Employer of Record in Lithuania

Lithuania, one of the three Baltic states, occupies an important economic position in Northern Europe. The country has become a high-tech hub in the Baltic region, driven by biotechnology, fintech and a strong startup ecosystem.

For foreign investors, Lithuania’s growing fintech market is of particular interest. According to Invest Lituania, the country is the leading fintech hub in the European Union. Talent growth in this sector highlights a strong local talent base with deep knowledge and experience.

Lithuania’s fintech workforce is the product of intense ecosystem development since 2017. Specialists such as compliance professionals and technical teams have gained experience within a complex regulatory system. This has resulted in a deep talent pool of young, multilingual and highly competent workers. The majority of this talent pool is located in Vilnius, the capital city.

Taking advantage of this strong talent pool requires global companies to establish a local legal entity in the country. While Lithuania’s company registration process is straightforward, it requires share capital, a legal address in the country and deposits into a local business bank account. This takes time and money that companies may not want to invest when testing a market. This is when partnering with an Employer of Record provides an alternative.

An Employer of Record (EOR), like Rivermate, becomes the employer in Lithuania and handles legal compliance, global payroll, benefits administration and employment taxes. Foreign employers remain in control of the employee’s day-to-day tasks and performance management.

How an Employer of Record (EOR) Works in Lithuania

Partnering with an EOR in Lithuania follows a predictable, yet effective process. The key steps are as follows:

1. You Find Your Candidate. You recruit and select the person you want to hire in Lithuania.
2. The EOR Hires Them. The EOR legally hires the employee through a local, compliant employment contract. This contract will comply with all requirements set forth in Lithuania's Labour Code.
3. The EOR Starts Onboarding. The EOR manages all onboarding paperwork. This includes registering the employee with the State Social Insurance Fund Board (Sodra) and the State Tax Inspectorate (VMI).
4. Payroll and Benefits are Managed. The EOR processes payroll, withholds taxes, and makes social security contributions each month. They also administer employee benefits.
5. HR and Compliance are Handled. The EOR ensures you stay compliant with Lithuanian labor laws for the entire employment period.
6. You Manage Your Team. You manage your employee's daily tasks and projects directly.

Why use an Employer of Record in Lithuania

An EOR simplifies international expansion into Lithuania, removing the legal and administrative burdens of hiring abroad. The key benefits are:

• Quick Market Entry. You can hire employees in days, not the months it takes to establish a legal entity.
• Compliance Management. EORs are experts in Lithuanian labor law. They handle complex regulations so you don't have to. This avoids the risk of fines or legal issues.
• Cost Reduction. Setting up a subsidiary in a new country is expensive. An EOR offers a cost-effective alternative to hiring international talent.
• Access to Local HR Experts. EORs provide insights into local hiring practices, benefits expectations, and payroll requirements.
• Outsourced HR administration. The EOR handles all HR administration.

Interest in international employees in the Lithuanian fintech, biotechnology and startup environment has increased over the last decade. This has created greater demand within Lithuania’s labor market and given local workers opportunities to gain international experience.

The Vilnius region has the highest percentage of high-skilled employees in the country, some 62%. A number of software developers, AI specialists, data analysts, compliance specialists, QA experts and financial analysts are located in this region.

Total employment costs in Lithuania are on par with those of the other Baltic states (Estonia and Latvia). In Lithuania, average employment costs are 101% of gross salary, with most labor taxation borne by the employee. This appears to reduce employers' labor taxes, but in reality, gross salaries are higher to offset the impact on employees.

Lithuania’s employment and labor regulations are progressive and fully aligned with EU standards. The business-friendly environment is balanced with strong worker protections, which are enforced by local authorities.

Employment contracts & must-have clauses

You must provide a written employment contract in Lithuania. The contract should be in Lithuanian, or a language the employee understands. Indefinite-term contracts are standard, but fixed-term contracts are possible for temporary work.

