Lithuania: New Labor Code in effect from 1 January 2017

Regions & Countries United Kingdom
Areas of Law Employment
Content Types Latest
Languages English
Employment Areas of Law Labor reforms

Overview

A new Lithuanian Labor Code will come into force on 1 January 2017.  


Contents

Amongst other topics, the Code addresses -  

  • The notice period and amount of severance pay to which an employee is entitled in a "no-fault" dismissal situation:
    • the Code reduces existing notice entitlement so that, subject to certain exceptions, the standard notice to be given in, for example, a redundancy dismissal situation will be only one month;
    • the Code also reduces the amount of severance compensation so that standard severance compensation for individuals with less than five years' service will be twice their average monthly salary.The amount increases for those with more than 5 years' service.
  • Dismissal at will: the Code entitles an employer to dismiss an employee at will,  provided three days' notice is given and the employee is paid increased severance compensation of at least six times their average monthly salary.  This does not apply to discriminatory dismissals, nor to employees on family related leave.
  • Employment contract arrangements: the Code permits the use of various new types of employment contract such as zero-hours, job-share and apprenticeship contracts.
  • Fixed term employment contracts:  the Code permits such contracts to be used for permanent positions,  but at the same time limits the maximum duration of a fixed term contract to two years.   After two years, the contract will become permanent,  although there are some exceptions where a maximum duration of five years is permissible.  Notice and severance pay requirements are also implemented for individuals retained on fixed term contracts.
  • Restrictive covenants:  The Code establishes fixed rules on non-competition provisions which
    • may only be used for employees with specific skills and knowledge that could cause harm to the employer if used in a competing business;
    • may not last for longer than two years post termination;
    • must provide for the employee to receive compensation of at least 40% of their average monthly salary during the non-compete period;
    • may provide for a penalty to be paid by the employee in event of breach, subject to a maximum of three months' of the non-compete compensation (above).
  • The maximum permitted amount of working time (working time, overtime and additional work) is increased to 60 hours per week.    Annual leave is changed to 20 business days (24 for those working 6 days per week) and one instalment of leave each year must be of at least 10 (or 12) days' duration.
  • Works councils:  the Code implements a requirement for employers with more than 20 employees to establish a works council within 6 months of the new Code coming into force, so by 30 June 2017.
Contact Information
Tim Marshall
Global Co-Chair - EMEA and Asia Pacific at DLA Piper
London
tim.marshall@dlapiper.com

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