1. SOURCES OF EMPLOYMENT LAW
Employment law in the Republic of Lithuania is mainly based upon the following sources, set out in order of priority:
2. PRINCIPAL INSTITUTIONS
The principal institutions in charge of regulation and monitoring of the employment relationships are:
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3. ROLE OF NATIONAL COURTS
There are no courts of special jurisdiction to examine employment disputes. The courts of general jurisdiction (regional courts, district courts, the Court of Appeals and the Supreme Court) are competent to hear disputes arising out of private employment contracts and collective agreements. Claims of employees of state or municipal administrative institutions are subject to the competence of the district administrative courts and the Highest Administrative Court.
The Supreme Court of Lithuania develops a uniform court practice in the interpretation and application of employment laws and related legal acts. The interpretation of laws in the rulings, published in the Bulletin of the Supreme Court, shall be taken into consideration by courts, state and other institutions as well as by other legal and natural persons when applying employment laws in daily practices.
4. EMPLOYMENT STATUS AND CATEGORIES OF WORKER
The differences between employed and self-employed status shall be assessed on a case-bycase basis, however, the essential elements of being an employee are:
The legal rights enjoyed by and applicable to employees and self-employed persons differ widely. Generally, the employment guarantees provided to the employees by employment laws and collective agreements are not applicable to the self employed workers, ie the self-employed workers cannot invoke the dismissal protection, are not entitled to minimum annual leave, redundancy payment, sick pay, parental/maternity leave, etc.
The main categories of employees are:
All Lithuanian and foreign nationals employed by domestic companies must enter into an employment contract. This requirement does not apply to members of the board and supervisory bodies, unless they perform duties prior to taking office. Therefore, the appointment and removal of a director are regulated by the company law and not by the employment law.
In contrast to members of the board and supervisory bodies, a managing director is usually seen as an employee of the company and shall enter into an employment contract with the company. A managing director shall normally enjoy all employment rights applicable to ordinary employees of the company, with the exception of certain employment protections against dismissal.
5. CONTRACT
An employment contract is the agreement between the employee and the employer whereby the employee undertakes to perform work of a certain profession, speciality, qualification or to perform specific duties in accordance with the work regulations established at the workplace, whereas the employer undertakes to provide the employee with the work specified in the contract, to pay him/her the agreed salary and to ensure working conditions as set in labour laws, the collective agreement and by agreement between the parties.
An employment contract must be made in writing and shall be deemed concluded at the time the employer and employee agree on the employee’s place of work, duties to be performed and the remuneration. If a written contract has not been signed, the employee has the right to request one. However, if at least one party has started to perform the agreed duties, an oral agreement shall have the same force as a written contract.
Generally, employment contracts are required to comply with a model form established by the law.
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The terms of employment derive from the employment contract. In addition to the express terms that the parties have agreed in the employment contract, some terms are directly implied by the law, eg a minimum notice period, redundancy payment, minimum annual leave, etc. The employment contract may not establish terms less favourable to the employee than employment conditions set forth under the law and the express contractual terms which reduce the protected rights shall be void. In addition, the terms of a binding collective agreement may supersede any conflicting terms of employment contract.
6. TERMS AND CONDITIONS
Except for the terms governing the employee’s place of work, duties to be performed and the remuneration, there are no other terms which, on a mandatory basis, must be included in the employment contract. Additional clauses dealing with a trial period, the date of commencement of work, job title, intervals at which remuneration is paid, non-competition and confidentiality are usually included in the employment contracts.
The Labour Code provides for a normal daily working time of eight hours and a weekly normal working time of 40 hours. Maximum working time, including overtime, must not exceed 48 hours per seven working days. The duration of working time of specific categories of employees (of health care, care (custody), child care institutions, specialised communications services and specialised accident containment services, etc) as well as of watchmen in premises may be up to 24 hours per day. The duration of working time of such employees must not exceed 48 hours per seven-day period, and the rest period between working days must not be shorter than 24 hours. For employees employed in more than one undertaking or in one undertaking but under two or more employment contracts, the working day may not be longer than 12 hours.
Night work and working on public holidays are prohibited, except in specific circumstances. Overtime is only permitted in specific situations provided by the Labour Code. Overtime work shall not exceed for each employee four hours in two consecutive days and 120 hours per year. Employees working overtime are entitled to overtime pay.