Your employment contracts must include:

• Parties involved: Full legal names and details of both you and the employee.
• Job details: A clear description of the role and responsibilities.
• Work location: Where the employee will work, which can be a fixed address or remote.
• Start date: The official start of the employment.
• Contract duration: State if it's indefinite or a fixed term with an end date.
• Working hours: Details on the work schedule.
• Salary: The base salary and any other compensation.
• Leave: Entitlement to annual paid leave.
• Termination: Terms for ending the contract, including notice periods.

Probation periods

You can include a probation period in the employment contract.

• The maximum length of a probation period is three months.
• For fixed-term contracts shorter than six months, the probation period must be proportional to the contract's length.
• During probation, either you or the employee can end the contract with a three-day written notice.
• If you dismiss an employee during the probation period, they are not entitled to severance pay.

Working hours & overtime

The standard workweek in Lithuania is 40 hours, typically eight hours a day for five days.

Category	Details
Standard Hours	40 hours per week
Maximum Hours	Average of 48 hours per week, including overtime. Can't exceed 60 hours in a week or 12 hours in a day.
Overtime Limit	Generally 8 hours per week. Can be extended to 12 hours with written employee consent. The annual limit is 180 hours.
Overtime Pay	1.5 times the regular rate.
Night/Rest Day Overtime	2 times the regular rate for work between 10 p.m. and 6 a.m. or on a rest day.
Public Holiday Overtime	2.5 times the regular rate.

Public & regional holidays

Here are the public holidays in Lithuania for 2025:

Date	Day	Holiday
January 1	Wednesday	New Year's Day
February 16	Sunday	Day of Restoration of the State of Lithuania
March 11	Tuesday	Day of Restoration of Independence of Lithuania
April 20	Sunday	Easter Sunday
April 21	Monday	Easter Monday
May 1	Thursday	International Labour Day
June 24	Tuesday	St. John's Day (Midsummer)
July 6	Sunday	Statehood Day (Coronation of King Mindaugas)
August 15	Friday	Assumption Day
November 1	Saturday	All Saints' Day
November 2	Sunday	All Souls' Day
December 24	Wednesday	Christmas Eve
December 25	Thursday	Christmas Day
December 26	Friday	Second Day of Christmas

Hiring contractors in Lithuania

In tech-heavy countries like Lithuania, independent contractors are widely utilized. Startups, in particular, employ highly skilled consultants and technical workers to accelerate business expansion in the country.

The use of contractors in Lithuania must be carefully balanced with the compliance risks. By law, contractors are treated as self-employed individuals, not employees. Authorities focus on the actual employment relationship rather than job titles. If there is no clear autonomy on the part of the contractor, they may require you to reclassify the person and back-date salary, tax and benefit payments.

An Employer of Record (EOR) helps you avoid this risk. An EOR hires employees on your behalf, ensuring full compliance with Lithuanian labor laws. This way, you can work with talent in Lithuania without needing to set up a local legal entity or worry about misclassification.

Payroll in Lithuania is either handled in-house by the employer or outsourced to a third-party provider. The employer is responsible for ensuring that all employees earn the minimum wage of €1,153 (gross) and that statutory contributions are deducted from the employee's wages. Monthly declarations and tax remittances must be sent to the relevant authorities.

Payroll cycles & wage structure

In Lithuania, the payroll cycle is typically monthly. You must pay your employees by the 10th day of the month following the one they worked. This consistent schedule makes it easy to manage your payroll process.

The wage structure is based on a gross salary figure. From this amount, you deduct employee taxes and social security contributions. While a 13th-month bonus is not a legal requirement, performance-based bonuses are common and can be a key part of an attractive compensation package.

Overtime & minimums

The standard work week in Lithuania is 40 hours, based on an 8-hour day. Any work performed beyond these hours is considered overtime. Overtime is paid at a rate of 150% of the employee's regular pay. If an employee works overtime at night (between 10 p.m. and 6 a.m.) or on a public holiday, the rate increases to 200%.

As of January 2026, the national minimum wage is €1,153 per month.

Employer taxes and contributions

As an employer in Lithuania, you are required to contribute to social security for each of your employees. These contributions cover pensions, health insurance, and other social benefits. The rates depend on the type of employment contract.

