Lithuania is a country located in Eastern Europe along the Baltic Sea. It is bordered by Latvia to the north, Belarus to the south and east, Poland to the south, and Russia (Kaliningrad district) to the southwest. It covers a land area of 65,286 square kilometers. The World Bank labels Lithuania as a high-income economy. Services dominate the country’s economy, with industry and agriculture also being significant sectors.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Lithuania.
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Lithuania is a country located in Eastern Europe along the Baltic Sea. It is bordered by Latvia to the north, Belarus to the south and east, Poland to the south, and Russia (Kaliningrad district) to the southwest. It covers a land area of 65,286 square kilometers. The World Bank labels Lithuania as a high-income economy. Services dominate the country’s economy, with industry and agriculture also being significant sectors.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Lithuania.
The national holidays mentioned below are valid for the year 2026 and are critical for hiring in Lithuania planning:
The holidays mentioned below are valid for the year 2026.
| January 1 | New Year’s Day | |
| February 16 | Restoration of State Day | |
| March 11 | Restoration of Independence Day | |
| April 5 | Easter Sunday | Movable |
| April 6 | Easter Monday | Movable |
| May 1 | Labor Day | |
| June 24 | Midsummer/St John’s Day | Movable |
| July 6 | Anniversary of the Coronation of King | |
| August 15 | Assumption Day | |
| November 1 | All Saints’ Day | |
| November 2 | All Souls’ Day | |
| December 24 | Christmas Eve | |
| December 25 | Christmas Day | |
| December 26 | Second Day of Christmas |
The approximate time for sharing the contract with an employee in Lithuania is 4 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
The compulsory social security insurance system consists of the following types of social security contributions:
Employers contribute 1.77% to the social insurance fund for employees on open-ended contracts and 2.49% for employees on fixed-term contracts. Employees contribute 19.50% to the social insurance fund regardless of their contract types.
The specific contributions for each type of social insurance based on the employee’s contract types are broken down as follows:
|
Employer Contributions |
|||
|
Open-ended Contracts |
Fixed-term Contracts |
||
| Insurances | Rates | Insurances | Rates |
| Unemployment insurance (Nedarbo) | 1.31% | Unemployment insurance (Nedarbo) | 2.03% |
| Accidents at work and occupational diseases (Nelaimingų atsitikimų) | 0.14% | Accidents at work and occupational diseases (Nelaimingų atsitikimų) | 0.14% |
| Guarantee fund (Garantinis) | 0.16% | Guarantee fund (Garantinis) | 0.16% |
| Long-term employment benefit fund (Ilgalaikio darbo) | 0.16% | Long-term employment benefit fund (Ilgalaikio darbo) | 0.16% |
| Total | 1.77% | Total | 2.49% |
|
Employee Contributions |
|||
| Insurances | Rates | ||
| Pension insurance (Pensijų) | 8.72% | ||
| Sickness insurance (Ligos) | 1.99% | ||
| Maternity insurance (Motinystės) | 1.81% | ||
| Health insurance (Sveikatos) | 6.98 | ||
| Total | 19.50% | ||
The standard working time of an employee is 40 hours per week and eight hours per day. Employees must be granted a break of a maximum of two hours and a minimum of 30 minutes to rest and to eat. This break must be provided, as a rule, after half of the working day (shift) but not later than after four working hours.
The employee’s overtime work must not exceed four hours on two consecutive days and 120 hours per year. Different annual duration of overtime work may be established in the collective agreement, however, not exceeding 180 hours per year.
All overtime hours are paid at an overtime compensation rate of 150% of the employee’s regular pay rate.
The probationary period must not exceed three months. In the cases provided for by law, an employee may be asked to undergo a longer probationary period, if that is necessary to assess the employee’s suitability for the job, though this may not be longer than six months.
| Termination Basis | Notice Period |
| Termination of an employment contract on the initiative of the employee without valid reasons |
|
| Termination of an employment contract on the initiative of the employee for valid reasons |
|
| Termination of an employment contract on the initiative of the employer due to the fault of the employee |
|
| Termination of the employment contract on the initiative of the employer without the fault of the employee |
|
| Dismissal at the will of the employer |
|
| Termination of an employment contract by mutual agreement |
|
The standard working time of an employee is 40 hours per week and eight hours per day. Employees must be granted a break of a maximum of two hours and a minimum of 30 minutes to rest and to eat. This break must be provided, as a rule, after half of the working day (shift) but not later than after four working hours.