The minimum annual paid vacation leave is 28 calendar days. Annual 35-calendar-day leave shall be granted to employees under 18 years of age, employees who, as single parents, are raising a child under 14 or a disabled child under 16 and disabled persons. Extended annual leave up to 58 calendar days shall be granted to certain categories of employees whose work involves greater nervous, emotional and intellectual strain and professional risk, as well as to those employees who work in specific working conditions.
Annual leave for the first working year shall be granted, as a rule, after six months of uninterrupted work at the company. For the second and subsequent working years annual leave shall be granted at any time of the working year in accordance with the schedule of granting annual leave. Annual leave may, at the request of the employee, be taken in installments. One installment of annual leave may not be shorter than 14 calendar days. When an employee is being dismissed from work, with the exception of cases when he is being dismissed through his/her own fault, the unused annual leave shall be granted, at his/her own request, by carrying forward the date of dismissal.
During annual leave the employee shall be guaranteed his/her average salary received at all places of employment.
7. EMPLOYEE REPRESENTATION
Codetermination within companies is established by the Law on Trade Unions, the Law on European Works Councils and the Law on Works Councils. These acts mainly establish information and consultation rights only and do not cover the right of employees to nominate representatives to corporate bodies or otherwise significantly affect corporate decision-making. Employee participation in the European Company is addressed by the Law on Employee Involvement, which transposed the EU Directive 2001/86/EC into national law.
The rules for the establishment of trade unions are set forth in the Law on Trade Unions. The trade unions may be established on the basis of professional, office, industrial, territorial or other principles that represent and protect the interests of employees. A group of trade unions, through free choice and on their own initiative, may join together to form a trade union association. The trade union’s principal function is to negotiate and conclude collective agreements, as well as to support and consult its members. The employees elected to the representative bodies of trade unions enjoy the statutory time credits to perform their duties, special protection on dismissal and periods of justifiable absence from work to perform their duties.
Where an enterprise has no functioning trade union and if the function of employee representation and protection was not transferred to the trade union of the appropriate sector of economic activity, the employees shall be represented by the works council elected by a secret ballot at the general meeting of the employees. The works council may be formed only in an enterprise in which the number of employees is not less than 20. In an enterprise with less than 20 employees, the functions of the works council may be performed by the representative of the employees to be elected at the employees’ meeting. The works council duties mainly include negotiation and conclusion of collective agreement, participation in information and consultation procedures, protection and enforcement of employees’ rights, etc. The employees elected to the works council enjoy the same benefits as those elected to the representative bodies of trade unions.
8. INFORMATION AND CONSULTATION
The employer must present all information relating to labour relations to the representatives of the employees and their organisations having regard to the level of social partnership. Information and consultation shall embrace information relating to the current and future activities of the enterprise and its economic and financial condition; information on the current state and structure of labour relations, and potential changes in employment; information about the measures application whereof is intended in case of a possible redundancy; other information connected with labour relations and activities of the enterprise, unless this information is considered a state, official or commercial secret. The precise conditions and procedure of furnishing of information and consultation shall be established in collective agreements.
The employer must in timely fashion provide free-of-charge information in writing to the employees and their representatives and shall be responsible for the accuracy of the information. Having presented a written pledge not to disclose the commercial (industrial) or professional secret, the employees or their representatives shall have the right of access to the information that is treated as commercial (industrial) or professional secret, but is necessary for the performance of their duties. Irrespective of where the employees and their representatives are located and regardless of the termination of the labour relations or expiry of the authorisation to represent they shall be prohibited from using not for the purpose or from disclosing to third persons the information considered as commercial (industrial) or professional secret that has come to their
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knowledge. The employer may refuse in writing to furnish information deemed as commercial (industrial) or professional secret, where such information due to its character would be or could be very detrimental according to objective criteria to the undertaking or its activities. Disagreeing with the decision of the employer (employers’ organisation) the employee or the employees’ representative may apply to the court within one year.
In connection with the transfer of undertakings employers are obliged to inform and consult employees’ representatives (or, if there are no representatives, the employees themselves) of the date or proposed date of the transfer, the reasons for the transfer, the legal, economic and social implications of the transfer for the employees and any measures envisaged in relation to the employees. The information must be given not later than 30 days before the transfer and in any event in ‘reasonable time’ before the transfer is carried out.
