How to hire and pay employees in Lithuania

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Before hiring


Before hiring employees in Lithuania, there are a few important things you’ll need to know. Firstly, non-compete agreements in Lithuania cannot exceed two years. They must also include adequate monthly compensation for the entire duration of the agreement, the amount of which should be evaluated on a case-by-case basis depending on the extent of the restrictions.

It’s also important for employers to know that in Lithuania, to be eligible for paid parental leave, employees must be insured under the social security system and have a record of social security payments for at least 12 of the previous 24 months.

We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in Lithuania below.

At a glance









(based on region;
see here


1.77% TO 2.49%

of gross salary

13th / 14th SALARY


Good to know

  • Monthly salaries are generally paid around the 10th of the following month.
  • Employers can terminate an employment contract by giving a notice of three working days in exchange for a severance payment of six average monthly salaries.
  • The most common type of employment contract in Lithuania is "open-ended" employment contracts which are for an indefinite term. However, fixed-term contracts are also possible. There are various types of employment contracts that are available based on a business' needs, such as a temporary agency employment contract. In this case, the agreement is concluded between the employee and the temporary work agency with the contract being titled, "Temporary Employment Contract" even if for an indefinite amount of time.

Labor laws in


Working hours and overtime

Employees in Lithuania work eight hours daily, 40 hours weekly. 

Any overtime work is paid at the rate of 150% of the standard hourly salary. Overtime work cannot exceed:

  • Eight hours per seven consecutive days
  • 12 hours per seven consecutive days if the employee expresses their consent in writing

Employment contracts

Probationary period

Probation periods are not legally required, but if offered, commonly last for three months. 


IP protection and non-compete agreements

Non-compete agreements must be clear and reasonable in scope, and usually vary in duration between one and two years. In Lithuania, employees are also entitled to adequate monthly compensation for the entire duration of the agreement. The amount should be evaluated on a case-by-case basis depending on the extent of the restrictions.

An employee's salary during their work period cannot be part of the compensation for the non-compete agreement.

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Benefits and leave in


Vacation time

Employees in Lithuania are entitled to 20 days of annual leave, which may be taken in parts but not less than 14 days at a time.

Single parents of children under the age of 14 are entitled to 35 days of paid annual leave.

Sick leave

Employees in Lithuania are entitled to paid sick leave. Employers pay 80% to 100% of an employee's average salary for the first two days of sick leave. From the third day onwards, employees receive 62.06% of their salary from the State Social Insurance Fund Board.

To be eligible for paid sick leave, employees must have been covered by social insurance for at least three months during the last 12 months, or at least six months during the last 24 months.

Parental leave


View a list of recognized public holidays in Lithuania here.

Employer tax

In Lithuania, employer social contributions depend on the kind of contract. For open-ended contracts, employers pay 1.77%. For fixed-term contracts, employers pay 2.49%.

Individual tax

In Lithuania, employees pay a flat rate income tax of 20%. They also pay between 19.5% and 22.5% in social security. 

Termination in


In Lithuania, a dismissed employee must be paid severance pay in the amount of two times their average monthly remuneration.

Employees with less than one year's service are entitled to severance pay in the amount of half of one month's average remuneration.

Employers can also choose to terminate an employment contract by giving a notice of three working days, in exchange for a severance payment of six average monthly salaries.

Notice period

The notice period for resignations in Lithuania is 14 days.

The length of notice for dismissals is determined by the length of continuous employment:

  • Less than one year of service: Two weeks
  • Over one year of service: One month

Notice periods are doubled for employees entitled to the retirement pension in five years. They are tripled for:

  • Employees raising a child under 14 years of age
  • Employees raising a disabled child under age 18
  • Employees with disabilities
  • Employees entitled to retirement pension in two years

Start hiring employees in


Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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