What does a $60,000 hire cost in Lithuania?
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Total annual employer cost
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Statutory contributions and typical benefits for an employee in Lithuania at $60,000 base salary.
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Key Takeaways for Hiring in Lithuania
- Employees are entitled to a minimum of 20 working days of paid annual leave, with additional leave possible under collective agreements or internal policies.
- Employer social contributions are relatively low, ranging from approximately 0.46% to 1.77%, depending on occupational risk classification.
- Termination rules vary by length of service, with notice periods of up to three months and mandatory severance payments in employer-initiated terminations without fault.
- Final payments must be settled on the day of termination, with severance paid in installments over up to three months where applicable, and immigration authorities must be notified when non-EU employees exit employment.
Continent
Europe
Capital
Vilnius
Currency
Euro (EUR)
Language
Lithuanian
Payroll Cycle
Monthly
Pay Date
Last working day of the month
VAT
21%
Lithuania Employment Contract Overview
Below is the core structure we use when preparing compliant employment contracts for hires in Lithuania.
Fixed-term contracts can be for a maximum of five years.
What Do You Need To Include In A Lithuanian Employment Contract?
Here’s what you need to include to stay compliant when drafting an employment contract in Lithuania.
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- Contract duration
- Working hours
- Probation and notice conditions
- Termination provisions
- The location of the workplace (company, institution, organization, or department)
- The employee’s job responsibilities (profession, specialty, qualifications, or specific duties)
- Compensation details (pay structure, salary amount, and payment procedure)
Payroll
Average employer cost
1.77% – 2.49%
| Category | Details |
|---|---|
| Time-Based Employees | Monthly |
| 13th Salary | Not mandatory; subject to employer discretion |
| Avg employer tax | 1.77% – 2.49% |
Tax Breakdown
Employer Contributions
| Category | Rate / Details |
|---|---|
| Social Security Contributions | 1.77% of gross salary (standard rate); not capped |
Employee Contributions
| Category | Rate / Details |
|---|---|
| Social Security Contributions | 19.5% on income up to €126,532/year. 6.98% on income exceeding €126,532/year. |
Personal Income Tax (PIT)
| Category | Rate / Details |
|---|---|
| 20% | on annual income up to €126,532 |
| 32% | on annual income exceeding €126,532 |
Corporate Income Tax
| Category | Rate / Details |
|---|---|
| Standard Rate | 16% (increased from 15% as of January 1, 2025) |
| Reduced Rate | 6% for small enterprises with fewer than 10 employees and annual revenue not exceeding €300,000 |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 21% |
Mandatory Employee Benefits in Lithuania
Employment of expats is supported in Lithuania.
| Benefits | Provider | Funded Through | Notes |
|---|---|---|---|
| Health Insurance | Government | Payroll Contributions | Covers medical treatment, hospitalization, and certain preventive care through Lithuania’s national health system. |
| Pension/Social Security | Government | Payroll Contributions | Provides retirement pensions, disability pensions, and survivor benefits. This includes the mandatory state pension and an optional second-pillar funded pension scheme. |
| Other Statutory Benefits | Government | Payroll Contributions | Includes several mandatory protections:
|
Leave And Holiday Entitlement In Lithuania
Annual Leave
Employees are entitled to 20 working days of paid annual leave, or 24 working days if they work a six-day schedule. Employees with long-term continuous service or those in specific job categories may qualify for additional leave.
Employment contracts, collective agreements, or internal policies may also grant longer leave periods.
Public holidays that fall during annual leave do not count toward the employee’s leave balance, and employees must receive their average pay during annual leave.
During the first year of employment, annual leave is generally granted after six months of continuous service.
In subsequent years, leave timing is determined either by a schedule set in a collective agreement or by mutual agreement between the employer and employee.
Certain groups, such as employees returning from maternity leave, have the right to choose when to take their annual leave.
Employees may split their annual leave into multiple periods, but at least one portion must last a minimum of 10 working days.
