On the basis, that the new Labour Code is already adopted, the employers should review the documents of the company and amend them according to the provision of the new Labour Code. Therefore, we would like to advice that the following documents of the company should be updated:

(a)     Employment Contracts;
(b)     Work Regulations.

Employment Contracts

All the employment contracts should be reviewed if there are any conditions which could conflict with the new Labour Code, e.g.: compensation for non-competition during the employment contract, period for annual holidays, etc.

Work Regulations

According to the new Labour Code, there is no straight obligation to have this document in the company. However, if the employer reaches to protect interests of his own and the employees, the Work Regulations are necessary in the company. Please be noticed that the following information should be updated in the Work Regulations:
-         the plan of work results improvement;
-         the procedure of election of work council;
-         the existing salary payment system, which should indicate all categories of employees, payment forms, wage rate (maximum-minimum), bonus appointment procedures;
-         the list of the administrative workers;
-         the removal of disciplinary actions and establishment of the procedure of appointment remarks and reprimands;
-         the systems of documents submission to the employees using electronic means;
-         other information.
Leinonen would like to shortly describe the main changes in the Labour Code, therefore in the table below you can find the most important provisions, which will be changed.

TILL 31st OF DECEMBER 2016

FROM 1st OF JANUARY 2017

1.     TYPES OF THE EMPLOYMENT CONTRACT

Types

(i)       non-term employment contract;
(ii)     fixed term employment contract;
(iii)   remote work employment contract;
(iv)   additional work employment contract.
(i)         non-term employment contract;
(ii)        fixed-fee employment contract;
(iii)       temporary work employment contract;
(iv)        zero-hour employment contract;
(v)         employment contract for project work;
(vi)        job-sharing employment contract;
(vii)       employment contract with several employers;
(viii)       apprenticeship employment contract;
(ix)         seasonal work employment contract.

1.1. FIXED TERM EMPLOYMENT CONTRACT

Duration term

-         5 years.

-         2 years (with several exceptions where the maximum duration is 5 years).

Notice period for expiration

-         no notice period.

-       5 working days (work relation lasts more than 1 year);
-         10 working days (work relation lasts

more than 3 years).

Compensation

-         no compensation.

-         upon expiration of fixed-term contracts exceeding 2 years, employees will be entitled to severance compensation in amount of 1 average monthly salary (hereinafter – AMS).

For the permanent positions

-         can not be concluded (unless other laws or the collective agreement allowed).

-         fixed-term contracts for permanent positions can be concluded but they must not exceed 20% of all employment contracts concluded at the company.

1.2. TEMPORARY WORK EMPLOYMENT CONTRACT

Main touch points

-         no temporary work employment contract at the moment.

-         contract is concluded between the employer and the temporary work agency;
-         could be with or without term;
-         agency shall inform the employee of the first working day before two working days, unless the employee agrees to start work earlier.

1.3. ZERO-HOUR EMPLOYMENT CONTRACT

Main touch points

-         no zero-hour employment contract at the moment.

-         this type of employment contract allows to recruit employees without an obligation to provide them agreed working hours. Employees perform their duties only when asked by the employer, and the remuneration is paid for their actual working time. The minimum payable number of working hours is 8 hours per month. Zero-hour contracts must not exceed 10% of all employment contracts concluded at the company.

1.4. EMPLOYMENT CONTRACT FOR PROJECT WORK

Main touch points

-         no employment contract for project work at the moment.

-         only fixed-term;
-         concluded for a specific project;
-         expires upon reaching the pre-agreed results;
-         hourly/monthly salary is paid to the employee (it may be agreed to pay the additional remuneration at the end of the project depending on the successful results);
-         maximum period could be 2 or 5

years.

1.5. JOB-SHARING EMPLOYMENT CONTRACT

Main touch points

-         no job-sharing employment contract at the moment.

-        two employees can agree with the employer on sharing one job position;
-         each employee will be able to agree with other employee about the work time (according to work and rest obligations);
-         if the employment contract with one of the employee is terminated, the employment contract of the other employee is valid for one month. After one month, if a partner is not found, the contract of the latter employee may be terminated;

-         in case of termination, notice period is three business days, and a severance compensation – 0,5 of the employee’s AMS.

