How to hire in Lithuania through an EOR

Employment contracts in Lithuania must be in writing. If someone starts work without one, an employment relationship still exists, but you'll need to register it retroactively. That means extra paperwork and potential compliance issues you don't want.

Contract types

Most companies use open-ended contracts. They're indefinite and give you flexibility without worrying about renewal limits. Fixed-term contracts have strict caps specifically to prevent misuse.

For most hires, open-ended is the right call. It removes the risk of fixed-term chains accidentally converting to indefinite status.

What has to be in the contract

Lithuanian law requires specific details in every contract. You'll need to include the job title, duties, place of work, pay (amount, system, and timing), working hours, start date, and notice period.

Contracts must be in Lithuanian, though bilingual versions are fine as long as Lithuanian is the official language. Register it the same day in the employment contracts book, unless you have fewer than 4 employees.

Probation is optional and capped at 3 months. You can end it early with 5 days' notice and don't need to give a reason. Pay full wages throughout probation, and issue a work certificate before day one.

Contractor vs employee

The legal test comes down to three things: work performed, wage paid, and dependence on you. If someone works under your direction, uses your tools, and follows your schedule, they're likely an employee. Calling them a contractor won't protect you if a court disagrees.

Misclassification is costly. You could owe back taxes, social contributions (around 1.77% employer share plus employee portions), and fines running into thousands of euros. Employees can also claim full benefits retroactively, including paid leave and statutory protections. Courts look at the reality of the arrangement, not what the contract says.

Non-competes are enforceable if they're reasonable: 1-2 years maximum, limited in scope, and you pay monthly compensation (separate from their regular salary) for the full period. Keep it specific and narrow, or it won't hold up.

On IP, employees own what they create unless the contract assigns it to you. Spell this out clearly for any work-related inventions. Vague language leads to disputes.

Get the contract type right from the start. If you're still figuring out your setup in Lithuania, an EOR can handle compliant contracts and help you avoid these issues.

Lithuania gives employees a minimum of 20 paid working days of annual leave after just six months on the job. That's more generous than many countries, and it increases further for parents or employees with long tenure.

Leave accrues monthly at about 1.67 days for a five-day week. You must grant at least one block of 10 consecutive working days. Pay is based on the employee's average salary from the prior three months, and it needs to be paid before leave starts.

Certain groups get extra days: 25 days for underage workers, single parents with kids under 14 (or 18 if disabled), and disabled employees. After 10 years with you, add three more days, then one extra every five years after that. High-risk jobs can qualify for up to 41 days.

You're required to withhold and contribute to social security (SoDu). The total rate is 19.5% on gross salary: you cover 1.77-2.49% (pension and illness), and the employee pays 17.67% (pension 12.52%, sickness 6.98%, health 1.10%, unemployment 1.07%). Health insurance runs through SoDu at 6.98% total: you pay 3.09-3.50%, the employee pays 3.48%.

Pension contributions split between mandatory state (you 1.77%, employee 12.52%) and a voluntary funded pension where you can match up to 3% of salary if the employee opts in.

There are no mandatory extras like meal vouchers or transport allowances. That said, some sectors include them through collective agreements, so it's worth checking what applies to your industry.

Most local employees expect the legal minimums on leave and benefits, and the baseline here is already fairly competitive. But if you're hiring for senior or specialist roles, the legal minimum probably won't be enough.

Top candidates in Lithuania typically expect 25-30 annual leave days in total. Private health insurance is a genuine draw, since public wait times are a real frustration for a lot of people. If you're hiring remotely or on a hybrid basis, a work-from-home stipend of 50-100 EUR/month or a laptop allowance makes a difference.

Meal vouchers (5-10 EUR/day) and gym memberships are common perks that local employers offer. Without them, you may find it harder to compete. Aiming for 5-10% above the minimum salary also helps, especially if you're trying to attract experienced hires.