Payment in lieu of annual leave is generally prohibited, except when employment ends or when the employee chooses not to take the leave.
Public Holidays
Lithuanian labour law recognizes the following paid public holidays:
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January 1 – New Year’s Day
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February 16 – Day of Restoration of the State of Lithuania
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March 11 – Day of Restoration of Lithuania’s Independence
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Easter Sunday and Easter Monday
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May 1 – International Labour Day
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First Sunday of May – Mother’s Day
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First Sunday of June – Father’s Day
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June 24 – Rasos (Midsummer) and St. John’s Day
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July 6 – Statehood Day (Coronation of King Mindaugas)
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August 15 – Assumption Day
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November 1 – All Saints’ Day
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December 24 – Christmas Eve
-
December 25 and 26 – Christmas Days
Sick Leave
For the first two days of illness, the employer must pay a sickness allowance equal to 80% to 100% of the employee’s average monthly wage.
From the third to the seventh day, the State Social Insurance Fund pays 40% of the employee’s average monthly salary. From the eighth day onward, the benefit increases to 80% and continues until the employee recovers or is deemed unfit for work.
A medical certificate issued by a doctor is required to confirm the illness, and the employee must notify the employer of the absence and its expected duration.
Maternity Leave
Pregnant employees are entitled to 70 calendar days of maternity leave before childbirth and either 56 calendar days, or 70 calendar days in cases of difficult delivery or multiple births, after childbirth.
During maternity leave, employees receive benefits from the State Social Insurance Fund, typically equal to their full salary within statutory limits.
If the employee chooses not to take leave before childbirth, the benefit is paid for 56 days after birth, or 70 days in cases of complications or multiple births.
Paternity Leave
Under the Labour Code of the Republic of Lithuania, fathers are entitled to 30 calendar days of paternity leave. This leave may be taken continuously or split into two separate periods of 15 days, at any time until the child turns 12 months old.
During paternity leave, employees receive benefits from the State Social Insurance Fund equal to 77.58% of their compensatory income, subject to legal limits.
Other Types of Leave
-
Parental Leave:A parent, grandparent, legal guardian, or other relative caring for a child may take up to two months of childcare leave, which can be used in parts, until the child reaches 18 or 24 months of age.
This leave is non-transferable, and both parents cannot take childcare leave at the same time.
The State Social Insurance Fund pays a child-raising benefit after maternity leave ends and continues until the child turns 12 or 24 months old. The benefit equals 100% of salary for one year, or 70% for two years.
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Adoption Leave: Employees who adopt a child are entitled to three months of childcare leave.
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Caretaker Leave: Employees are entitled to unpaid leave for the period recommended by a healthcare institution when caring for an ill family or household member. Employers must also grant leave in urgent family situations, such as illness or accidents that require the employee’s direct involvement.
Termination and Offboarding in Lithuania
Lithuania provides defined procedures for how employment must end. Below is a breakdown of the notice rules, severance entitlements, and documentation required for compliant offboarding.
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | Yes |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
Lithuania Employee Resignation
Notice
Form
Written.
Notice period
An employee who intends to resign must provide the employer with written notice at least 20 working days in advance.
Payment in lieu of notice or notice waiver
The employee may agree with the employer to shorten or waive the notice period. The employer cannot unilaterally require payment in lieu unless mutually agreed.
End-of-Service Benefits
Severance/Gratuity
Generally, employees who resign voluntarily are not entitled to statutory severance pay. Exceptions may exist under collective agreements or company internal policies.
Other Benefits
-
Employees are entitled to payment of their salary up until termination and for unused annual leave (Labour Code, Article 161).
-
Any contractual bonuses or accrued benefits payable under company policy should be settled on the final pay date.
Termination Documentation
-
The employer must provide a written confirmation of the termination and a final calculation of wages, unused leave, and other owed benefits.
-
Employees may request a work record certificate (Darbo knyga equivalent) documenting employment dates, position, and type of work performed.
