Employer of Record in Lithuania

How does an Employer of Record work in Lithuania?

The largest fintech and one of the largest business services hubs in the Baltics and an advanced economy with high wages regionally yet low employer costs, Lithuania is a consistently attractive location for foreign employers.

A new tax regime, tight rules on non-EU worker hiring, and a detailed labor code can present certain challenges to foreign entities looking to hire in Lithuania.

A local Employer of Record (EOR) deeply understands employment laws, trends, and requirements, making your entire hiring process smooth and compliant.

Lithuania’s labor market: Snapshot

The hiring market

Unemployment	6.2% (July 2026)
Greatest hiring activity	Vilnius and Kaunas
Hiring timelines	4-8 weeks; non-EU hires can take longer due to tighter rules and annual permit quota limits
In-demand sectors	ICT, software, fintech (especially compliance, risk, AML, and payments engineering), global business services (e.g. multilingual finance, customer/IT support, HR), manufacturing (machinery, electronics), life sciences
Sectors with skills shortages	Niche IT and senior roles, experienced engineers, compliance specialists, construction trades, heavy-goods drivers

The salary market

Employer contributions	Permanent employee (open-ended contract)	Fixed-term employee (fixed-term contract)
Sodra state social security contributions (covers unemployment and accident insurance, with percentages per risk group)	Group I - 1.45% Group II - 1.80% Group III - 2.01% Group IV - 2.71%	Group I - 2.17% Group II - 2.52% Group III - 2.73% Group IV - 3.43%
Guarantee fund (covers pay in case of employer insolvency)	0.16%	0.16%
Long-term Employment Benefit Fund (extra payout to long-serving staff on dismissal)	0.16%	0.16%
TOTAL EMPLOYER CONTRIBUTION	1.77% - 3.03%	2.49% - 3.75%

Earnings

Minimum hourly wage (gross)	€7.05 in 2026, increasing to €7.61 from 1 January 2027
Minimum monthly wage (gross)	€1,153 in 2026, increasing to €1,245 from 1 January 2027
Average annual earnings (gross)	€31,540 (annualised, Q2 2026); higher in Vilnius and for workers in insurance and finance
Personal income tax rates (3-band scale introduced in January 2026)	20% - up to €83,237.40 25% - from €83,237.40 to €138,729 32% - above €138,729

What costs are involved when hiring in Lithuania?

Employer on-costs in Lithuania are among the lowest in the EU as most social insurance is directly deducted from the employees’ gross pay. While this reduces the burden for employers, there are still a number of statutory contributions and allowances to factor in when calculating employment costs.

Base salary

This is the gross figure before any tax and social insurance deductions paid by the employee. The table above lists averages, but it is important to bear in mind that these figures may be higher depending on location and if the role is in an in-demand sector or is a senior / specialist position.

Statutory employer contributions

Aside from state social insurance (employer rates vary depending on the job’s risk category - most office employers fall into Group I), mandatory employer contributions are made to the Long-Term Employment Benefit Fund and the Guarantee Fund. Total contributions are between 1.77% - 3.03% for permanent employees and 2.49% - 3.75% for fixed-term employees. See table above for a more detailed breakdown.