Contribution	Rate	Notes
Social Security (Indefinite Term Contract)	1.77%	This is the standard rate for permanent employees.
Social Security (Fixed-Term Contract)	2.49%	A higher rate applies to temporary employment agreements.
Guarantee Fund	0.16%	This fund provides payments to employees in case of employer insolvency.
Long-Term Employment Fund	0.16%	This fund supports employees who have been laid off.

Employee taxes and deductions

Employees also contribute to the social security system and pay personal income tax. You withhold these amounts directly from their gross salary.

Contribution	Rate	Notes
Social Security	19.5%	This rate applies to annual income up to €126,532.
Social Security (on income above the cap)	6.98%	For income exceeding the annual cap of €126,532.
Personal Income Tax (PIT)	20%	This rate applies to annual income up to €82,962.
Higher Personal Income Tax (PIT)	25%	This rate applies to annual income between €82,962 and €138,270.
Highest Personal Income Tax (PIT)	32%	This rate applies to annual income exceeding €138,270.
Pension (Optional)	3%	Employees can choose to contribute an additional amount to a private pension fund.

In Lithuania, there are strong mandatory benefits that support the country’s focus on long-term social security and economic prosperity. Supplementary benefits such as additional private health insurance and pension contributions are becoming more popular. Companies also provide bonuses and performance incentives to attract top talent.

Statutory leave

The government sets minimum leave requirements that all employers must provide.

• Annual Leave: You are entitled to 20 working days of paid annual leave. You must take at least 10 of these days in one continuous block. Any unused days can be carried over to the next year. After you work for the same company for 10 years, you get an extra three days of leave.
• Sick Leave: If you are sick, your employer pays for the first two days of leave. They must pay you between 62.06% and 100% of your regular salary. From the third day, the State Social Insurance Fund (SODRA) pays 62.06% of your salary.
• Maternity Leave: Mothers receive 126 days of paid maternity leave. This is typically taken as 70 days before the birth and 56 days after. The social security system pays 77.58% of your regular earnings during this time.
• Paternity Leave: Fathers get 30 days of paid paternity leave. You can take this leave anytime within the first three months after your child is born. Social security pays this at a rate of 77.58% of your salary.
• Parental Leave: After maternity leave ends, one parent can take parental leave until the child is one or two years old, with benefits paid by SODRA. Each parent also has a two-month non-transferable period of paid parental leave.
• Educational Leave: After five years with the same employer, you are entitled to up to 10 days of educational leave per year for professional development, paid at half your salary.

Public holidays & regional holidays

You get paid time off for national holidays. In 2025, Lithuania observes the following public holidays:

Date	Holiday
January 1	New Year's Day
February 16	Day of Re-establishment of the State of Lithuania
March 11	Day of Re-establishment of Independence
April 20	Easter Sunday
April 21	Easter Monday
May 1	International Labour Day
May 4	Mother's Day
June 1	Father's Day
June 24	St. John's Day (Midsummer)
July 6	Statehood Day (Coronation of King Mindaugas)
August 15	Assumption Day
November 1	All Saints' Day
November 2	All Souls' Day
December 24	Christmas Eve
December 25	Christmas Day
December 26	Second Day of Christmas

Typical supplemental benefits

Companies in Lithuania offer a mix of required and extra benefits to attract and keep employees.

Statutory Benefits (Required by Law)	Non-Statutory Benefits (Common Perks)
National Health Insurance	Private Health Insurance
Social Security Contributions (Pension, etc.)	Private Pension Plans
Workers' Compensation Insurance	Additional Annual Leave
Unemployment Benefits	Flexible Working Hours
Severance Pay	Gym Memberships or Wellness Stipends
Guarantee Fund for Insolvency	Life and Accident Insurance
Paid Family and Sick Leave	Training and Development Budgets
---	Cash Bonuses

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already understands Lithuania's labor laws and common practices. We handle all the administrative work. This includes enrolling your employees in mandatory programs like social security and health insurance. We can also advise on and manage supplemental benefits that make your job offers more competitive.

