Hire Employees in Lithuania

Your own entity is normally a UĘB. Registration is quick and Lithuania has actively courted international financial services and shared-service operations, with a licensing regime that reflects that.

An Employer of Record inverts the sequence: the Lithuanian entity signs the Lithuanian-language contract, notifies Sodra at least one working day before the start, withholds the employee’s 19.5% and files monthly, while you direct the day-to-day work.

The most consequential thing to understand before quoting is that Lithuanian gross salaries are not comparable with those of any neighbouring market without adjustment.

Lithuania moved almost the entire contribution burden onto the employee in 2019 and uplifted gross salaries to compensate. The employer now pays 1.77% on an indefinite contract; the employee pays 19.5%. The practical consequence is that a Lithuanian gross salary is not comparable with a Latvian or Polish one without adjusting for the shift, and a foreign employer benchmarking on gross will misprice in both directions.

That 1.77% is among the lowest employer rates in the EU, which is a genuine advantage, but only if the gross figure being quoted is understood as post-uplift.

Fixed-term contracts carry a deliberate premium. The employer rate rises to 2.49% for a fixed-term contract, a policy disincentive rather than an administrative difference. It is small in absolute terms but signals how Lithuanian law views the two forms.

The Sodra ceiling of 60 VDU a year, roughly €138,270, caps the social insurance element but not health insurance, which continues above it. Income tax became three-tier from 2026 at 20%, 25% and 32%, which affects senior packages that were previously flat-rated.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Lithuanian entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Lithuania moved almost the entire contribution burden onto the employee in 2019 and uplifted gross salaries to compensate. The employer now pays 1.77% on an indefinite contract; the employee pays 19.5%. VSD social insurance at 12.52% and PSD health at 6.98%.

That 1.77% is among the lowest employer rates in the EU. But a Lithuanian gross figure quoted against a Latvian or Polish one will mislead in both directions unless the 2019 uplift is accounted for.

Fixed-term contracts carry a deliberate premium: the employer rate rises to 2.49%. It is small in absolute terms but it is a policy disincentive rather than an administrative difference, and it signals how Lithuanian law regards the two forms.

The Sodra ceiling of 60 VDU a year, roughly €138,270, caps the social insurance element but not health insurance, which continues above it.

A fixed-term contract costs the employer more than a permanent one, which is worth knowing because EOR placements are frequently fixed-term. Unemployment insurance is 1.31% on a permanent contract and 2.03% on a fixed term, so the same person on the same salary costs 0.72 points more. The employee’s deductions are identical either way, so the difference is invisible on the payslip and falls entirely on the employer. Accident cover is rated by group. 0.14% for Group I where most employers sit, rising to 1.40% for Group IV, with Sodra assigning groups annually. The Group II rate rose from 0.43% to 0.49% for 2026, which takes a Group II permanent-contract employer to 2.12% rather than the standard 1.77%.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Because the main charges are capped, the on-cost percentage falls sharply above the ceiling. Model a senior hire explicitly rather than scaling the junior figure, the error runs in your favour but it distorts the comparison against uncapped markets.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in euros. Contributions and withheld income tax are declared and paid to Sodra and the STI on a monthly cycle.

Income tax became three-tier from 2026 at 20%, 25% and 32%, replacing the previous two-band structure. That affects senior packages materially and any model built on the earlier scale will understate employee deductions at the top.

The tax-exempt amount tapers by formula as income rises, reaching zero at a defined threshold, so the effective marginal rate in the taper band exceeds the headline figure. That is worth explaining to candidates moving from a flat-rate market.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved, there are 3 such rows on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written contract in Lithuanian is required and must be signed before work begins.

Sodra must be notified at least one working day before the employee starts. That is a precondition rather than a filing formality, and starting someone before the notification is a breach.

Probation may run up to three months and cannot be extended. During it either party may terminate on three days’ notice.