Other costs

Paid annual leave	Employees are entitled to 20 working days at average pay (25 for certain protected groups), plus 3 extra days after 10 years of continuous service with the same employer, and 1 extra for every additional 5 years thereafter.
Sick pay	The first 2 days are paid by the employer at 62.06% - 100% of the employee’s average pay (the employer sets the rate). Sodra pays from Day 3 at 62.06% of their average pay. A medical certificate of incapacity is needed to qualify for sickness benefits.
Paid parent days off	Paid at average pay: 1 x per every 3 months - parents of one child under 12 1 x per month - parents of two children under 12 1 x per month - parents of a disabled child under 18 2 x per month - parents of three or more children under 12
Public holidays	Lithuania has 16 public holidays - these are paid days off aside from the 3 that always fall on a Sunday. If an employee must work on a public holiday, then their compensation is at least 2x their normal pay. Any overtime on a public holiday is paid at 2.5x their normal pay. Unusually, the working day before a public holiday ends 1 hour early, including for part-time staff. If the employer cannot give that hour, then the employee is compensated as overtime of at least 1.5x pay for that hour.
Overtime	Overtime rules are strict. It generally requires the employee’s consent, although employers can require it without consent in exceptional situations. Normal working time is 40 hours a week. Overtime must not exceed 8 hours in a week (although up to 12 hours are allowed with the employee’s specific consent). Total annual cap of 180 overtime hours. Overtime on a working day is at least 1.5 x normal pay and at least 2.5x on a public holiday. Employees can request overtime conversion to annual leave time at a 1.5x conversion rate per overtime hour.
Severance pay	Severance payments are based on length of service: <1 year - 0.5 month’s pay; paid by employer 1 year+ - 2 months’ pay; paid by employer 5 years+ - 2 months’ pay, paid for by employer; Sodra pays the employee an additional separate amount on top (currently 77.58% of 1-3 months’ pay depending on service).
Parental leave	Paid for by Sodra, not the employer. Maternity leave is 126 calendar days (70 before the birth, 56 after). Paternity leave is 30 calendar days.
Holiday and Christmas bonus	Not statutory. This is at the discretion of individual employers.
Educational leave	Employees can take up to 5 working days per year for adult education courses. There is no statutory payment unless the employee has worked with the company for more than 5 years, although the employer can choose to pay them. For 5+ years of service, employees receive at least half their average salary, for up to 10 days of job-related educational leave, including formal study.
Additional benefits (optional)	Private insurance is a popular perk (especially in tech and finance), followed by training budgets, meal allowances, pension top-ups, and sports cards

Worked Example

An employee at an average salary (Q2 2026) of €2,628.20 gross plus total employer contributions of €46.52 (at 1.77%) equals a total monthly cost of €2,674.72 and total annual cost of €32,097 (excluding other costs such as annual leave and paid parent days off).

Calculate employment costs

Try our employee cost calculator below to gain a better understanding of the total cost for your potential hire.

What hiring in Lithuania currently looks like

Market condition	Current reality
Hiring momentum	🟡 Moderate
Talent availability	🟡 Moderate
Specialist talent	🔴 Competitive
Salary pressure	🔴 High
Candidate expectations	🔴 High
Non-EU hiring	🔴 Restricted
Workforce skills	🟢 Strong

Hiring momentum

While the Lithuanian economy is growing (GDP forecast for 2026 is +3.0%), unemployment is at 6.2% (July 2026). The market is steady overall rather than experiencing a hiring boom.

Talent availability

Lithuania’s unemployment rate means that job seekers are readily available, particularly for generalist and junior roles (the youth unemployment rate is higher than the average, at around 12.6% in June 2026). Filling entry-level and early-career positions is much easier than it was a few years ago.

Specialist talent

Lithuania is currently experiencing a lack of senior IT, fintech, and compliance specialists, so competition is high. Potential employers would be wise to make attractive offers and move quickly to secure specialist talent.

Salary pressure

Wages are increasing quickly: the average gross pay has increased by around 10% year-on-year (Q2, 2026), with the minimum wage increasing by 8% from 2026 to 2027. This is important to bear in mind during annual salary reviews and contract renewals.

Candidate expectations

Since 2019, Lithuanian law requires job ads to publish the salary range. The EU Pay Transparency Directive (implemented in June 2026) has strengthened pay equality. From 2027, employees will be able to request information on their individual pay level as well as average pay levels by sex. Candidates in competitive fields expect competitive offers, including benefits such as flexible working and private health insurance.

Workforce skills

Lithuanians are generally well-educated and speak good English, especially younger professionals. Approximately 61% of 25-34-year-olds have a degree (the third-highest share in the EU). English is taught widely in schools, so many workers speak the language at varying levels of fluency. English levels tend to be higher in the capital, where a lot of international, tech, and fintech firms are based and English is used as a working language.

A Lithuania-specific problem that employers should know about

Non-EU hiring

Non-EU citizens can only work in Lithuania on a Temporary Residence Permit (TRP) since rule changes were implemented in July 2024. Working on visa-free stays has now been abolished.

If you intend to hire a foreign employee for your needs in Lithuania, it is important to know that Lithuania imposes an annual quota on non-highly qualified non-EU workers. This quota is set annually by the Minister of Social Security and Labor, capped at 1.4% of the population. Note: The 2026 quota of 24,706 TRP permits ran out by September.