The employee’s overtime work must not exceed four hours on two consecutive days and 120 hours per year. Different annual duration of overtime work may be established in the collective agreement, however, not exceeding 180 hours per year.
All overtime hours are paid at an overtime compensation rate of 150% of the employee’s regular pay rate.
The probationary period must not exceed three months. In the cases provided for by law, an employee may be asked to undergo a longer probationary period, if that is necessary to assess the employee’s suitability for the job, though this may not be longer than six months.
| Termination Basis | Notice Period |
| Termination of an employment contract on the initiative of the employee without valid reasons |
|
| Termination of an employment contract on the initiative of the employee for valid reasons |
|
| Termination of an employment contract on the initiative of the employer due to the fault of the employee |
|
| Termination of the employment contract on the initiative of the employer without the fault of the employee |
|
| Dismissal at the will of the employer |
|
| Termination of an employment contract by mutual agreement |
|
The compulsory social security insurance system consists of the following types of social security contributions:
Employers contribute 1.77% to the social insurance fund for employees on open-ended contracts and 2.49% for employees on fixed-term contracts. Employees contribute 19.50% to the social insurance fund regardless of their contract types.
The specific contributions for each type of social insurance based on the employee’s contract types are broken down as follows:
|
Employer Contributions |
|||
|
Open-ended Contracts |
Fixed-term Contracts |
||
| Insurances | Rates | Insurances | Rates |
| Unemployment insurance (Nedarbo) | 1.31% | Unemployment insurance (Nedarbo) | 2.03% |
| Accidents at work and occupational diseases (Nelaimingų atsitikimų) | 0.14% | Accidents at work and occupational diseases (Nelaimingų atsitikimų) | 0.14% |
| Guarantee fund (Garantinis) | 0.16% | Guarantee fund (Garantinis) | 0.16% |
| Long-term employment benefit fund (Ilgalaikio darbo) | 0.16% | Long-term employment benefit fund (Ilgalaikio darbo) | 0.16% |
| Total | 1.77% | Total | 2.49% |
|
Employee Contributions |
|||
| Insurances | Rates | ||
| Pension insurance (Pensijų) | 8.72% | ||
| Sickness insurance (Ligos) | 1.99% | ||
| Maternity insurance (Motinystės) | 1.81% | ||
| Health insurance (Sveikatos) | 6.98 | ||
| Total | 19.50% | ||
WorkMotion operates through its own entity in Lithuania, acting as the legal employer for every hire.
This means your company can bring in talent from Vilnius, Kaunas, or anywhere else in the country without having to register a local legal entity.
WorkMotion generates a locally compliant employment contract aligned with the Lithuanian Labour Code.
Employment contracts in Lithuania must be in writing and include at least the basic terms of employment stipulated by Lithuanian labour law.
It is advisable to draft the employment contract in Lithuanian. WorkMotion handles this as standard, producing bilingual contracts where needed so your new hire receives documentation they can read and rely on.
Contract terms cover:
Before your new hire’s first day, WorkMotion registers them with SODRA — Lithuania’s State Social Insurance Fund.
The conclusion of an employment contract must be notified to the territorial division of SODRA one working hour before the scheduled start of work.
Missing this window is one of the most common compliance errors foreign employers make. WorkMotion handles the notification as part of the standard onboarding workflow, so the registration is in place before the employee sets foot in the role.
WorkMotion configures payroll in euros – Lithuania’s official currency – and applies the correct withholding rates from day one.
A progressive income tax rate of 20%–32% applies to employees depending on gross income.
The employer withholds 19.5% in employee social contributions and contributes 1.77% of each employee’s gross income for permanent contracts.
All salary payments must be made via bank transfer in accordance with the Lithuanian Labour Code — cash payments are prohibited.
