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End of Employment in Lithuania

Employee Termination Procedures & Guidelines in Lithuania

Termination procedure

In Lithuania, companies must follow a standard procedure to properly dismiss an employee, which includes a grievance procedure, valid reason, notice and severance pay (if the employee is not at fault) according to tenure.

There are different types of dismissal:

  • Termination by mutual agreement between the employer and the employee
  • Termination at the employer’s initiative
    • When the employee is at fault (gross misconduct)
    • When the employee is not at fault (ordinary dismissal)
      • Changes to the company’s structure make the role redundant.
      • The employee is not reaching their targets and results after setting up an improvement plan.
      • The employee does not agree to changes made to their employment contract.
      • The employee does not agree to continue working after a full or partial transfer of business.
      • Company’s liquidation.
    • At employer’s will
  • Employee resignation
    • Without valid reasons
    • Due to valid reasons
  • Termination without the will of the parties
  • The end of a fixed-term contract, as agreed on the contract

The most common and preferred termination procedure is by mutual agreement, which should be concluded in writing and detail the terms and conditions agreed by the parties. If the termination is not done in writing, the employer bears the burden of proof in the event of a dispute. Employees should always be informed of the employment termination in writing, detailing the legal and factual reasons for the termination and the date it takes effect. If any dispute ever arises, the employer must have proof of the reason the employee was dismissed.

Termination must be documented and communicated in writing, including the length of the notice period to be served. Employers must inform SODRA of the employment termination by submitting the 2-SD form within one working day of termination. Employees should be paid for any outstanding remuneration and compensation for unused holidays, including severance, by the last day of employment. Delayed payments incur a daily interest equal to the employee’s proportionate average salary, to be awarded to the employee.

Employees who believe their rights have been violated can bring the case to the Labour Dispute Commission within three months (in case of wrongful suspension, termination — within one month). If the employer is found to not have followed the correct termination procedure, the employee may be awarded their remuneration for the entire period between dismissal and the court’s decision. If the court considers it reasonable, the employee may be reinstated at their previous job. In addition, they are also entitled to compensation for any non-economic damages. If the employee is not reinstated, they are entitled to one average monthly salary for every two years of continuous employment with the company, capped at six average monthly salaries.

Disciplinary procedure

The Lithuanian Labour Code sets out the disciplinary procedure that companies must follow before firing an employee. To be dismissed, the employee must have been guilty of repeated misconduct and have been previously issued a warning about it in the preceding year. Employers must act on it no later than one month after they are made aware of the misconduct and no later than six months after the misconduct takes place. In case the employee has made a gross breach of working duties, the employment contract can be terminated immediately (after the employee is given a possibility to explain the breach).

Companies dealing with a disciplinary action should follow these steps:
1. Tell the employee about their misconduct.
2. Request in writing an explanation from them about the misconduct, setting a reasonable deadline for it.
3. Consider the explanation that the employee has provided. If the deadline passes without the employee’s responding to the employer’s request, the employer may proceed with the termination.
4. After considering the employee’s explanation, the employer may choose to act on it by giving them another chance or by proceeding with the termination. This decision must be communicated to the employee in writing, and the employee must sign it.

The employee should be presented with warning letters. The letters should include the legal and factual reasons for dismissal and the date it takes effect.

Resignation

There is no formal procedure for resignation. However, it is common for employees to first speak to their managers about their decision and then submit a dated letter restating their desire to leave the company. Employees must respect the notice period provided in the Labour Code (i.e., 20 calendar days), but they do not need to provide the company with their reason for leaving.

If the employee is resigning for an important reason, they need to notify the employer five working days in advance. According to the Labour Code, the employee is entitled to a severance payment in such a case.

Redundancy

Terminations are considered collective if the employer initiates dismissals, within any 30 days, of

  • 10 or more employees for companies with 20 – 99 employees,
  • no less than 10% of employees for a company with 100 – 299 employees,
  • 30 or more employees for companies with at least 300 employees.

Before the redundancy can take place, companies must consult with the employees’ representatives and inform the Employment Service office in writing about their plans to make employees redundant.

Notice period

The standard notice period when terminating an agreement without an employee’s fault is one month. The notice period is shortened to two weeks for employees who have been employed for less than one year. Employees five years away from retirement age are entitled to a notice period of double the length.

The following categories of employees benefit from a notice period three times longer:

  • Employees raising children under the age of 14
  • Employees raising disabled children under the age of 18
  • Disabled employees
  • Pregnant employees
  • Employees two years away from retirement

Fixed-term employees are entitled to a different notice period of five working days if they have been employed for one year, and ten working days if they have been employed for at least three years.
Employers and employees can agree to provide the employee with pay in lieu of serving their notice period.

Severance

Employees who are dismissed at no fault of their own by their employers or when the agreement is terminated by the employee due to important reasons are entitled to severance pay according to the length of employment:

  • Employed for less than one year: one average monthly salary or 50% of an average salary (depending on termination grounds)
  • Employed for more than one year: two average monthly salaries

When the employment contract is terminated based on the employer’s initiative and without the employee’s fault, the employee is also entitled to receiving a long-time employment benefit from SODRA. The benefit is calculated according to the employee’s terms of employment.

Fixed-term employees who have their employment terminated are entitled to one average monthly salary if they have been working for the company for at least two years.

When the employment agreement is terminated based on the employer’s will, the employee is entitled to a severance payment of their six monthly average salaries.

Employee termination protection

During the following circumstances, employers cannot fire employees of certain categories, except for gross misconduct:

  • Employees on maternity, paternity, and parental leave
  • Employees called up for military services
  • Pregnant employees: from the moment the company is made aware of the pregnancy via the submission of the medical certificate until the child reaches four months of age
  • Employees raising children under the age of three: except in cases where the employee doesn’t accept to be part of the business transfer or where the company is liquidated

Employees exercising their rights such as being part of a trade union representative body, attending a case against the employer, filing grievance against the employer or for discriminatory reasons cannot be terminated based solely on these grounds.

Unemployment funds

Employees who lose their job may be entitled to the government’s unemployment benefit if they satisfy the following criteria:

  • Have been employed for at least 12 months in the last 30 months
  • Made contributions to the social security system during the employment
  • Are currently unemployed and of working age, actively seeking work and not rejecting employment offers, and having the “unemployed” status
  • Not pursuing full-time education

The unemployment benefit is paid for up to nine months, until the employee starts a new job. The allowance is made up of a fixed part and a variable sum. The fixed part is 23.27% of the minimum monthly wage (€149.39) plus the variable sum of 38.79% of the average monthly insured income of the individual for the first three months, 31.03% for the next three months, and 23.27% for the following three months. The benefit is capped at 58.18% of the average national wage.

This page was last updated on 
22 September, 2022,
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