Lithuania

Employment agreements in Lithuania formalize the relationship between employers and employees, outlining the employee's duties, workplace regulations, remuneration, and other vital employment conditions. The Lithuanian Labour Code governs these agreements, specifying various types to suit different employment needs.

Standard Employment Agreements:

• Unlimited-Term Contracts: These are the most common type, offering employment with no predetermined end date. They provide stability for employees and are generally preferred.

• Fixed-Term Contracts: These contracts specify a set duration for employment, up to a maximum of five years. They can be used for temporary projects or specific needs. However, if a fixed-term contract is renewed or extended for more than two years, or a series of fixed-term contracts exceed two years in total (excluding situations where a replacement for a temporary absence is needed), it will be considered an unlimited-term contract.

• Seasonal Contracts: Applicable to jobs dependent on natural conditions, seasonal contracts last for up to eight months within a twelve-month period. These are ideal for industries like tourism or agriculture.

Special Employment Agreements:

• Temporary Employment Contracts: These are short-term agreements, valid for a maximum of two months. They are suitable for one-off tasks or peak workloads.

• Contracts for Additional Work: These allow employees to perform extra duties beyond their primary role at the same workplace.

• Secondary Job Contracts: Employees can hold secondary jobs with another employer through this agreement.

• Homeworker Contracts: These contracts are designed for employees who perform their duties from home.

• Contracts for the Supply of Personal Services: In these agreements, the employee provides personal household services directly to the employer.

Additional Notes:

• Employment contracts can include terms more favorable to the employee than those mandated by law.

• It is highly recommended to have all agreed-upon provisions documented within the employment contract.

Employment agreements in Lithuania necessitate specific clauses to ensure legal compliance and clarity. These essential elements are outlined in the Labour Code of Lithuania.

Mandatory Clauses:

• Parties to the Agreement: The employer and employee should be clearly identified, including their full names and contact information.

• Job Description: The employee's job title, duties, and responsibilities should be detailed to provide a clear understanding of expected work performance.

• Place of Work: The primary work location should be specified.

• Working Time: The agreed-upon work schedule should be outlined, including regular working hours, overtime regulations, and rest periods.

• Remuneration: The employee's salary or wage structure should be clearly defined, including the amount, payment frequency, and any additional compensation details.

• Start Date of Employment: The official commencement date of the employee's work should be specified.

• Term of Employment: The contract should indicate whether it is unlimited, fixed-term, or seasonal.

• Leave: Leave entitlements, including annual leave, sick leave, and other forms of paid or unpaid leave, should be outlined.

Optional, But Often Included Clauses:

• Probationary Period: If applicable, the length and terms of the probationary period for assessing suitability should be defined.

• Confidentiality: Clauses protecting confidential business information or intellectual property should be included if necessary.

• Non-Competition Clauses: These clauses, restricting post-employment activities, are enforceable with limitations.

• Termination: The grounds and procedures for contract termination by either party should be specified.

• Benefits: Any additional benefits offered, such as health insurance, company car, or training programs, should be detailed.

In Lithuania, the Labour Code permits employers to incorporate a probationary period in employment contracts to evaluate an employee's aptitude for the job. This trial period provides advantages for both employers and employees, but its execution is governed by specific rules.

Key Points on Probation Periods:

• Optional: Probation periods are not obligatory, and employers have the discretion to omit them.

• Maximum Duration: The probation period must not exceed three months. Periods of absence due to approved leave (sick leave, vacation) are not included in this duration.

• Purpose: The probation period serves to evaluate the employee's:

  • Competence for the assigned tasks and compliance with company standards.
  • Fit within the team and company culture.

• Employee-Initiated Assessment: Notably, the probation period can also be used, at the employee's request, to determine if the job is suitable for them.

• Termination During Probation: During the probation period, either the employer or the employee can terminate the contract with a written notice of just three business days. No severance pay is required in such instances.

• Transition to Standard Employment: If the probation period is completed without termination, the employment contract automatically converts into a standard agreement with full legal protections.

Considerations for Employers:

• Clearly define the purpose and duration of the probationary period in the employment contract.

• Establish specific performance expectations for the employee during the probation period.

• Provide sufficient training, support, and feedback to effectively evaluate the employee's abilities.

• Ensure all termination decisions during probation are based on objective criteria related to job performance and not discriminatory factors.

Considerations for Employees:

• If possible, negotiate the duration of the probation period.

• Seek clarification on the criteria used to evaluate performance during probation.

• Use the probation period to actively learn about the role and company culture.

• If the job proves unsuitable, exercise the right to terminate the contract with three days' notice during probation.

In Lithuanian employment agreements, confidentiality and non-compete clauses can be included to safeguard an employer's legitimate business interests. However, Lithuanian law imposes certain restrictions on these clauses to maintain a balance between the employer's interests and the employee's right to work.

Confidentiality Clauses (Non-Disclosure Agreements)

In Lithuania, non-disclosure agreements (NDAs) are legally binding contracts. They restrict employees from sharing confidential information obtained during their employment with unauthorized third parties.

Key Points about NDAs in Lithuania:

• Scope: NDAs should clearly define "confidential information." This can encompass trade secrets, customer lists, and specific technical information. Clauses that vaguely refer to all information as confidential are likely unenforceable.
• Reasonableness: NDAs must be reasonable in scope and duration. The restrictions should not be broader than necessary to protect the employer's legitimate interests.

Non-Compete Clauses

Non-compete clauses limit an employee's ability to work for a competitor or start a competing business after leaving the company. Lithuanian law is relatively employee-friendly regarding non-competes:

• Limited Duration: Non-compete clauses cannot exceed two years after employment terminates. This protects the employee's right to work and earn a living.
• Compensation: Employers must provide adequate monthly compensation to the employee for the entire duration of the non-compete period. The amount should be commensurate with the restrictions placed on the employee. An employee's regular salary cannot be used as compensation.

Important Note: If a non-compete clause is found to be unreasonable or not in compliance with Lithuanian law, it may be declared unenforceable by a court.