How to hire and fire employees in Lithuania according to Labour Law: Firing the employee
Procedures For Terminating the Agreement
In all cases the termination of an employment contract must comply with the terms of the contract. In most cases, there are certain minimum steps which must be followed before termination to avoid the termination amounting to an unfair dismissal. An employer must be able to demonstrate a "potentially fair" reason for dismissal.
An employment contract will expire: 1) upon the termination thereof on the grounds established by the Labour Code and other laws (termination of the employment contract by mutual agreement, upon contract’s expiry, upon the notice of employee, due to circumstances beyond the Employees control, on the initiative of an Employer without any fault on the part of an Employee; 2) upon the liquidation of an employer without legal successor; and 3) upon the death of an employee. For every type of termination the procedural requirements differs.
An employment contract must be terminated without notice in the following circumstances:
1) upon an effective court decision, or when a court judgement impose a custodial sentence on the employee, which prevents him from continuing his work;
2) when an employee is deprived of special rights to perform certain work in accordance with the procedure prescribed by laws;
3) upon the demand of bodies or officials authorised by laws;
4) when an employee is unable to perform these duties or work in accordance with an opinion of the medical commission or the commission for the establishment of disability;
5) when a parent, statutory representative, doctor or school of an employee between the age of 14 and 16 years demands that the employment contract be terminated;
6) upon the liquidation of an employer.
An employment contract will expire upon the death of an employer if the contract was concluded for the supply of services to him personally, as well as when the employer has no legal successor.
An employer will be entitled to terminate an employment contract without giving an employee prior notice under the following circumstances: 1) when the employee performs his duties negligently or commits other breaches provided that disciplinary sanctions were imposed on him at least once during the last 12 months; 2) when the employee commits a gross breach of duties. The term of "gross breach of duties" is specified in the Labour Code.
An employee is entitled to terminate a non-term employment contract, as well as a fixed-term employment contract, prior to its expiry by giving his employer written notice of at least 14 business days. The collective agreement may set a different period of notice, but it shall not exceed one month.
Termination On Notice
An employer may terminate a non-term employment contract with an employee only for valid reasons and by giving him notice in accordance with the procedure established by law. The general notice period is 2 months, but for special groups of persons (disabled persons or persons raising children under 14 years of age etc.) the notice period is 4 months. The dismissal of an employee from work without any fault on the part of the employee concerned will be allowed if the employee cannot, with his consent, be transferred to another work.
Reasons for dismissal which are related to the qualification, professional skills or conduct of an employee, are recognised as valid. An employment contract may also be terminated on economic, technological grounds or due to the restructuring of the workplace, as well as for other similar valid reasons.
Termination By Reason Of The Employee's Age
Termination by reason of the employee's age is discriminatory.
Automatic Termination In Cases Of Force Majeure
The death of the employee shall be understood as the automatic termination of the employment relations.
Termination By Parties’ Agreement
One party to an employment contract may put forward in writing to the other party that the employment contract be terminated by agreement between the parties. If accepted the parties must agree to termination within seven days of the option being put forward. Having agreed to terminate the contract, the parties conclude a written agreement on the termination of the contract. This agreement indicates the date when the contract will be terminated as well as other conditions of the termination of the contract (compensation, granting of unused leave, etc.).If the other party fails, within the time period of 7 days, to inform the other party that it agrees to the termination, the offer to terminate the employment contract by agreement is considered rejected.
Directors Or Other Senior Officers
There are no special rules which relate to the termination of a director or other senior officer's employment, but in the case of a statutory director (or other company officer), termination of employment does not automatically bring to an end the directorship. Separate steps will be required to bring the directorship to an end (pursuant to the company's articles of association).
Special Rules For Categories Of Employee
There are no categories of employee to whom special rules apply, but certain categories (e.g. disabled employees, employees raising children) benefit from more generous rules of protection from unfair dismissal or enjoy longer notification periods – up to 4 months. For certain categories of employees the termination of employment contract is not allowed at all (for instance pregnant women, employees raising a child under 3 years of age if there is no fault of employee etc.)
Specific Rules For Companies in Financial Difficulties
An employment contract may be terminated on economic, technological grounds or due to the restructuring of the workplace, as well as for other similar valid reasons. However the Employer must establish the fact that company is in financial difficulties. An employee will be entitled to terminate a non-term employment contract, as well as a fixed-term employment contract for a period exceeding six months, if the employee has no work over 30 successive days or if it amounts to over 60 days in the last twelve months. The employee can also terminate the contract if the employee is not paid his full monthly wage for over two successive months. The employment contract must be terminated from the date indicated in the employee’s request. This date must be at least three days after the submission of the request.
Restricting Future Activities
The Labour Code is silent on possible restrictions of future activities, however, if such restrictions apply they must be designed to protect a 'legitimate business interest' and they should be no wider than is necessary to protect those interests. Further they must be clear and reasonable in time and area. The employer and the employee can sign a civil agreement regarding restriction of future activities. The employee shall always be compensated for any restrictions of future activities, otherwise the agreement is deemed invalid.
Upon the termination of the employment contract the dismissed employee must be paid a severance pay in the amount of his average monthly wage taking into account the continuous length of service at that workplace provided the employee is not at fault. If the employee has worked under 12 months he is entitled to one month's average wage; 12 to 36 months he is entitled to two month's average wage; 36 to 60 months he is entitled to three month's average wage; 60 to 120 months he is entitled to four month's average wage; 120 to 240 months he is entitled to five month's average wage;) over 240 months he is entitled to six month's average wages. Upon the termination of an employment contract in other cases without any fault on the part of the employee concerned, he will be paid a severance pay in the amount of two month's average wage, unless otherwise provided by law or collective agreement. If it is established that the working conditions were changed, the employee was suspended from work without a valid reason or in breach of law, the violated rights of the employee must be restored and he must recover the average work pay for the entire period of involuntary idle time or the difference in the work pay for the time period the employee was employed in a lower paid job.
Special Tax Provisions And Severance Payments
Severance payments are subjected to personal income tax.
Allowances Payable To Employees After Termination
Employers are not required to contribute to any allowances payable to employees after termination.
Time Limits For Claims Following Termination
An employee who disagrees with the changing of the working conditions, suspension from work on the employer's initiative or dismissal from work is entitled to apply to the court within one month from the day of receipt of the appropriate notice (document).
Jovita Valatkaite, lawyer of the Gencs Valters Law Firm in Vilnius
Practising in fields of Labour Law in Latvia, Lithuania and Estonia
T: +370 52 61 10 00
F: +370 52 61 11 00