Using an EOR ensures you are fully compliant with local regulations from day one. It saves you time and reduces the risk of making costly mistakes. We take care of the details so you can focus on growing your team.

Termination of employees holds a high compliance risk for employers. In Lithuania, there are strong worker protections and employers must handle the process in accordance with the Labor Code. Employers are expected to document the process and provide final settlement of wages, accrued leave, and pro rata payments.

Employers are required to give written notice for ‘no-fault’ terminations, but for dismissals for serious offences, no notice is required.

Notice periods

The notice period for an employee depends on their length of service and the reason for termination.

• Less than one year of service: The notice period is 14 calendar days.
• One year or more of service: The notice period is 30 calendar days.

Certain situations call for different notice periods:

• Probationary period: During the first three months of employment, either you or the employee can end the contract with just three calendar days of written notice.
• Employee resignation: An employee must give 20 calendar days' notice if they resign without a specific reason. If they have an important reason, the notice period is five working days.
• Termination for cause: If you terminate an employee for a serious breach of contract, you must do so within one month of discovering the issue.

Some employees have a right to a longer notice period. For example, employees close to retirement age or those raising young or disabled children may have their notice period doubled.

Severance pay

When you terminate an employee without fault on their part, you must provide severance pay. The amount depends on how long they have worked for you. In most cases, employees are entitled to up to two months of severance pay. However, for long-serving employees, this can be significantly more. For instance, an employee with 20 years of service could receive up to 36 months' pay.

You must pay all outstanding salary, compensation for unused vacation, and severance by the last day of employment. If you delay these payments, you will have to pay interest for each day of delay.

How Rivermate handles compliant exits

We make sure every termination and offboarding process is smooth and compliant. We handle all the necessary steps so you can focus on your business.

Here’s how we manage the process:

• Documentation: We prepare all the necessary written documents, including the termination notice. This notice clearly states the reason for termination and the effective date.
• Communication: We ensure clear communication with the employee throughout the process.
• Final payment: We calculate and process the final payment, including any outstanding salary, vacation pay, and severance.
• Official notifications: We handle the required notifications to government bodies, like submitting the necessary forms to SODRA (the State Social Insurance Fund Board) within one working day of termination.

By managing these details, we help you navigate the complexities of Lithuanian labor law and ensure a compliant and respectful exit for your employees.

EU citizens do not need a work permit for Lithuania, but foreign nationals will need employer sponsorship. The employer is required to apply for a work permit, either the Standard Work Permit, Blue Card Permit or Seasonal Work Permit. This process is handled by the Lithuanian Employment Services and Migration Department.

Employment visas & sponsorship realities

An Employer of Record (EOR) can be your legal employer in Lithuania and sponsor your work visa. This is a practical route if your company doesn’t have a legal entity in the country. The EOR handles the entire process, from the labor market test to dealing with the Migration Department.

Here are the key things to know:

• Sponsorship is necessary: You can't apply for a work visa as a freelancer or independent contractor. You need a confirmed job offer from a Lithuanian-registered employer.
• Local registration: The EOR must be registered with the Migration Department to sponsor foreign workers.
• Tied to the job: Your work permit is tied to your specific job with the EOR. If you change roles or employers, you may need a new permit.

For highly skilled professionals, the EU Blue Card is another option. This permit requires a university degree or at least five years of relevant experience and a job offer that meets a minimum salary threshold.

Business travel compliance

You can travel to Lithuania for short-term business without a work visa. As part of the Schengen Area, Lithuania allows business-related activities for up to 90 days in a 180-day period.

Permitted activities include:

• Attending business meetings
• Meeting with clients or colleagues
• Participating in conferences or training events

It is important to understand the limits of business travel. You cannot perform work that is part of a service contract or directly enter the local labor market. If you are being sent to work at a Lithuanian branch of your company or for a client, you will likely need a work permit. Always check with the Lithuanian embassy or immigration authorities if you are unsure about your specific activities.