In the event of reduction in the number of employees or cessation of the operations of a business entity, the employer must, two months in advance, notify in writing the territorial labour exchange and the municipal institution when the employer intends to make redundant within 30 calendar days:
The information on contemplated reduction in the number of employees should be submitted to the representatives of employees (eg trade unions or works councils) seven days in advance of the notifications to state/municipal authorities.
The aforementioned notification should not be interpreted as a requirement to obtain a relevant approval; however, failure to initiate consultations may constitute a violation of regulatory prerequisites and form a legal basis for reinstatement claims.
9. EQUAL OPPORTUNITIES
The main laws implementing the EU directives on race, disability and sexual orientation discrimination are the Law on Equal Treatment, the Law on Social Integration of the Disabled and the Labour Code, the latter establishing the general principle of equality of subjects of labour law, irrespective of race, sexual orientation and other grounds unrelated to the employee’s professional qualities, and provides that a valid ground for termination of employment relations may not be sexual orientation, race, etc.
The Law on Equal Treatment prohibits any direct or indirect discrimination based on age, sexual orientation, disability, racial or ethnic origin, religion or beliefs. The law defines the forms of discrimination, establishes and regulates the obligation of state and municipal institutions and other entities to implement equal treatment, lays down provisions on the violation of equal treatment, regulates control and supervision of the implementation of the law entrusting such supervision to the Office of Equal Opportunities Ombudsman, etc.
The Law on Social Integration of the Disabled ensures equal rights and opportunities of the disabled in society, establishes principles of their social integration, describes the system and conditions of such integration, establishes institutions implementing social integration of the disabled, lays down provisions on the establishment of the level of disability and ability to work, regulates professional rehabilitation services, provides for the principles of the establishment and satisfaction of specific needs, etc.
The Criminal Code establishes criminal sanctions for discrimination based on race, nationality, sex, origin, religion or other group subordination, namely, for actions intended to prevent a certain group of persons or a person on the said discriminative grounds from or restrict their/his/her participation on equal grounds in political, economic, social, cultural, occupational or other activities; and also criminalises public provocation of such discrimination.
9.2 Equal treatment of parents
Women shall be entitled to maternity leave: 70 calendar days before childbirth and 56 calendar days after childbirth (in the event of a complicated confinement or birth of two or more children – 70 calendar days). This leave shall be added up and granted to the woman as a single period, regardless of the days used prior to the confinement. The employees who have adopted newly born babies or who have been appointed as their guardians shall be granted leave for the period from the date of adoption or guardianship before the baby is 70 days old.
Fathers are entitled to a paternity leave for the period from the birth date until the baby is 30 days old. The paternity benefit will amount to 100 per cent of the compensated salary amount.
Parental leave before the child has reached the age of three shall be granted, at the choice of the family, to the mother/adoptive mother, the father/adoptive father, the grandmother, the grandfather or any other relatives who are actually raising the child also to the employee who has been recognised the guardian of the child. The leave may be taken as a single period or be distributed in portions. The employees entitled to this leave may take it in turn. A maternity allowance paid until a child reached the age of one year will amount to 100 per cent of the compensated salary amount.
Unpaid leave may be provided at the employer’s request to:
The employees raising a child with disabilities before he/she has reached the age of 18 or two children before they reach the age of 12 shall be granted an additional day of rest per month or their weekly working time shall be shortened by two hours; the employees who are raising three or more children before they reach the age of 12 shall be entitled to two additional days of rest per month or their weekly working time shall be shortened by four hours and shall be paid the average salary.
10. DISCIPLINE AND TERMINATION
10.1 What rules/procedures must be followed if an employer wishes to discipline an employee?
The Labour Code distinguished two types of disciplinary violations: breach of labour discipline and a gross breach of work duties. Breach of labour discipline is a non-performance or improper performance of labour duties through the employee’s fault. A gross breach of work duties is a breach of labour discipline involving gross violation of the provisions of laws and other legal acts which directly regulate the employee’s work, or any other gross transgression of work duties or the prescribed work regulations (eg disclosure of professional, commercial or technological secrets or communicating them to a rival enterprise; violation of equal opportunities or sexual harassment of colleagues, subordinates or customers; absence from work throughout the day/shift without any substantial cause; etc).