1.6. EMPLOYMENT CONTRACT WITH SEVERAL EMPLOYERS

Main touch points

-         no employment contract with several employers at the moment.

-         should indicate the primary employer who establishes the employee’s schedule, pays remuneration, takes care of payroll taxes and is responsible for other obligations of the employee on behalf of all employers of the contract. All other employers compensate all costs in proportion of working time to the main employer.

1.7. APPRENTICESHIP EMPLOYMENT CONTRACT

Main touch points

-         there is no apprenticeship employment contract at the moment.

-         this contract may be concluded when the employee is recruited for the purpose of acquiring skills and qualifications necessary for a certain profession. The maximum duration of the contract is six months, with several available exceptions. Other terms related to concluding the contract and its termination, reimbursement of training costs, etc. depend on whether the apprenticeship employment contract is concluded independently or in relation to a training program.

2.     TERMINATION OF THE EMPLOYMENT CONTRACT

2.1.  ON THE INITIATIVE OF THE EMPLOYER WITHOUT THE FAULT OF THE EMPLOYEE

Reasons of termination

-         only essential reasons.

-         reasons are indicated in Labour Code:
-         changes in the employer’s work organization (obligation to offer another position);
-         employee did not reach the results according to the plan of work results improvement;
-         employee refused to work under the different necessary conditions of the employment contract;
-         employee refused to work after a transfer of business;
-         court or the employer adopts a decision regarding expiration of the

employer.

Notice period

-         2 months (in special cases – 4 months).

-         1 month – standard notice period;
-         2 weeks – when the duration of employment is less than 1 year
-         double notice period - for the employee who has a child under 14 years of age or who has less than 5 years remaining until retirement age;
-         triple notice period - if the employee is disable or have less than 2

years until retirement age.

Severance pay

The employer pays:
-         from 1 to 6 employee’s AMS (depending on the duration of the employment with the company).
The employer pays:
-         2 AMS – standard severance compensation;
-         0,5 AMS – if the duration of employment is less than 1 year;
The special state fund pays:
-         1 AMS - when the duration of employment is from 5 to 10 years;
-         2 AMS - when the duration of employment is from 10 to 20 years;

-         3 AMS - when the duration of employment is 20 or more years.

2.2. DISMISSAL ON THE EMPLOYER’S WILL

Reasons and compensation

-         the employer is not able to dismiss the employee without substantial reason for termination.

-         the employer has the right to dismiss the employee with the notice period of 3 days paying compensation which shall be not less than 6 AMS. The reason for dismissal is not important, however the employer cannot terminate the employment contract for discrimination reasons, also during the pregnancy, maternity, paternity or child care leave.

2.3. UNDER THE MUTUAL AGREEMENT OF THE PARTIES

Period to make a decision

-         7 calendar days to accept the offer on termination.

-         5 working days to accept the offer on termination.

2.4. ON THE INICIATIVE OF THE EMPLOYEE WITHOUT ESSENTIAL REASONS

Notice period

-         statement shall be submitted before 14 working days to the employer.

-         statement shall be submitted before 20 calendar days to the employer.

2.5. ON THE INICIATIVE OF THE EMPLOYER ON THE FAULT OF THE EMPLOYEE

Reasons

-         the employee breached the work responsibilities 2 times per year;
-         other reasons indicated in the Labour

Code.

-         the employee breached the same work responsibility 2 times per year;
-         other reasons indicated in new Labour Code.

3.     NON-COMPETE

3.1. The Non-Competition Agreement

Main touch points

-         the Labour Code does not regulate the rules of non-compete.

-         the new Labour Code regulates that the parties could agree that after the termination of employment contract the employee will not compete with the employer for a certain time; 
-         agreements may be concluded, only with employees who have specific skills and knowledge;
-         maximum period of non-competition is two years after termination;
-         during the period of non-competition, the compensation to the employee should be at least 40% of AMS (calculated at the time of termination);

-         compensation cannot be paid during the period of the employment contract.

