benefit for part of it. | Ministry of Social Security and Labour – Social insurance benefits |
| Probation period | Up to 3 months, agreed in writing in the employment contract. From 1 November 2026, up to 6 months for employees paid at least twice the national average wage. During probation either party may end the contract with 3 working days' notice. | Labour Code (Darbo kodeksas), Art. 36 – e-TAR register |
| Notice period | Dismissal without employee fault: 1 month, or 2 weeks if employed under 1 year; longer (doubled or tripled) for protected groups such as parents of children under 14, disabled employees and those near pension age. Employees resign with 20 calendar days' notice. | Labour Code (Darbo kodeksas), Arts. 55 and 57 – e-TAR register |
| Severance pay | Dismissal without employee fault: 2 months' average pay (half a month's pay if employed under 1 year), plus a long-term employment benefit from Sodra after 5+ years. Dismissal at the employer's will: at least 6 months' average pay. | Labour Code (Darbo kodeksas), Arts. 57 and 59 – e-TAR register |
| Employer social contributions | 1.77%–3.03% of gross pay for indefinite contracts and 2.49%–3.75% for fixed-term contracts, depending on accident-risk group. Includes 0.16% each for the Guarantee Fund and Long-term Employment Fund. Capped at 60 average wages (EUR 138,729 in 2026). | PwC Worldwide Tax Summaries – Lithuania, other taxes (reviewed October 2026) |
| Employee social contributions | 19.5% of gross pay, withheld by the employer, including 6.98% health insurance. Pension and other social insurance stop at 60 average wages a year (EUR 138,729 in 2026); only the 6.98% health contribution applies above it. | PwC Worldwide Tax Summaries – Lithuania, other taxes (reviewed October 2026) |
| Income tax on salaries | Withheld monthly by the employer. From 1 January 2026: 20% on annual income up to EUR 83,237 (36 average wages), 25% up to EUR 138,729 (60 average wages) and 32% above. A tax-exempt amount (NPD) reduces tax for lower earners. | PwC Worldwide Tax Summaries – Lithuania, taxes on personal income (reviewed October 2026) |
| Mandatory bonuses and 13th-month pay | None required by law. The contract must state a monthly salary or hourly rate; extra pay for difficult conditions or higher workload is set by collective agreement or contract. | State Labour Inspectorate – Remuneration |
| Work permits for foreign nationals | Most non-EU workers need a temporary residence permit for work handled by the Migration Department. Since 1 January 2025 the Employment Service issues work permits only for seasonal work and for workers posted by non-EU companies. | Employment Service (Užimtumo tarnyba) – Hiring a non-EU citizen |
| Employment contract requirements | Must be in writing, in Lithuanian (and, for foreign workers, also in a language they understand). Notify Sodra with form 1-SD before work starts; for foreigners also file the LDU notice at least one working day before the start date. | Employment Service (Užimtumo tarnyba) – Hiring a non-EU citizen |
Filter by primary service relevance
Employer obligations in Lithuania, topic by topic
A compliant hire starts with the contract
Working time is capped across the day and week
Annual leave is counted in working days
Employees must receive at least 20 working days of paid annual leave for a five-day week or 24 for a six-day week. Public holidays are additional and do not reduce the leave balance.
A fixed-term contract might become open-ended
register the hire Before day one
Skilled roles must be paid above minimum wage
Pay Salary on time and Show breakdown
The right to Work for foreign nationals
Contractors or Employees? On Independent Work
Key employment laws in Lithuania and official sources
- Labour Code (Darbo kodeksas), Law No XII-2603 of 14 September 2016, in force since 1 July 2017 — Core rules on contracts, probation, working time, pay premiums, leave, notice and severance.
- Government Resolution No 700 of 16 October 2025 on the minimum monthly and hourly wage — Sets the 2026 minimum wage of EUR 1,153 a month and EUR 7.05 an hour.
- Law on State Social Insurance (Valstybinio socialinio draudimo įstatymas) — Sets employer and employee social insurance contributions and the 60-average-wage ceiling.
- Law on Sickness and Maternity Social Insurance — Governs sickness, maternity, paternity and childcare benefits paid by Sodra.
- Law on Personal Income Tax (Gyventojų pajamų mokesčio įstatymas) — Sets payroll withholding, the 20%/25%/32% rates from 2026 and the tax-exempt amount.
- Law on the Legal Status of Foreigners (Įstatymas dėl užsieniečių teisinės padėties) — Governs visas, temporary residence permits for work, EU Blue Cards and work permits for non-EU nationals.
FAQs: hiring employees in Lithuania
Can a foreign company hire employees in Lithuania without a local entity?
Only with local registrations. An employer must be registered with Sodra and the State Tax Inspectorate to file the 1-SD notice before each hire and the monthly payroll and contribution reports. Most foreign companies do this through a Lithuanian subsidiary or branch. The alternative is an Employer of Record, which employs the staff through its own Lithuanian entity and runs payroll, contracts and permits.