WorkMotion also accounts for additional employer obligations, including the Guarantee Fund and Long-term Employment Fund contributions, and work accident insurance, which varies by risk classification.
WorkMotion enrolls each employee in Lithuania’s mandatory social insurance system, which covers retirement, health insurance, sickness and maternity benefits, and unemployment.
All residents in Lithuania have access to the national health system, which is funded through mandatory contributions.
WorkMotion also administers statutory leave entitlements — including the minimum 20 working days of annual leave, sick leave, and parental leave — and can advise on supplemental benefits to make your offer competitive in the Lithuanian market.
WorkMotion runs payroll on Lithuania’s standard cycle and meets all statutory reporting deadlines.
Employers must submit all Social Security returns electronically via the official portal on the 15th day of the following month.
Accurate recordkeeping is mandatory, with payroll documents retained for 50 years. Employees must also receive itemised pay slips detailing hours worked, deductions, and taxes.
By handling this via WorkMotion, your finance team receives a single, clear invoice rather than a stack of local compliance tasks.
Lithuania’s Labour Code is actively updated.
The Parliament of Lithuania approved amendments to the Labour Code that came into force on January 1, 2025, increasing the criteria for setting the minimum wage and strengthening employee protection against workplace violence or harassment.
WorkMotion monitors these changes and updates employment terms, contribution rates, and statutory entitlements accordingly — so your Lithuanian employees always receive what the law requires, without your HR team having to track legislative changes across jurisdictions.
| WorkMotion EOR | Lithuania Entity Setup | |
|---|---|---|
| Setup cost | No entity cost — per-employee monthly fee | €2,500 minimum share capital (UAB) plus legal, notary, banking, and registration fees |
| Time to first hire | Days from signed contract | Weeks to months, depending on document preparation, bank account opening, and SODRA registration |
| Ongoing legal exposure | WorkMotion carries the employer-of-record liability; compliance is managed by WorkMotion’s local team | Your entity is directly liable for all Labour Code obligations, SODRA filings, tax returns, and employment disputes |
| Ongoing admin burden | Single monthly invoice; WorkMotion handles payroll, filings, and compliance monitoring | Dedicated local HR, payroll, legal, and accounting resources required |
| Exit flexibility | Wind down a hire without dissolving a legal structure | Closing a Lithuanian UAB requires formal liquidation proceedings |
An employer of record (EOR) is well-suited for companies that need to hire from 1 to dozens of employees in Lithuania without committing to a permanent legal structure — particularly when the hiring need is driven by access to talent or market testing rather than by long-term operational headquarters.
If you’re planning to build a substantial, permanent team in Lithuania and want direct employment relationships under your own brand, WorkMotion’s Direct Hiring solution — which supports compliant employment registration as a foreign employer — is worth evaluating.
Lithuania has a well-structured Labour Code, but several of its requirements catch foreign employers off guard — particularly those used to more flexible employment regimes.
Most countries require employer registration before payroll runs. Lithuania goes further: the employment contract must be notified to SODRA one working hour before the scheduled start of work.
Employers who treat SODRA registration as a post-hire administrative step create immediate legal exposure. WorkMotion builds this notification into the onboarding workflow so it happens automatically, before the employee’s first day.
Employment contracts in Lithuania must be in writing and comply with the formal requirements set out in Lithuanian labour law.
Fixed-term contracts cannot be concluded for a period exceeding five years. It is advisable to draft the employment contract in Lithuanian.
Companies that issue English-only contracts – or use template agreements drafted for another jurisdiction – risk contracts that don’t meet Lithuanian formal requirements.
You can only terminate an employee in Lithuania for a “just cause.”
This comes with a high burden of proof and is usually reserved for cases of serious misconduct or criminal activity.
At-will termination is not recognized. Companies must follow a standard procedure to properly dismiss an employee, which includes a grievance procedure, a valid reason, notice, and severance pay according to tenure.
US or UK employers accustomed to more flexible termination regimes often underestimate this — and the cost of getting it wrong.
Overtime work is paid at not less than 1.5 times the employee’s regular rate of pay.
Overtime work on a rest day at night is paid at least twice the employee’s salary, and overtime work on a public holiday at night is paid at least 2.5 times the employee’s salary.
