Hiring in Lithuania is straightforward enough, but ending employment is a different matter. The Lithuanian Labour Code governs every termination, and there’s no at-will employment here. Whether you’re letting someone go for performance reasons, closing a role, or parting ways by mutual agreement, you’ll need to follow specific procedures for notice, severance, and final pay. This guide covers what you need to know as an employer in 2026.
Termination framework in lithuania
All employment terminations in Lithuania are governed by the Lithuanian Labour Code. This applies to every employer with staff in the country, regardless of where your company is headquartered. The Code sets out mandatory requirements for notice periods, severance pay, and procedural steps depending on the grounds for termination. You can’t contract out of these protections, and a termination that doesn’t follow the correct process can be challenged before a Lithuanian labour court.
Types of termination
The rules that apply to a termination depend heavily on how and why employment ends. Lithuania recognises several distinct categories, each with its own obligations.
Employer termination without cause
This is the most common scenario when you’re ending employment for business reasons rather than employee misconduct. Examples include role elimination, restructuring, or redundancy. Notice periods and severance both apply, and the amounts scale with how long the employee has worked for you. The specific figures are covered in the sections below.
Termination for cause (serious fault)
Where an employee has committed a serious breach of their duties or engaged in gross misconduct, you can terminate without serving a notice period and without paying mandatory severance. However, you’ll need to follow a proper disciplinary procedure before acting. The bar for “serious fault” is high and needs to be documented. Cutting corners on procedure can expose you to a successful challenge, even if the underlying conduct was genuinely serious.
Mutual termination agreement
If both you and the employee agree to end the employment relationship, notice periods and severance amounts are whatever you both agree on. There are no mandatory minimums to meet in a mutual termination. This route is often the cleanest when you want certainty on both sides, and it can avoid disputes later.
Employee resignation
When an employee resigns, they’re required to give 20 working days’ written notice. There’s no mandatory severance obligation on your part unless a collective agreement in place at your organisation provides otherwise.
Fixed-term contract expiry
A fixed-term contract ends naturally at the conclusion of the agreed term, with no notice or severance required for the expiry itself. Worth noting: the Sodra (social insurance) employer contribution rate for fixed-term contracts is 2.49%, compared to 1.77% for permanent contracts, so there’s a cost difference to factor in when deciding which type of contract to use.
Probation period termination
Either party can terminate during probation with just 3 working days’ written notice. Probation in Lithuania can last up to 3 months.
Notice periods
Notice requirements for employer termination without cause depend on how long the employee has been with you:
- Under 5 years of service: 1 month’s notice
- 5 to 10 years of service: 2 months’ notice
- Over 10 years of service: 3 months’ notice
These are minimums under the Labour Code. You can always give more notice, but you can’t give less. For terminations for cause (serious fault), no notice period is required, provided the disciplinary process has been followed correctly.
Severance pay
Mandatory severance applies when you terminate employment without cause. The amount is based on the employee’s total length of service and is calculated as a multiple of their average monthly wage:
- Under 12 months: 1 month’s average wage
- 12 to 36 months: 2 months’ average wage
- 36 to 60 months: 3 months’ average wage
- 60 to 120 months: 4 months’ average wage
- 120 to 240 months: 5 months’ average wage
- Over 240 months: 6 months’ average wage (maximum)
Severance can be paid in instalments over a period of up to 3 months, but payments must be made at least monthly. There’s no requirement to pay it all in one lump sum on the final day, though the full amount must be committed to.
Terminations for cause and mutual agreements don’t carry mandatory severance obligations. For mutual agreements, severance is whatever the parties negotiate and agree in writing.
Final payments
Regardless of how employment ends, all outstanding amounts owed to the employee must be settled on the day of dismissal. This includes accrued wages, any unused holiday pay, and applicable severance. Don’t wait until the next regular payroll cycle. The Labour Code is explicit on this point, and late payment of final wages can trigger additional claims.
Termination of non-EU/eea employees
If you employ a non-EU/EEA national in Lithuania and their employment ends before their visa or work permit expires, you’re required to notify the Migration Department. This obligation applies whenever the employment ends ahead of the permit’s scheduled end date, regardless of the reason for termination. Failing to notify can result in regulatory penalties, and it’s an easy compliance step to miss if you don’t have a local process in place. Make sure whoever handles your HR operations in Lithuania has this notification built into the offboarding checklist.
How an EOR manages terminations in lithuania
For companies without a Lithuanian legal entity, managing a compliant termination is operationally complex. You need to apply the right notice period for the employee’s tenure, calculate severance against their service history and average wage, settle all final payments on the last day, and handle immigration notifications where relevant. Each step needs to be done in the right order and documented correctly.
An Employer of Record (EOR) takes on the legal employer role in Lithuania, which means termination compliance sits with them, not you. If you’re new to the model, it’s worth understanding how EOR arrangements work before you hire. When evaluating providers, look for EOR services with demonstrated in-country expertise and a clear, documented termination process.
To see how RemotePass handles compliant terminations in Lithuania, book a demo at https://www.remotepass.com/request-demo.
