Yesterday the Parliament of the Republic of Lithuania voted in favour of a more liberal Labour Code. For the Code to be passed, the approval of the President of the Republic of Lithuania is necessary. Out of all the projects, the Labour Code received the most controversy during the last year due to the changes it offered to the labour market.

Once the Code is adopted, it will be much easier to dismiss the employees. This change is essential for the Lithuanian market as the current constraints prevent the employers from dismissing the employees transparently. Severance pay will be decreased to two average monthly salaries of the employee, while prior to the changes severance pay was up to six average monthly salaries.

The Code introduced a new form of employment agreement which by its essence is very similar to zero hours agreement. The only difference is that the employer shall pay for 8 hours of work per month if the employee is not called in to work. Also, the employer will be able to conclude fixed term contracts for the jobs of permanent nature as well as hire employees in order to carry out a certain project. Prior to the changes, the Labour Code favoured open-ended employment agreements.

The Labour Code shall enter into force in January, 2017.

COBALT Lithuania

Head of Employment Law Practise Group, Dr. Dalia Foigt