Changes related to employment relationships: what will the 2020 bring?

10/01/2019

Since 1 January 2020 significant changes have entered into force regarding the regulation of labor relations in Lithuania. ECOVIS ProventusLaw has prepared a summary of changes related the labour and employment law and regulations.

The minimum wage has been increased increased to EUR 607 (in 2019 it was EUR 555).

Maximum monthly nontaxable income for 2020 – EUR 350, intended for residents whose income from an
employment relation will not exceed the minimum wage.

1. The progressivity of income tax has increased. A 20% income tax rate is applied to the annual wage which amounts up to 84 national average wages (up to EUR 104.277,6 per year/ average EUR 8.686,8 per month before taxes). A 32% income tax rate is applied to the annual wage in case it amounts to more than 84 national average
   wages (from 2021 – more than 60 national average wages).
2. The average national wages have increased too. The national average wage in 2020 reached up to EUR 1.241,4 (2019 – EUR 1.136,2).
3. Parental leave. 30 calendar days of uninterrupted parental leave will be granted at any time from the birth of a child until the child reaches the age of one.
4. Annual leave of the employee. Employees who have unused annual leave for more than 3 (three) years before the entry into force of the Labour Code shall be entitled to use it until July 1, 2020.
5. Extra public holidays. The list of public holidays has been supplemented. November 2 – All Souls Day – becomes a public holiday.
6. Simplified termination of employment in the event of employer’s bankruptcy. The obligation to consult the work council or the trade union regarding collective redundancies in the event of the bankruptcy of an undertaking is removed.
7. Termination of the collective agreement of collective agreement. In the case of the employer’s bankruptcy, the collective agreement expires upon termination of the employment contracts with all employees.

Once a court ruling to institute bankruptcy proceedings against an employer comes into force or once a decision of a creditor’s meeting to pursue out of court bankruptcy proceedings has been taken, the provisions of the collective agreement improving working conditions shall not apply, if such provisions increase the creditors’ losses due to bankruptcy.