Employer Termination With Cause in Lithuania
Acceptable grounds
Grounds for terminations with cause include repeated neglect of duties, serious breaches of work discipline, or failure to improve after prior disciplinary actions within the last 12 months.
Valid grounds for such termination must directly relate to the employee’s qualifications, skills, or behavior, and must be documented in detail.
Notice
Form
Written notice is required.
Notice period
No notice period is required when terminating for cause due to serious employee fault (Labour Code, Article 58).
Payment in lieu of notice or notice waiver
Not applicable.
End-of-Service Benefits
Severance
Employees terminated for cause are generally not entitled to statutory severance pay unless a collective agreement states otherwise. Any company-specific severance is subject to internal policies or collective agreements.
Other Benefits
-
Employees are entitled to payment for unused annual leave accrued until the termination date (Labour Code, Article 161).
-
Any earned wages up to the termination date must be paid in full.
Termination Documentation
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Written notice of termination specifying the grounds for dismissal.
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Final calculation of wages, unused leave, and other owed benefits.
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Employees may request a work certificate (employment record) documenting employment period, position, and type of work performed.
Employer Termination Without Cause in Lithuania
Notice
Form
Written notice specifying the reason for termination. Under Article 61, termination by the employer can occur under several circumstances, including employee’s incompatibility.
Notice period
-
Employees with less than five years of service are entitled to a one-month notice period.
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For employees with five to 10 years, the notice period is two months
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For employees with more than 10 years of service, the notice period is three months.
Payment in lieu of notice or notice waiver
The employer may mutually agree with the employee to shorten or waive the notice period; otherwise, the employee works through the notice period and receives regular pay.
End-of-Service Benefits
Severance
Mandatory severance pay applies under certain conditions:
-
For employees with less than 12 months of service, the severance pay is equal to 1 month’s average wage.
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Employees who have served between 12 and 36 months are entitled to two months’ average wages.
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For those with 36 to 60 months of service, the severance pay increases to three months’ average wages.
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Employees with 60 to 120 months of continuous service receive four months’ average wages.
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Those who have served between 120 and 240 months are entitled to five months’ average wages.
-
For employees with over 240 months (20 years) of service, the severance pay is capped at six months’ average wages.
If a collective agreement or internal company policy provides more generous benefits, those apply.
Other Benefits
-
Payment for unused annual leave accrued up to the termination date (Labour Code, Article 161).
-
Any earned but unpaid wages, bonuses, or contractual benefits.
Termination Documentation
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Written notice of termination specifying the reason.
-
Final calculation of wages, unused leave, severance, and other owed benefits.
-
Work certificate or employment record confirming period of employment, position, and type of work performed.
Mutual Termination Agreements in Lithuania
A mutual termination agreement is a voluntary arrangement in which both the employer and employee agree to terminate the employment contract by mutual consent. It is regulated under Labour Code, Article 54, which allows parties to terminate the contract at any time if both agree.
Notice
Form
Written agreement signed by both parties.
Notice period
Determined by mutual agreement; there is no statutory minimum unless otherwise specified in the contract.
Waiver of notice
The parties may mutually agree to waive the notice period entirely, with termination effective on the agreed date.
End-of-Service Benefits
Severance
Severance is not mandatory unless stipulated in the contract or company policy. Any severance or gratuity is determined by the mutual agreement terms.
Other Benefits
-
Employees are entitled to payment for unused annual leave accrued until the termination date.
-
Any earned wages, contractual bonuses, or other benefits must be settled according to the agreement.
Termination Documentation
-
Signed mutual termination agreement specifying the effective termination date, any severance or benefits, and confirmation that both parties consent.
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Final payroll calculation including wages, unused leave, and any agreed benefits.
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The employee may request a work certificate or employment record confirming period of employment, position, and type of work performed.
Offboarding Process for the End of Fixed-term Contracts in Lithuania
If the Fixed-Term Contract Ends Normally
Notice
No statutory notice is required if the contract reaches its agreed end date. If the parties agree in the contract to give notice before the end, that agreement applies.
