The Lithuanian labour legislation is on the brink of a new stage of its history. On 14 September 2016 the Lithuanian Parliament adopted a new Labour Code, which will come into force on 1 January 2017. The amendments offer more flexible regulation of employment relations and are expected to encourage foreign investment and job creation in general.The main changes introduced by the new Labour Code are related to:
1. Fixed‐term employment contracts
The new Labour Code brings liberalization of fixed-term contracts’ application. It allows employers to utilize fixed-term contracts for work of permanent nature while limiting its duration.
Employers will be able to conclude fixed‐term contracts for permanent positions with a restriction to the length of a fixed-term contracts to 2 years for same work done through the duration of contracts and 5 years in case different work is done under fixed-term contracts. Where fixed‐term contracts are concluded for jobs of a permanent nature, they must not exceed 20% of all employment contracts concluded at the company.
2. New types of employment contracts
A number of new types of employment contracts are introduced: zero‐hour contracts, project work, job‐sharing, work for several employers, and apprenticeship contracts. This should provide more opportunities for employers to adapt employment contracts and work terms to the nature of the employee’s work.
Zero-hour contracts are widely discussed by public and perceived contradictorily. This type of employment contract will allow hire of employees without an obligation to provide them with minimum defined working hours. Employees will work only in cases when assigned by the employer, and will be paid only for their actual working time. The minimum number of working hours is eight hours a month.
3. The minimum wage – an employer will only be allowed to pay it for unqualified work.
4. Notice period
The new Labour Code reduces notice periods (two or four months) that employees are entitled to in case of dismissal without fault due to an important reason (e.g. redundancies and lay‐offs, performance dismissals) to: one month – standard notice period; two weeks – when the duration of employment is less than one year; notice periods will be doubled for the employees raising a child under 14 years old and those with less than five years remaining to retirement; notice periods will be tripled for disabled employees and those who have less than two years remaining until retirement.
5. Severance pay
Standard severance pay – 2 monthly average salaries; if an employee is in the company less than a year – half of a monthly average salary (reduced from current severence pay range from 1 to 6 average salaries depending on the duration of their employment with the company).
In case the duration of the employee’s employment with the company is five years or longer, in addition to severance compensaton payable by employer, the employee will be entitled to a long‐term service benefit paid by a special state fund (from 1 to 3 monthly average salaries depending on a period worked in the company).
6. Employment termination
A new clause introduced – an option for a employer to dismiss an employee at will with no substantial reason for termination. In this case the employer will be entitled to give a notice of three working days and pay a severance pay of 6 average monthly salaries.
7. Annual leave
The change in calculation of annual leave is introduced from calender days to business days: instead of previous 28 calendar days of annual leave, an employee will be entitled to 20 business days (24 business days for employees working six days a week).
8. Liability of an employee
Under the new Labour Code, an employee will be liable for the entire amount of damage not exceeding 3 times his average monthly wage. For cases where such damage is caused by gross negligence on the part of the employee, the amount of coverage for damage will not exceed his six average monthly wages.
An employee will be liable for the entire sum of damage in the following cases: if damage was caused intentionally; if damage was the result of an offence; if damage was made by an employee under the influence of alcohol, drugs or toxic substances; if damage was caused by breaching the obligation to protect confidential information or by violating the non-competition agreement; if damage was non-pecuniary; if full compensation for damages is provided for in the collective agreement.
Maximum working time – 12 hours a day and 60 hours a week; maximum average weekly working time – 48 hours; maximum number of working days is six days a week. There is no longer restriction of no more than four overtime hours in two consecutive days. The maximum permitted limit for weekly overtime will be eight hours, and with the employee’s consent – 12 hours per week. Moreover, the annual overtime limit is increased from 120 to 180 hours, with a possibility to agree on an even higher limit in a collective agreement.
10. Working time regimes
The new Labour Code provides several new types of working time regime: flexible working time; fragmented working day; work under an individual working time regime. More flexibility as for working time will be provided for employees with certain family circumstances (pregnant, breast-feeding, raising children up to 3 years); providing flexible working time in these cases will be obligatory if requested by an employee.
New terms are introduced for the on-call work: only the time when an employee is actually working is calculated as working time; the maximum duration of uninterrupted on‐call work is one week during a period of four consecutive weeks. On‐call work should be agreed in the employment contract and an employee is entitled to additional payment of 20% average salary for the week they are on call, as well as to salary paid for actual working time.