How much does an employee cost in Lithuania on top of gross salary?
About 1.77%–3.03% on top of gross pay for an indefinite contract, or 2.49%–3.75% for a fixed-term contract, depending on the accident-risk group. The employee’s 19.5% social insurance and income tax of 20%–32% are withheld from gross. Employer contributions stop at 60 average wages a year (EUR 138,729 in 2026).
What is the minimum wage in Lithuania in 2026?
EUR 1,153 gross a month and EUR 7.05 gross an hour in 2026, set by Government Resolution No 700 of 16 October 2025. The monthly minimum may be paid only for unqualified work; collective agreements can set higher minimums. The Government has approved EUR 1,245 a month and EUR 7.61 an hour for 2027.
How much notice and severance does an employer owe when dismissing an employee in Lithuania?
For dismissal without the employee’s fault, notice is 1 month (2 weeks if employed under 1 year), longer for protected groups, and severance is 2 months’ average pay (half a month’s pay under 1 year). Employees with 5+ years’ service also receive a long-term employment benefit from Sodra. Dismissal at the employer’s will needs 3 working days’ notice and at least 6 months’ pay.
Can a company hire a foreign national in Lithuania, and what permit is needed?
Yes. Most non-EU workers need a temporary residence permit for work, handled by the Migration Department, and the employer files the LDU notice on foreign workers at least one working day before they start. Since 2025 the Employment Service issues separate work permits only for seasonal work and for staff posted by non-EU companies. EU and EEA citizens need no permit.
Is it risky to engage contractors instead of employees in Lithuania?
Yes, if the work has the features of employment. When a person works personally under your direction, to a schedule and for regular pay without an employment contract, the State Labour Inspectorate can treat it as illegal work and fine the company. Back contributions and tax can also be assessed. Use civil or service contracts only for independent, result-based work.
Related NNRoad resources for Lithuania: Employer of Record in Lithuania · Payroll in Lithuania · Hiring foreign employees in Lithuania · Contractors and on-demand talent in Lithuania · Lithuania employer cost calculator
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Regulation Updates in Lithuania
Discover the latest employment and compliance updates in Lithuania — helping you stay ahead in a changing regulatory landscape.
Amendments to the Labour Code regarding pay transparency and equal pay
What it is: Amendments to the Labour Code introducing pay transparency requirements, including establishing or updating pay systems, and monthly payroll data reporting to the State Social Insurance Fund, with public disclosure of average pay by gender for certain employers, effective from 2027-01-01.
What it changes: Employers must establish or update their pay systems and begin providing payroll and wage data to the State Social Insurance Fund monthly. In addition, certain employers must publicly disclose average pay by gender. These payroll obligations take effect on 2027-01-01.
Who is affected:
- Employers required to maintain pay systems and report payroll data to the State Social Insurance Fund
- Employers subject to public disclosure of average pay by gender for certain entities
What employers should do:
- Ensure there is a pay system in place or update the existing system
- Set up processes to provide payroll and wage data to the State Social Insurance Fund on a monthly basis
- Prepare for the public disclosure of average pay by gender for applicable employers, to comply once the obligation begins
Notes: Effective month: 2027-01.
Amendments to the Labour Code regarding the Pay Transparency Directive
What it is: The amendments to the Labour Code introduce pay transparency requirements and payroll data reporting obligations related to the Pay Transparency Directive.
What it changes: Employers must publish pay information and submit payroll and working time data to Sodra, creating new payroll reporting and pay-transparency obligations. The changes take effect in 2026-06.
Who is affected:
- Employers
What employers should do:
- Prepare to publish pay information as required.
- Set up processes to submit payroll and working time data to Sodra.
Notes: Effective month: 2026-06.
Age-Friendly Workplace Guidelines
What it is: The Ministry of Social Security and Labour has published and disseminated the Age-Friendly Workplace Guidelines to promote hiring, retention and workplace adaptation measures for workers aged 50+.
What it changes: This provides national guidance for employers on age-friendly practices, effective February 2026, focusing on support for workers aged 50+ in hiring, retention and workplace adaptations.
Who is affected:
- Employers
- Workers aged 50 and older
What employers should do:
- Refer to the Age-Friendly Workplace Guidelines for guidance on hiring, retention and workplace adaptation measures.
- Consider applying age-friendly practices as part of workforce planning and workplace arrangements.
Notes: Effective month: 2026-02.
Sep 2025: Sodra pension payment calendar (September 2025) – Lithuanian Social Benefits Schedule
Sodra pension payment calendar (September 2025) – Lithuanian Social Benefits Schedule
Update first published on NNRoad in Sep 2025. The current rules are summarised in the sections above.