Lithuania doesn't let you fire someone on a whim. Employment relationships are protected by mandatory legal rules regardless of what your contract says, and the burden is on you to prove you had a valid reason. Get this wrong and you're looking at a Labour Disputes Commission hearing where the employee has a strong case.

Valid grounds for termination

There are three main ways to end an employment relationship in Lithuania, each with different notice and severance requirements.

Termination for cause (misconduct) covers serious breaches: theft, fraud, workplace violence, willful disobedience of lawful instructions, gross neglect of duty, or persistent underperformance despite prior disciplinary measures. You need to document the misconduct clearly and give written notice, but you don't need to provide advance notice. Termination can be immediate.

Termination for non-performance is stricter. You must notify the employee in writing of their performance shortcomings, agree on a two-month improvement plan together, and only terminate if they fail to meet it. Keep solid documentation throughout: the initial notice, the written improvement plan, and evidence they didn't meet the targets.

Termination at the employer's will (redundancy or organizational change) requires only three working days' notice but mandates severance of at least six months' average salary. The catch: you must prove the job functions genuinely became redundant due to real changes in work organization or operations. Courts look closely at whether the reason is genuine or artificially created. You also can't terminate if there's a vacant position the employee could transfer to with their consent.

During probation (up to three months), either party can terminate with just three calendar days' written notice and no reason required. Even then, employees can challenge dismissals they believe are discriminatory or unjust.

Protected categories and unfair dismissal

Some employees are entitled to three times the standard notice period: parents of young children, pregnant employees, employees with disabilities, adoptive parents of children under 14, parents raising disabled children under 18, and employees due to retire within two years.

Unfair dismissal claims are common. You're exposed if you terminate without a valid legal ground, skip proper procedure, don't document your case, or discriminate on grounds like pregnancy, disability, or family status. Employees have one month to challenge dismissal-related disputes at the Labour Disputes Commission, and up to three months for other employment violations. If they win, you'll likely owe back wages and may be ordered to reinstate them.

Notice periods

All notice must be in writing and clearly state the legal grounds for termination and the termination date.

Severance

Severance is required for termination at the employer's will regardless of tenure. For other terminations, it only applies once the employee has completed one year of service. Calculate average salary based on the 12 months before termination. There's no statutory cap, but courts can adjust amounts they consider grossly disproportionate.

Work permits and visas

You can hire foreign nationals through an EOR in Lithuania. The EOR handles the employment relationship and compliance, but visa sponsorship and work permits are dealt with separately.

Non-EU/EEA citizens need a work permit tied to a specific job position. The employer, or your EOR on your behalf, applies through the State Labour Office. This typically takes 2-4 weeks. The employee will also need a residence permit, which is usually linked to the work permit. Lithuania offers a fast-track process for highly skilled workers.

EU/EEA citizens have freedom of movement and don't need a work permit, though they should register with local authorities if staying longer than three months.

Lithuania doesn't have a dedicated digital nomad visa, but remote workers from outside the EU can apply for a temporary residence permit if they meet income requirements (roughly €2,000+ monthly).

An EOR can help with the work permit application process, but legal responsibility for compliance stays with you as the employer. Check your EOR's experience with Lithuanian work permit procedures before you hire.

Recent regulatory changes (2024-2026)

A draft law on individual and collective labour relations was registered in October 2025 and is expected to pass in 2026. Key changes include longer probationary periods for high-earning employees (those earning more than two national average salaries) and more flexible termination terms if both parties agree. This could affect how you structure probation for senior hires, so it's worth watching.

From January 2025, violence and harassment protections now extend to managers as well as employees. You'll need policies in place and regular anti-violence and anti-harassment training. Violations carry fines of €500-€3,000.

A pay transparency law comes into force on June 7, 2026. Start preparing now: you'll need to disclose salary ranges in job postings and ensure equal pay for equal work. Non-compliance carries fines of €460-€1,400.

Keep your documentation tight. Maintain clear evidence files for every termination: performance records, disciplinary warnings, improvement plans, and written communications. If a dispute reaches the Labour Disputes Commission, your documentation is your defense.