A disciplinary sanction shall be imposed immediately after a breach of discipline is disclosed but not later than within one month after the date when the breach was disclosed, with the exception of time when the employee was not available at work due to illness, posting or on leave, and where criminal proceedings against him/her were instituted – not later than within two months from the termination of the criminal proceedings or from the date when
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the court judgment became effective. A disciplinary sanction may not be imposed after a lapse of six months from the date when the breach was committed. Where a breach of labour discipline was disclosed during an audit or when taking inventory of pecuniary or other assets, a disciplinary sanction may be imposed not later than within two years after the date of the commission of the breach.
Before imposing a disciplinary sanction the employer must request the employee in writing to provide an explanation in writing about the breach of labour discipline. A disciplinary sanction shall be imposed by an order/instruction of the employer or the administration and the employee shall be served a notice of it against his signature.
10.2 What disciplinary action may be taken?
The Labour Code provides the following disciplinary sanctions which may be imposed for breaches of labour discipline:
When imposing a disciplinary sanction account must be taken of the gravity of the disciplinary breach and its consequences, the degree of the employee’s guilt, the circumstances under which the breach occurred, the previous performance at work. Only one disciplinary sanction may be imposed for each breach of labour discipline.
Where, during one year after the date when a disciplinary sanction was imposed, no new sanction was imposed upon the employee, it shall be regarded that the employee has had no sanctions. Where the employee keeps working diligently and conscientiously, the sanction imposed on him/her may be lifted before the term of the sanction expires.
10.3 What are the grounds on which employment contracts can be terminated (by both employer and employee)?
An employment contract of indefinite duration may be terminated by either party by providing notice and complying with relevant legal procedures. In general, however, an employment contract can be terminated by several means, including mutual consent of the parties or at the initiative of one party.
The employee is not obliged to give grounds for his/her resignation. Generally, an employment contract concluded for an undefined period may be terminated on the employer’s initiative only if based on valid/sound reasons. The concept of ‘valid/sound reasons’ is not sufficiently developed in the statutory acts, however, it follows from the established case law and doctrine that only reasons related to the employee’s qualification, professional abilities and behaviour at work may be recognised as valid/sound. Employees may also be dismissed due to economic, technological reasons or structural reformation of an entity (employer). The later ground is acknowledged in conventional employment practice and allows exercising reduction of the number of employees in the business entities undergoing structural reforms. However, the reorganisation of an entity (employer), change of the ownership or the name of an entity (employer) and transfer of the business should not be regarded as a lawful reason for termination of the employment.
According to the Labour Code, the following circumstances shall not be regarded as valid reasons for termination of the employment:
10.4 What procedure must be followed?
An employee shall be entitled to terminate the employment contract of indefinite duration, as well as a fixed-term employment contract prior to its expiry by giving his employer 14 days written notice. The collective agreement may set a different period of notice, but it shall not exceed one month. An employee shall be entitled to terminate the employment contract of indefinite duration, as well as a fixed-term employment contract prior to its expiry by giving his employer three days notice before the day for submitting the application, where his request to terminate the employment contract is justified by the employee’s illness or disability restricting proper performance of work, or for other valid reasons established in the collective agreement, or where the employer fails to fulfil his obligations under the employment contract, violates laws or the collective agreement. An employee shall be entitled to terminate the employment contract of indefinite duration by giving his employer three days notice provided he is already entitled to the full old age pension or is in receipt of it. Upon the expiry of the period of notice, the employee shall be entitled to terminate his employment, whereas the employer must execute the termination of the employment contract and settle accounts with the employee.
Generally, when the employee is not at fault, the employer may terminate the employment contract at its own initiative only after giving the employee two months written notice. Certain exclusions are established with respect to ‘sensitive’ categories of employees. Thus, persons who are within five years of being entitled to full pension, minors under 18 years of age, disabled persons, women and (or) men raising children (a child) under 14 years of age must be given a written notice four months prior to the dismissal.
