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Lithuania: Flexibility and Nuances in the Labor Code

Lithuania: Flexibility and Nuances in the Labor Code

Issue 10.9
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In today’s fast-evolving world, countries are continuously revising their labor laws to achieve the right balance between the needs of the workforce and the demands of the corporate sector. The Republic of Lithuania stands out in this regard, as its Labor Code seeks to provide flexibility in labor relations, all the while ensuring the rights of its employees are not undermined. A close examination of the Labor Code, local documentation practices, and the progressive legal shifts toward Western norms paints a comprehensive picture of the nation’s approach to employment dynamics.

1. The Fine Balance Between Flexibility and Employee Rights

A cornerstone feature of the Labor Code of Lithuania is its provision that allows for deviations from the mandatory norms under certain conditions. Specifically, if an employee’s monthly wage is not less than double the average gross monthly wage of the national economy – as published by the Lithuanian Statistics Department – there exists a possibility of diverging from the stringent regulations of the Labor Code or other related labor law norms.

In this context, two aspects become important in order to benefit from this possibility. It could not compromise critical areas such as maximum working hours, minimum rest durations, the process of concluding or terminating an employment contract, minimum wage, health and safety concerns of employees, and the principle of gender equality. Furthermore, any deviation should always be made with the primary aim of achieving a harmonious balance between an employer’s requirements and the employee’s welfare (providing additional annual leave, and other benefits). However, this flexibility isn’t absolute. There are plenty of practical applications of this provision. Employers and employees might mutually agree upon diverse non-compete clauses, modify the bounds of the employee’s liability, or negotiate varied compensations for business trips and overtime, among others. Such tailored arrangements might be especially advantageous for roles demanding unique skill sets or particular responsibilities. Thus, although the law imposes certain limitations, employers have sufficient scope to agree with the employee on terms different from those imposed by the Labor Code in order to benefit their business.

2. The Significance of Local Documentation and Awareness

Apart from the overarching Labor Code, local documents, often endorsed by a company’s director, hold substantial importance in Lithuania’s labor law. These internal documents elucidate specific rules and regulations that the employees must abide by during their tenure.

Case law in Lithuania has often underscored the significance of these local documents. In scenarios where the employee might contravene these rules, their awareness becomes pivotal. If the employee hasn’t been adequately informed about these regulations in written form, in many cases, it is much harder to prove that the employee is at fault and to hold them liable. This stems from the understanding that an uninformed individual could not be faulted for non-compliance. This precedent ensures that employers maintain transparency and proper channels of communication with their workforce, thereby promoting a culture of awareness and understanding.

3. Progressive Adaptations

While the Republic of Lithuania has its unique labor regulations, there’s a palpable shift toward adopting legal practices reminiscent of Western countries. In recent times, Lithuania’s legal landscape has seen employers being obligated to introduce local policies addressing key societal and workplace challenges. These new policy requirements encompass areas like promoting equality in the workplace, implementing a whistleblowing model, and taking proactive steps to prevent instances of violence and harassment. Such mandates not only showcase Lithuania’s commitment to creating a supportive work environment but also reflect the nation’s effort to align with global standards and best practices.Furthermore, the legislator of the Republic of Lithuania, while acknowledging the adaptability necessitated by the pandemic and the global nature of employment relations, has made efforts to emphasize remote work provisions and its opportunities, promote the secondment of employees, and offer guarantees to foreigners – all to bolster market competitiveness. It is also worth mentioning that the updated Labor Code facilitates more straightforward employee termination, albeit with higher severance pay. The reasons for termination might range from individual behavior to qualifications, granting employers considerable discretion in decision-making.

Lastly, the public sector is not forgotten either – the latest amendments established a reduced working time rate of 32 hours per week for employees of budget institutions who raise children under three years old, with the aim of encouraging employees to return to work earlier, without losing their qualifications and connection to the workplace, while at the same time allowing them to effectively care for a small child.

By Tomas Bagdanskis, Managing Partner, and Milda Jogelaite, Senior Associate, Ilaw Lextal

This article was originally published in Issue 10.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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