January 2026 brings important changes for employers, from higher minimum wages to clarified rules on employee bonuses. This issue highlights key labour law updates and practical considerations to help organisations stay compliant and manage employment obligations effectively.
VDI: Year-end bonuses: when are they just motivation, and when are they the employer’s responsibility?
At the end of the year, employers often give bonuses to employees to recognise their good work or achievements. The State Labour Inspectorate (VDI) notes that the Labour Code clearly distinguishes between two types of bonuses – bonuses for work performed and bonuses at the employer’s initiative- and that their legal consequences for the employee and employer differ.
Article 142(1) of the Labor Code provides that bonuses may be awarded for two purposes: to reward the employee for work performed under an employment contract in the cases, amounts, and manner specified in the employment contract, the remuneration system, or other labour legislation, or at the employer’s initiative to encourage the employee for good work, activities, or results achieved.
Even after the termination of the employment relationship, the employer may still be obliged to pay the bonus. Article 142(3) of the Labour Code provides that an employee must be paid a bonus proportional to the time actually worked during the period for which it is awarded, unless the parties have agreed otherwise.
Another type of bonus is an incentive bonus, which is awarded at the employer’s initiative. It is paid at the employer’s discretion to motivate the employee for good work, performance, or results achieved. However, the awarding of such a bonus is the employer’s right, not an obligation.
It should be noted that if an employee has committed a breach of their work duties within the last 6 months, they may not be eligible for an incentive bonus. For example, if an employer decides to award bonuses to all employees at the end of the year, the employee who committed the breach may not receive a bonus. Such a breach must be thoroughly investigated so that the employer can make a decision, and the employee is informed of this in writing.
VDI: From January 1, 2026 – higher minimum wage
The minimum wage in Lithuania will change on January 1, 2026. As of this date, the minimum hourly wage (MVA) must be at least €7.05, and the minimum monthly salary (MMA) will be €1,153. It is important to note that this is a gross wage, i.e., before taxes so that the actual take-home pay may vary depending on the amount of taxes paid, the applicable tax-free income amount, tax breaks, and other individual circumstances.
When does the old minimum wage apply, and when does the new one apply?
It should be noted that when paying wages for December 2025 in January 2026, the minimum wage applicable in 2025 will apply, i.e., €1,038 per month or €6.35 per hour. This means the salary amount is determined by the period for which wages are calculated, not by the payment date.
Minimum wage – only for unskilled work.
We would like to remind you that the minimum wage applies only to unskilled work, either for one hour of work or for the standard working time for a calendar month. According to Article 141(2) of the Labour Code, unskilled work is work that does not require any special qualifications or professional skills. If skilled work is performed, the wage must be higher than the minimum wage, and the specific amounts are determined by the wage system in effect at the workplace.
MMA and MVA – different amounts.
It is important to emphasise that the minimum monthly wage and the minimum hourly wage are different amounts, and one does not have to correspond to the other. This means that in cases where the employment contract specifies a minimum hourly wage, the employee’s monthly salary may vary and, depending on the actual number of hours worked, may be either higher or lower than the specified minimum monthly wage.
The minimum wage is assessed based on the base salary.
The minimum wage requirement must be complied with when determining the employee’s base salary, rather than when assessing the employee’s total remuneration, including bonuses and allowances. Accordingly, the employee’s base salary, whether hourly, monthly, or a fixed portion of the official salary, must be at least the minimum wage. For skilled work, it must be higher, regardless of whether the employee receives additional remuneration.
When is it necessary to amend an employment contract?
If the minimum wage is specified in the employment contract as a specific amount (e.g., €1,038), the employment contract must be amended when the minimum wage changes. However, if the employment contract specifies the wage as the minimum monthly or hourly wage without specifying an amount, the employment contract does not need to be amended.
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