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Recommendations on the new Labour Code in Lithuania

Please find below an overview on key changes in the regulatory framework under new Labour Code of the Republic of Lithuania, which comes into force on 1st of January, 2017 (if the effective date is not postponed).

New types of employment contracts

Employment contract for several employers:

employee works for two or more employers by performing the same job function;
contract should indicate the primary employer who will fulfil all obligations of the employer on behalf of all employers;
other employers shall reimburse the primary employer its costs in proportion to the working time attributed for the benefit of each employer.

Job-sharing employment contract:

two employees may agree with an employer to share one job position distributing tasks and working time between themselves.

Apprenticeship employment contract:

employee is hired for the purpose of acquiring skills and qualification or gaining competence necessary for a certain profession;
maximum duration - 6 months with some applicable exceptions.

Project-based work employment contract:

maximum permitted duration:
- 2 years for new employees or
- 5 years for the replacement of the existing employment contracts.

Changes related to fixed-term employment contracts

Employers will be able to conclude fixed-term contracts for permanent positions (must not exceed 20 percent of total employment contracts concluded in the company);

a maximum duration of 2 (exception - 5 years) years and afterwards the contract becomes permanent;

notice period: 5 business days (employment is 1-3 years) or 10 business days (employment exceeds 3 years);

1 average monthly salary severance compensation upon expiration of fixed-term contract exceeding 2 years.

Non-competition by employees

Changes

The parties of the employment contract may agree that the employee will not compete with the employer for a certain time after the expiration of the employment relationship.

These agreements may only be concluded with the employees who have skills and knowledge that could be applied in a competing business and thus cause harm to the employer.

The maximum duration of non- competition is 2 years after the termination of the employment. The employee is entitled to compensation amounting to at least 40 percent of average monthly salary (calculated at the time of termination of the employment).

The parties may also agree on a penalty in case the employee breaches the non- competition obligation but the penalty may not exceed compensation for 3 months.

An employee who violates the agreement on non-competition, non-competition period, must stop competing activities, repay the compensation and reimbursement of the damage caused to the employer.

The employee has the right to terminate the agreement of non-competition where the employer is late to pay the non- competition compensation (or part of it) for more than two months.

Recommendations

We recommend employers to review existing non- competition agreements with employees to make sure that the conditions specified therein match the new Labour Code requirements.

In the case if a non-competition agreement worsens the situation of the employee in relation to the provisions indicated in the new Labour Code, such agreement can be declared null and void at the employee's request.

Employment termination

* The dismissed employee, when the duration of employment is more than 5 years, shall additionally receive a severance pay from special state fund taking into account the continuous length of employment.

Protection of confidential information

Changes

The parties of the employment contract may enter into an additional agreement on the protection of confidential information during the performance of the employment contract and after the end of the contract.

The agreement on the protection of confidential information is valid for 1 year after the termination of the employment contract, unless longer term is agreed.

The parties of such agreement may also agree on penalties.

Protection of personal data and privacy of the employee

Changes

It is prohibited for the employer to handle personal data of the employee which is not related to labor needs, also to provide personal data of the employee to the third parties, except in cases provided by law.

Video surveillance and audio recording is prohibited in order to control the quality and extent of work. Video and audio recording can be carried out in the workplace only in cases justified specific activity.

The secrecy of the employee personal communication, such as personal correspondence, may not be violated.

Recommendations

It is recommended to formalize and familiarize employees with the policy of usage of information and communication technology, and monitoring of the personnel and control procedures in the workplace.

Also to adopt and publish the policy of security of personal data of the employees together with measures for its implementation, if the average number of employees is more than 50.

Employees should be informed by figurative sign about video and audio recording when it is allowed for specific activities of the company.

Working time and overtime

Labour Code provides for the employer a more flexible organization of working time, adapting not only to the specific nature of business, but also to the individual needs of employees. It is important to remember that despite the planned liberalisation and flexibility of labor relations in all cases maximum working time requirements can not be infringed.

Changes

Summary working time duration period - 3 months;
Maximum overtime limits: 12 hours per week (with the employee’s written consent) and 180 hours per year;
Maximum working time: 12 hours per day and 60 hours per week;
New types of working time regime: flexible working time, fragmented working day, individual working time, on-call work

Recommendations

We recommend employers to adjust wages and calculation of other payments, as well as payment systems (annual leave, overtime, etc.), so that they comply with the new rules.

It is important to note that the minimum wage will be paid only for unskilled work that is not subject to specific qualification or professional skills.

Note: transport, postal services, energy and other areas of economic activity may have different work and rest time rules. In this case, work and rest peculiarities are determined by the Government or by collective agreements.

Material liability of employees

The new Labour Code raises the limits on employee material liability, but eliminates full liability of employees as an option when concluding agreements.

Limits on material liability:

standard limit – 3 employee average monthly salary,
if damage is caused due to gross negligence of the employee – 6 employee average monthly salary,
collective agreements may establish a higher limit of liability, with the maximum of 12 employee average monthly salary.

Employee liability will be unlimited only under certain circumstances provided below:

employee causes damage on purpose,
while under the influence of alcohol or drugs,
the damage is done by the act of criminal nature,
damage is made in breach of the obligation to protect confidential information,
an agreement of non-competition,
damage is non-pecuniary,
collective agreement provides a case of full compensation.

Internal policies of the company

Changes

Companies, which on average have more than 20 employees, will be required:

to approve the remuneration system (salaries and supplements) rules;
within 6 months of the Effective date of the Labour Code to establish the Commission of the elections of the Works council in order to set up Works council.

Companies, which on average have more than 50 employees, will be required to adopt:

local acts on equal opportunities policy and employee data storage policies;
personal data retention policies and measures for its implementation.

The employer must inform the Works council and consult with it on the decisions on approval or modification of the company's internal regulatory documents.

Recommendations

We recommend employers to adjust wages and other payments calculation and payment systems (annual leave, overtime, etc.), so that they comply with the new rules.

It is important to note that the minimum wage will be paid only for unskilled work that is not subject to specific qualification or professional skills.

We hope this information was helpful

If you have more questions, related to the information provided or you need our help by adopting documentation of your company in compliance with the new Labour Code, please do not hesitate to contact us:

Loreta Andziulytė

Attorney at law

loreta.andziulyte@proventuslaw.lt
+370 5 212 40 84

Brigida Sorokina

Senior associate

brigida.sorokina@proventuslaw.lt
+370 5 212 40 84

ECOVIS ProventusLaw

Mėsinių g. 5, 01133 Vilnius
Tel.: +370 5 212 40 84
Faks.: +370 5 212 27 41
El. p.: vilnius@ecovis.lt

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