End-of-Service Benefits
Severance/Gratuity
Employees are not entitled to mandatory severance pay at the end of a fixed-term contract, unless otherwise provided in the employment contract or company policy.
Other Benefits
- Payment for unused annual leave accrued up to the end date (Labour Code, Article 161).
- Payment of any earned wages, bonuses, or contractual benefits due under the agreement.
If the Employer Terminates Early
Notice
- Written notice must be provided to the employee.
- Notice period follows the same rules as indefinite contracts.
End-of-Service Benefits
Severance/Gratuity
Mandatory severance may apply if the early termination is not due to employee fault, based on length of service, similar to indefinite contracts (Labour Code, Article 123).
Other Benefits
- Payment for unused annual leave accrued until termination.
- Payment of earned wages, contractual bonuses, or other benefits.
- Any other benefits provided under internal company policy or collective agreements.
Final Payment Timing & Immigration and Visa Compliance in Lithuania
Final Payment Deadline
Upon terminating an employment contract, Lithuanian law mandates that employers must settle all financial accounts with the departing employee on the day of dismissal. This immediate settlement includes payment for any wages due, compensation for unused annual leave, and any other amounts owed under the employment contract.
In cases where the employee is entitled to severance pay, the law stipulates that this payment must be made in equal installments over a period not exceeding three months from the day of dismissal. Employers are obligated to make these payments at least once a month, providing a steady source of income for the employee during their initial period of unemployment.
Penalty
Failure to make timely payment can result in administrative fines imposed by the State Labour Inspectorate, and the employee may claim the outstanding amounts through the courts. Employers are legally required to provide a final payslip detailing all payments and deductions, and ensure all social security contributions and taxes are reported and remitted to Sodra and the State Tax Inspectorate.
Visa and Immigration Compliance
- For non-EU/EEA employees, the employer must notify the Migration Department if the employee’s work contract is terminated before the visa or residence permit expires.
- Employees on work permits or visas lose the right to work once the employment contract ends; they may need to apply to extend their permit, switch to a different employer, or leave Lithuania within the period allowed by the Migration Department.
Supporting Guides
Frequently Asked Questions
How does severance pay work in Lithuania?
For employer-initiated terminations without fault, severance scales with tenure: one month’s average wage (under 12 months service), two months (12-36 months), three months (36-60 months), four months (60-120 months), five months (120-240 months), and six months maximum (over 240 months/20 years). If your collective agreement or company policy is more generous, those terms apply instead.
Do I have to pay everything on the termination day?
Yes. Wages, unused leave, and other amounts must be settled on the day of dismissal. But severance pay specifically is different: you pay it in equal installments over up to three months from dismissal, with payments at least once per month. This gives the employee steady income during their initial unemployment period.
Why do employees give less notice than employers?
Employees resigning give 20 working days’ written notice. But when you terminate without cause, notice depends on the employee’s tenure: one month (under five years), two months (five to 10 years), or three months (over 10 years). Lithuanian law protects employees from sudden job loss by requiring longer notice periods based on their investment in your company.
How is sick leave payment split?
You pay 80-100% of average monthly wage for the first two days. From day three to seven, the State Social Insurance Fund pays 40% of average monthly salary. From day eight onward, the state fund increases payment to 80% until recovery or the employee is deemed unfit for work. The employee must provide a medical certificate.
What’s the difference between 20 and 24 working days of annual leave?
Employees get 20 working days for a standard five-day work week, or 24 working days if they work a six-day schedule. The entitlement scales to the working pattern. Contracts, collective agreements, or internal policies may grant longer periods beyond these minimums.
How much is paternity leave paid?
Fathers get 30 calendar days of paternity leave (taken continuously or split into two 15-day periods until the child turns 12 months old). The State Social Insurance Fund pays 77.58% of compensatory income during this leave, subject to legal limits, not the full salary that applies to some other benefits.