The Labour Code recognises several contract types beyond the standard indefinite form, project-based, job-sharing, apprenticeship and temporary agency arrangements, each with its own rules, which gives more structural flexibility than most of the region.

Forty hours a week and eight a day, with a maximum of forty-eight including overtime averaged over a reference period. Overtime carries a 1.5 times premium, rising to double for night work and 2.5 times on rest days and public holidays.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise, reconstructing records after a complaint is far harder than keeping them.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected, reconstructing a record after a complaint is considerably harder than keeping one.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies, some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 16 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Lithuania observes 16 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 126 calendar days, or 140 for complicated or multiple births. Paid by Sodra at 77.58% of compensatory earnings, not by the employer. Paternity: 30 calendar days within the first year. Sodra-funded at 77.58%. Childcare leave: Until the child is 3. Sodra pays for the first two years at a rate the parent elects; two non-transferable months are reserved to each parent. Sick leave: From day 1. The employer pays days 1 and 2 at not less than 62.06%; Sodra pays from day 3 at 62.06%.

Additional rest days: 1 or 2 days a month for parents of young children. Paid, depending on the number and age of the children.

Termination requires a ground in the Labour Code. Notice for employer termination without employee fault is one month, or two weeks where the employee has worked less than a year.

Notice periods double for protected employees, those raising a child under fourteen, employees with a disability, and those within five years of pension age, and treble in some cases. That multiplier is easy to miss when planning an exit and can turn a one-month notice into three.

Severance is one month's average pay where service is under a year and two months where it is longer, paid by the employer. The Long-Term Employment Benefit Fund provides an additional payment for employees with five or more years of service, funded separately.

Probation may run up to three months and cannot be extended. During it either party may terminate on three days' notice.

EU, EEA and Swiss nationals need no permit. A third-country national needs a national visa and a temporary residence permit, generally preceded by a work permit unless an exemption applies.

Roles on the shortage occupation list avoid the labour market test, which is a materially faster route and covers much of the technology and engineering demand. Allow two to three months otherwise.

Lithuania has actively recruited relocating businesses and staff in recent years, and the Migration Department operates expedited processing for qualifying employers, worth confirming eligibility rather than assuming the standard timeline.

A cross-border hire may not attract local contributions at all. Under EU Regulations 883/2004 and 987/2009 a worker moving within the EEA is subject to one state’s social security system at a time. A posted worker stays in the home system for up to 24 months under Article 12, and someone working across two or more states follows a single state determined by a 25% activity test under Article 13. Where a valid A1 portable document is held, the host state cannot charge contributions. The certificate is declaratory rather than constitutive, the right legislation applies either way, but without it a host state can assess retroactively with penalties, and enforcement is aggressive in France, Belgium and Austria. Residual local charges are not always nil, so confirm the specific position rather than assuming zero.

Notice periods double for protected employees, those raising a child under fourteen, employees with a disability, and those within five years of pension age, and treble in some cases. A one-month notice can become three, and the multiplier is easy to miss when planning an exit.

Severance is one month’s average pay where service is under a year and two months where longer, with the Long-Term Employment Benefit Fund providing an additional payment for employees with five or more years, funded separately.

Practical controls: notify Sodra before the start date, check protected status before serving notice, apply 2.49% rather than 1.77% on fixed-term contracts, and configure the three-tier income tax scale introduced in 2026.

Work backwards from the start date. For an EU national, a week or two is realistic. A non-EU hire needs a national visa and temporary residence permit, adding two to three months, with a faster route for shortage occupations.

Confirm before making an offer: whether the contract will be indefinite or fixed-term, since the employer rate differs; whether the candidate falls into a protected category, since notice doubles; and that the gross figure is understood in post-2019 terms.

The employee must be notified to Sodra at least one working day before starting work. That is a precondition rather than a filing formality, and starting someone before the notification is a breach. The contract must be in Lithuanian and signed before work begins.