Navigating employment termination in any country requires a thorough understanding of local labor laws to ensure compliance and mitigate risks. In Lithuania, the Labor Code sets out specific requirements that employers must follow when ending an employment relationship, whether initiated by the employer or the employee, or occurring under other circumstances. Adhering to these regulations is crucial for lawful and smooth transitions.
Understanding the nuances of notice periods, severance entitlements, valid grounds for dismissal, and the required procedures is essential for employers operating in Lithuania. Failure to comply can lead to legal challenges, financial penalties, and reputational damage. This guide provides an overview of the key aspects of employment termination in Lithuania as they apply in 2025.
Notice Period Requirements
The required notice period for terminating an employment contract in Lithuania depends primarily on the grounds for termination and the employee's length of service. Standard notice periods apply unless otherwise specified by law or a collective agreement.
For employer-initiated termination on grounds related to the employee's fault or circumstances beyond the employer's control (e.g., redundancy), the standard notice period is typically one month. However, this period can be shorter or longer in specific situations.
| Employee Category / Grounds for Termination | Standard Notice Period |
|---|---|
| Termination due to employee's fault (e.g., gross violation of duties) | Shorter period (often 3 working days) |
| Termination due to circumstances beyond employer's control (e.g., redundancy) | 1 month |
| Employees with less than 1 year of service (redundancy) | 2 weeks |
| Employees with 1-3 years of service (redundancy) | 1 month |
| Employees with 3-5 years of service (redundancy) | 2 months |
| Employees with 5+ years of service (redundancy) | 3 months |
| Employees close to retirement age (redundancy) | 2 months |
| Single parents raising a child under 14 or disabled child under 18 (redundancy) | 2 months |
| Employees with a disability (redundancy) | 2 months |
| Termination during probation period (employer or employee) | 3 working days |
| Employee resignation (standard) | 2 weeks |
| Employee resignation (valid reason, e.g., illness, employer breach) | Shorter period (often 3 working days) |
Notice must be provided in writing. The notice period begins on the day following the delivery of the written notice. During the notice period, the employee is generally entitled to their regular salary and benefits.
Severance Pay Calculations and Entitlements
Severance pay is typically required in Lithuania when an employment contract is terminated on grounds not related to the employee's fault, such as redundancy or the employer's bankruptcy. The amount of severance pay is calculated based on the employee's length of service with the employer.
The standard severance pay calculation is based on the employee's average monthly salary.
| Employee's Length of Service | Severance Pay Entitlement (in average monthly salaries) |
|---|---|
| Less than 1 year | 0.5 |
| 1 - 3 years | 1 |
| 3 - 5 years | 2 |
| 5 - 10 years | 3 |
| 10 - 20 years | 4 |
| 20+ years | 5 |
In addition to the employer-paid severance, the employee may also be entitled to a payment from the Long-Term Employment Benefits Fund, provided they have been employed for at least 5 years. This fund payment is calculated separately and is typically equivalent to one average monthly salary for 5-10 years of service and two average monthly salaries for 10+ years of service.
Severance pay is generally not required when the termination is due to the employee's fault or by mutual agreement, unless the mutual agreement explicitly includes a severance provision.
Grounds for Termination
Employment contracts in Lithuania can be terminated based on various grounds specified in the Labor Code. These grounds can be broadly categorized:
Employer-Initiated Termination
- With Cause (Employee's Fault):
- Gross violation of work duties (e.g., intoxication at work, theft, disclosure of confidential information).
- Repeated minor violations of work duties after disciplinary measures have been applied.
- Failure to achieve performance targets or unsatisfactory work results, provided the employee was given sufficient time and opportunity to improve.
- Without Cause (Circumstances Beyond Employee's Fault):
- Redundancy (elimination of the position or reduction in workforce).
- Employer's bankruptcy or liquidation.
- Employee's long-term inability to work due to health reasons (if exceeding a specified period).
- Entry into force of a court judgment or administrative act preventing the employee from performing their work.
Employee-Initiated Termination
- Standard Resignation: Employee gives notice (typically 2 weeks).
- Resignation for Valid Reason: Employee can terminate with shorter notice (often 3 working days) if there is a valid reason, such as illness preventing work, employer's breach of contract, or other important personal circumstances.
Termination by Other Grounds
- Mutual Agreement: The employer and employee agree in writing to terminate the contract under mutually agreed terms.
- Expiration of Fixed-Term Contract: The contract ends automatically on the specified date.
- Termination by Court Decision: A court orders the termination.
Procedural Requirements for Lawful Termination
To ensure a termination is lawful, employers must strictly follow specific procedural steps, particularly for employer-initiated dismissals. The exact procedure varies depending on the grounds for termination.
General Steps for Employer-Initiated Termination (e.g., Redundancy)
- Identify Valid Grounds: Ensure a legally recognized ground for termination exists.
- Provide Written Notice: Deliver a written termination notice to the employee, clearly stating the grounds for termination and the effective date (considering the required notice period).
- Consult with Employee Representatives (if applicable): In certain cases, consultation with the works council or trade union may be required, especially for collective redundancies.
- Offer Alternative Positions (if applicable): For redundancy, the employer may be required to offer suitable alternative positions within the company if available and the employee is qualified.
- Issue Termination Order: Prepare a formal internal order or document confirming the termination.
- Calculate and Pay Final Dues: Calculate and pay the employee's final salary, accrued unused vacation pay, and any applicable severance pay on the last day of employment.
- Issue Employment Documents: Provide the employee with necessary documents, such as a certificate of employment.
Additional Steps for Termination Due to Employee's Fault
- Investigate the Misconduct: Conduct a thorough investigation into the alleged violation.
- Request Employee's Explanation: Provide the employee with an opportunity to provide a written explanation for their actions. This step is mandatory.
- Consider Employee's Explanation: Review the employee's explanation before making a final decision.
- Issue Disciplinary Order: If terminating for fault, issue a written order detailing the violation and the decision to terminate.
Common pitfalls include failing to provide proper written notice, miscalculating notice periods or severance pay, failing to follow required consultation procedures, or terminating without sufficient evidence of employee fault.
Employee Protections Against Wrongful Dismissal
Lithuanian law provides significant protections to employees against unfair or unlawful termination. Employees who believe they have been wrongfully dismissed can challenge the termination through the Labor Disputes Commission or the courts.
Key protections and potential consequences of wrongful dismissal include:
- Requirement for Valid Grounds: Termination must be based on grounds explicitly permitted by the Labor Code.
- Procedural Compliance: Strict adherence to notice periods, documentation, and consultation requirements is mandatory.
- Protection for Specific Categories: Certain employee categories, such as pregnant women, employees on parental leave, or employees with disabilities, may have enhanced protection against dismissal or require specific procedures.
- Remedies for Wrongful Dismissal: If a termination is found to be unlawful, the Labor Disputes Commission or court may order:
- Reinstatement: The employee is returned to their former position.
- Compensation: The employer may be ordered to pay the employee compensation for the period of forced absence, typically calculated based on their average salary, and potentially additional compensation for non-pecuniary damage.
- Change of Termination Basis: The grounds for termination may be changed to a different, lawful basis.
Employers must maintain clear documentation throughout the employment relationship and termination process to demonstrate compliance with the law and defend against potential claims of wrongful dismissal. Seeking legal counsel or utilizing an Employer of Record service can help ensure all procedures are correctly followed.
