RegRally Insights: Employment and Labour Law

Our monthly employment law update explores the latest developments in employment law and looks at the issues that matter to employers.

Lithuanian Court Confirms CEO Personal Liability for Governance Failures

The Lithuanian Court of Appeals has reaffirmed that a CEO may be held personally liable for breach of fiduciary duties, poor business decisions, and violations of legal requirements. The ruling highlights the importance of convening shareholders’ meetings when the law requires and promptly initiating insolvency proceedings.

If a company’s equity falls below half of its registered capital or insolvency becomes apparent, the CEO must act swiftly, including informing shareholders and initiating necessary proceedings. Failure to comply with these obligations may lead to legal claims and financial consequences for the CEO.

Recommendations of ECOVIS ProventusLaw

– Monitor Financial Health. Regularly assess the company’s financial position, ensuring equity does not fall below half of the registered capital.

– Hold Regular Shareholder Meetings. Convene shareholder meetings as required by law and inform stakeholders of financial difficulties.

– Document Decision-Making. Maintain clear records of management decisions, justifications, and actions to demonstrate due diligence.

– Act Promptly on Insolvency Risks. If insolvency risk arises, take immediate steps, including informing shareholders and initiating necessary proceedings.

Avoiding Common Mistakes in Annual Leave Management

The State Labour Inspectorate highlights key aspects employers must consider to prevent errors and ensure effective leave management. Proper leave planning helps avoid legal risks, financial surprises, and disruptions in workflow.

Key Points:

Encourage leave usage: Unused leave can lead to high severance costs when employees resign.
Plan leave schedules: Poor planning can disrupt operations and increase overtime expenses.
Ensure continuous leave: Employees must take at least 10 consecutive days of leave to comply with legal requirements.
Monitor leave balances: Granting leave in advance without tracking balances can cause issues at contract termination.
Make timely leave payments: Delays may result in additional leave being granted as compensation.

Recommendations of ECOVIS ProventusLaw

To mitigate the risks, we recommend:

to ensure timely use of leave, which benefits both health and productivity
to create a clear leave schedule in advance and involve employees in planning
to monitor and ensure that employees use their accrued leave
to maintain accurate leave records and plan leave carefully
to ensure timely payment of leave compensation, considering employee preferences

The Importance of Clearly Defined Job Functions in Employment Contracts

A well-defined job function ensures smooth and legally sound employment relations, preventing disputes and misunderstandings.

Key Points:

Job function is essential: According to the Labor Code (Article 32), it defines the tasks linked to a profession or qualification.
Job descriptions are required: Employers must provide a written job description before work begins.
Employee rights: Employees can request additional details about their job function, and employers must respond within five working days.
Employment contracts vs. job descriptions: The contract defines the nature of work, while the job description clarifies specific tasks.
Combining or grouping job functions: Any additional duties must be clearly agreed upon by both employer and employee.

Recommendations of ECOVIS ProventusLaw

To mitigate the risks, the employers shall:

Ensure job functions are explicitly stated in the employment contract, outlining the profession, speciality, or qualifications required to avoid ambiguity.
Use job descriptions to clarify specific duties and respond promptly (within five working days) to any employee requests for further details about the role.
Clearly agree and document any additional or combined job functions, ensuring both parties understand the scope and responsibilities involved.