4.     MATERIAL LIABILITY OF THE EMPLOYEES

The Full Material Liability Agreement

-         the Labour Code allows to conclude the full material liability agreements with the employees.

-         the new Labour Code eliminates a possibility to conclude the full material liability agreements. Therefore, the employee’s liability will be unlimited under certain circumstances provided in the new Labour Code (e.g. the damage is made on purpose).

Limits of employee’s liability

-         3 AMS of the employee.

-         standard - 3 AMS of the employee;
-         damage is caused regarding gross negligence – 6 AMS of the employee;
-         in the collective bargaining agreement, the higher liability limit could be indicated, however maximum amount

could be 12 employee’s AMS.

5.     REPRESENTATION OF THE EMPLOYEES

5.1. Work Council

Establishment of the Work Council

-         the Labour Code indicates that the work council could be established on the initiative of the employees. It is not obligatory to have the work council or trade union in the company.

-         the new Labour Code regulates that in the companies with 20 or more people, the employers have an obligation to initiate an establishment of the work council in the company. The work councils in the companies should be established till 30 June 2017.

Functions

 

 

-         the employer has to inform and consult with the work council due to the following:
-         before the termination of the group of employees;
-         once a year to submit an information regarding the fixed term agreements in the company (e.g., how many employees works under the fixed term agreements, etc.);
-         on the procedure of compiling the work schedules for the employees;
-         once a year to submit an information about the salaries of the company (by the groups of profession and gender). The work council announces this information to the employees;

-         other obligations.

6.     WORKING TIME, REST TIME, PAYMENT SYSTEM

Holidays

-         28 calendar days per year of annual leave.

-         20 working days per year of annual leave (if an employee works 5 days per week);
-         24 working days per year of annual leave (if an employee works 6

days per week).

Holiday pay

-         annual leave shall be paid at least 3 calendar days before the commencement of annual leave.

-         annual leave shall be paid no later than the last working day before the commencement of annual leave.

Eve of public holidays

-         in the eve of public holidays work time shall be shortened by 1 hour.

-         no shorter work time in the eve of public holidays.

Overtime

-         overtime shall not exceed 120 hours per year.

-         overtime shall not exceed 180 hours per year, unless longer term is agreed by the collective agreement.

Pay for overtime during public holidays

-         the overtime pay during public holiday shall be at least the double rate of the hourly pay/monthly wages established for the employee.

-         the overtime pay during public holiday shall be at least double and a half rate of the hourly pay/monthly wages established for the employee;
-         for overtime during night shall be at least double rate of the hourly pay/monthly wages established for the employee.  

Working schedule

-         a five-day or six-day working week;
-         no possibility of flexible working schedule.

-         flexible working schedule for each employee. An employee may set the beginning and the end of working day.

Work from home

-         no such opportunity.

-         the opportunity to work from home for pregnant women, women who have recently given birth, employees who are taking care of children under 3 years of age, are solely raising a child under 14 years of age or a disabled child under 18 years of age. The employer must allow those employees to work from home at least one fifth of the total working time unless it would lead to excessive costs.

Minimum wage

-         no restrictions.

-         minimum wage could be paid only for unskilled labour. Unskilled labour is treated as labour which does not require professional skills.

7.     SUMMARY RECORDING OF WORKING TIME

Period

-         the duration of a reporting period may not exceed 4 months.

-         the duration of a reporting period may not exceed 3 months.

Working time schedules

-         working time schedules shall be announced not later than 2 weeks in advance.

-         working time schedules shall be announced not later than 5 working days in advance.

Pay for idle time

-         the pay for idle time which is not the employee's fault shall be paid at least two-third of the average monthly wage but not less than the minimum hourly pay approved by the Government for each idle hour.

-         if employee worked less hours than fixed time during reporting period, employer should pay a half of remuneration for these non-working hours.


To the best of our knowledge, the Lithuanian Parliament has plans to change some parts of the new Labour Code before it comes into force. There are already projects registered by the members of the Parliament, e.g., to eliminate of zero-hour employment contract, to change to severance pay regulations, etc. 

Leinonen Lithuania will inform you as soon as any changes are announced.