This 2.5x rate for public holiday overtime was introduced in the January 2025 Labour Code amendments.
Employers running payroll manually or using outdated rate tables will underpay – creating back-pay liability.
Employers contribute 1.77% of a permanent employee’s gross salary into the social security fund.
For fixed-term employees, the employer contribution rate is higher at 2.49%.
If you apply a single flat rate regardless of contract type, you could end up in breach of the employee’s contract. WorkMotion applies the correct rate based on each employee’s contract structure.
Lithuania has a well-educated, English-proficient tech workforce.
Lithuania ranks fourth among EU countries in the share of young workers with degrees, and around 85% of the country’s young professionals are proficient in English.
DACH and Benelux-based B2B SaaS and AI companies use WorkMotion’s employer of record in Lithuania to hire software engineers, product managers, and data specialists they can’t find — or can’t afford — at home.
Post-Brexit, UK companies building EU-based teams need a compliant employment structure inside the single market. Lithuania — an EU member state with a competitive cost base and a growing fintech ecosystem — is an increasingly common destination.
WorkMotion’s own entity in Lithuania means UK companies can hire there without setting up a local subsidiary, while keeping employment legally sound under Lithuanian law and GDPR-compliant under EU data protection rules.
A US-based scale-up that needs a European sales lead or solutions engineer in the Baltic region faces a familiar problem:
WorkMotion’s Lithuania EOR gives them a compliant employment structure from the first hire – with locally drafted contracts, SODRA registration handled, and payroll running in euros.
So, you’ve found the right candidate in Lithuania.
The last thing you need is a months-long entity setup standing between you and their start date.
Thankfully, by operating through its own entity in Lithuania, WorkMotion can act as the legal employer, so you don’t have to. Whether you’re making your first hire in the Baltics or building out a team, the compliance infrastructure is already in place.
Before you commit, use WorkMotion’s Employment Cost Calculator to see the full cost of hiring in Lithuania — salary, employer contributions, and service fee — with no surprises.
When you’re ready to move forward, book a demo and see exactly how hiring through an employer of record in Lithuania works.
WorkMotion operates through its own entity in Lithuania — meaning WorkMotion is the legal employer of record, not an intermediary passing your hire through a local partner network.
This matters because it gives WorkMotion direct accountability for compliance with the Lithuanian Labour Code, SODRA obligations, and payroll accuracy. You’re not dependent on a subcontractor’s interpretation of local law.
Lithuania’s statutory minimum wage increased to €1,153 per month as of January 1, 2026.
Beyond the gross salary, employers must account for social insurance contributions — 1.77% of gross salary for permanent employees and 2.49% for fixed-term employees — plus Guarantee Fund, Long-term Employment Fund, and work accident insurance contributions.
The applicable rate depends on the contract type you choose, so getting that distinction right from the start affects your cost forecast.
Lithuania applies a progressive personal income tax of 20% on income up to a set threshold and 32% on income above it.
The employer of record withholds the correct amount from each employee’s gross salary and remits it to the Lithuanian tax authority on their behalf.
Employees also contribute 19.5% of gross salary toward social insurance.
Fixed-term contracts are permitted under the Lithuanian Labour Code but cannot exceed five years in total duration.
They also carry a higher employer social insurance contribution rate — 2.49% versus 1.77% for permanent contracts — which increases your total employment cost.
If the role is ongoing rather than project-specific, a permanent contract is typically the more cost-effective and legally straightforward choice.
Lithuania does not recognize at-will termination.
Dismissal requires a documented just cause — such as serious misconduct or redundancy — along with a formal grievance procedure, proper notice, and severance pay calculated according to the employee’s tenure.
Foreign employers accustomed to more flexible termination regimes frequently underestimate both the procedural requirements and the financial exposure.
Lithuanian employees are entitled to a minimum of 20 working days of paid annual leave per year.
Beyond annual leave, employers must also administer sick leave, maternity leave (70 days before birth and 56 days after), paternity leave (30 calendar days), and parental leave — all governed by the Labour Code and funded in part by SODRA.
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