A package of amendments to the Lithuanian Labour Code, currently under review by the Seimas of the Republic of Lithuania and expected to enter into force on 1 November 2026, would introduce significant changes to employment relations.
Key proposed changes
Greater flexibility for higher earners
Employees earning at least 2 average salaries (VDU) could agree more freely on:
- termination terms;
- notice periods;
- severance arrangements.
Longer probation periods
For employees earning at least 2 VDU, probation could be extended from 3 to 6 months.
New termination grounds
Additional dismissal grounds are proposed, including where an employee no longer meets an impeccable reputation requirement.
Updated final settlement rules
- amounts up to 1 VDU must generally be paid by the last working day (or within 10 working days if agreed);
- amounts above 1 VDU may be paid later, but no later than 3 months after termination.
Higher penalties for late payments
Late payment penalties would remain CPI-linked but be multiplied by five.
Annual leave flexibility
Collective agreements could:
- shorten the period for using accrued leave (up to 2 years);
- allow compensation for leave exceeding statutory minimums.
Remote work clarity
Employers would need to accommodate certain remote work requests unless operationally impossible. Collective agreements could regulate expense reimbursement.
New employer discretion dismissal model
A revised Article 59 would create a clearer right to terminate employment for a justified reason, independent from Article 57 grounds, while preserving:
- severance protection;
- short notice periods;
- obligation to state objective reasons in the notice.
Dismissals without an objective basis would remain unlawful, consistent with Article 30 of the Charter of Fundamental Rights of the European Union.
Practical impact
If adopted, the reform would significantly increase employers’ flexibility while preserving core employee protections and expanding the role of collective bargaining.
Given the scope of the proposed Labour Code amendments, companies should start preparing in advance for potential impacts on employment policies, internal procedures, and HR frameworks.
- Review employment contracts for high-earning employees
Companies should assess the contracts of employees earning 2 VDU or more to identify where greater contractual flexibility could be applied, particularly regarding termination terms, notice periods, and severance arrangements.
- Assess internal HR and dismissal procedures
It is advisable to review internal processes related to probation periods, disciplinary procedures, and terminations to align with the proposed changes and reduce legal risk, in line with reputational requirements.
- Update payroll and settlement processes
Companies should ensure their payroll systems can comply with the new settlement timelines upon termination, including split payment rules (up to 1 VDU and amounts exceeding 1 VDU).
- Prepare for higher late payment penalties
Given the proposed increase in late payment penalties, companies should strengthen internal payroll controls to avoid delays in salary and other employment-related payments
- Monitor legislative developments closely
As the amendments are still under parliamentary review, companies should closely follow the legislative process and be ready to adjust internal policies once the final version is adopted.
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