Pursuant to the Labour Code, the termination notice must at least specify the termination reasoning and motivating circumstances, the date of actual dismissal and the procedure for settlement with the to be dismissed employee. Receipt of termination notice should be duly and properly acknowledged by the employee in writing. It is forbidden to give a termination notice and dismiss an employee when he/she is on holiday or temporarily disabled, or he/she is recruited for military service or is on other citizen’s duties mandated by law. During the period of notice the employer must grant the employee some time off from work to seek a new job. The length of time shall not be less than ten per cent of the employee’s rate of working time during the term of notice. Time off from work shall be granted in accordance with the procedure agreed between the employee and the employer. The employee shall retain his average salary for this time
When the number of the employees is being reduced due to economic or technological reasons or because of structural reforms, the employer must, prior to giving termination notice, hold consultations with representatives of employees (eg trade unions). Such consultations should serve the purpose of avoiding or mitigating the negative effects of intended restructuring and should not be understood as a requirement to obtain relevant authorisation by representatives of employees. Conclusions of consultations should be executed by drawing up a record (signed by the employer and representatives of the representative body).
If the employer seeks to dismiss an employee who is elected to an employee representative body, it must first obtain the permission of such employee representative body. The representative body must make a decision whether or not to consent the employer’s request within 14 days from its receipt. If the representative body fails to reply to the employer within this period, the employer is entitled to dismiss the employee. An employer may contest any decision by the representative body to refuse to consent to a dismissal in court.
The employer shall be entitled to terminate an employment contract without giving the employee prior notice when the employee performs his/her duties negligently or commits
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other violations of labour discipline provided that disciplinary sanctions were imposed on him at least once during the last 12 months, and/or when the employee commits one gross breach of duties.
10.5 What indemnities must be paid?
The severance pay for the employee whose employment contract has been terminated is
calculated based on the term of employee’s working experience with the employer. Thus, the
severance pay upon termination should amount to:
• one average monthly salary if the term of experience is less than 12 months;
The employer must make a full settlement of accounts with the employee being dismissed on the day of his/her dismissal. In addition to the foregoing, the employer should compensate the employee for the holiday not taken at the date of termination of the employment contract.
10.6 What are the consequences of not having the right grounds/ following the right procedure?
If an employee is dismissed without a valid reason or in violation of the statutory dismissals procedure, the court may reinstate the employee and award average pay for the period from the day of dismissal until the day of execution of the court order. If the court holds that the employee may not be reinstated due to economic, technological, organisational or similar reasons, or because s/he might be provided with unfavourable working conditions, the employee will be awarded the statutory severance payment as well as average pay for the period from the day of dismissal until the effective date of the court order.
10.7 Special rules for protected categories
The employees that will be entitled to the full old age pension in not more than five years, persons under 18 years old, disabled persons, and employees raising children under 14 years of age may only be dismissed in extraordinary cases where the retention of the employee would substantially violate the interests of the employer.
In addition, the following categories of employees are generally not allowed to be dismissed:
In order to dismiss certain employees (eg employee representative for safety and health, employees who are elected to employee representative bodies, members of the Works Council, European Works Council or special negotiating body) prior permission of the employee representative or other bodies is required.
10.8 Special rules for fixed-term contracts
The fixed-term employment contract may be terminated prior to the expiry of its term only in extraordinary cases, if the employee cannot be transferred to another work, or, alternatively, by paying him/her the salary for the remaining part of fixed employment term.
10.9 Special rules for trial period
The trial (probation) period may not be longer than three months. During the trial period each party may terminate the employment contract by giving the other party three days written notice without severance pay.
11. COLLECTIVE DISMISSALS
11.1 Definition
The layoff qualifies as collective dismissal if the employer intends to cease operations of the business entity or make a certain number of employees redundant within a period of 30 calendar days:
11.2 Information and consultation procedure
In the event of a collective dismissal the employer must, two months in advance, notify in writing the territorial labour exchange and the municipal institution. The information on contemplated reduction in the number of employees should be submitted to the representatives of employees (eg trade unions or works councils) seven days in advance of aforementioned notifications to state/municipal authorities.
12. FORTHCOMING LEGISLATION
No important reforms of the legislation are currently under consideration.
13. USEFUL REFERENCES
13.1 Laws
www3.lrs.lt/dokpaieska/forma_e.htm
The Ministry of Social Security and Labour:
www.socmin.lt
State Labour Inspectorate:
www.vdi.lt