The quota does not apply to workers earning a monthly gross salary of at least €2,893.68 (2026), workers in a high value-added shortage occupation earning at least €2,411.40, or EU Blue Card holders.

EU, EEA, and Swiss citizens do not need a permit. They just need to notify the local authorities of their residence.

Labor market test requirements were abolished in 2025 and replaced by the quota system tied to salary thresholds.

Processing time: 3-4 months for a TRP (2 months if fast-tracked) or around 4 weeks for an EU Blue Card (15 days if fast-tracked).

Permit Type	Conditions	Quota applies?
Temporary Residence Permit (TRP)	Most non-highly-qualified non-EU workers. Individuals must have a job offer from a Lithuanian employer and meet one of the following conditions: a) relevant qualifications, b) at least 1 year of relevant experience in the past 3 years, or c) a salary of at least €2,411.40 per month. Once the quota is exceeded, the salary must be at least €2,893.68 per month (2026), or at least €2,411.40 per month for high-value-add shortage jobs that are quota-exempt. Valid up to 2 years; renewable.	Yes (new only; not renewals)
EU Blue Card	For professionals with a tertiary degree or qualifying experience. Salary of at least €3,617.10 per month and a contract of at least 6 months. Valid up to 3 years.	No

Compliance risks that employers must know about

The 1-working-day Sodra deadline

Even if the contract is signed, employers must notify the social insurance body (Sodra) at least one working day prior to the employee’s start date. It is considered illegal work if either this notice or a contract is missing and the employer will be fined.

Pay transparency

Lithuania has robust pay transparency laws. Since 2019, all job ads must include a salary range. The EU Pay Transparency Directive adds an additional layer of protection by requiring equal pay for equal work, regardless of gender. Employees have the right to request and receive average pay levels of other employees doing similar work, broken down by gender.

Remote work requests

Remote work can be agreed by employer and employee, but there is no legal expectation to offer it. Remote and hybrid work are common in sectors such as IT, fintech, and business services, so candidates may expect flexibility. Remote working requests must be granted to protected employees (pregnancy, breastfeeding, single parents, carers, parents of children under 8) unless they cannot be met because of how their work is organised or the production process. From 1 November 2026, cost is no longer a valid refusal reason.

Dismissals

There are four common dismissal categories, each with its own conditions.

1. No-fault dismissal (e.g. redundancy). The employer must give 2 weeks’ notice if the employee served there for under 1 year or 1 month after that (longer for protected groups). Pregnant workers or those with children under 3 can’t be dismissed on these grounds. See ‘Other costs’ for specific severance payment scales.

2. Dismissal at the employer’s will. From 1 November 2026, employers must have a substantiated reason for this type of dismissal. As the law doesn’t define ‘substantiated’, it is vital to document everything carefully. The employee receives at least 6 months’ average pay. Written notice period: 3 working days.

3. Dismissal for fault (e.g. gross breach of job responsibilities). The breach must be documented and the employee can respond in writing first. No notice or severance.

4. Dismissal during probation. Probation is up to 3 months (or up to 6 months from 1 November 2026 for employees earning at least twice the national average monthly wage). Employers can end employment during probation only if the employee’s probation performance was unsatisfactory, so it is important to document performance against clear KPIs. Probation can be ended early by either side with 3 working days’ written notice. No severance.

It is important to identify the correct category and follow any procedures carefully, as employees can challenge unlawful dismissals with the Labor Disputes Commission or ultimately at court, potentially leading to reinstatement or compensation.

An EOR such as Rivermate can leverage its local expertise of HR and employment laws to ensure dismissals are handled compliantly and are in line with all legal obligations.

Benefits of hiring employees through an EOR in Lithuania

EORs help foreign companies with the hiring, onboarding, HR administration, and payroll compliance of local employees, ensuring that everything is handled legally and smoothly. Benefits include:

• The EOR acts as your hire’s legal employer locally, so you don’t need to invest time and money setting up your business in Lithuania
• Up-to-date guidance on non-EU hiring steps to hire quickly and avoid setbacks
• EORs like Rivermate also handle the complete work permit process
• Advice on salary trends, employer costs, allowances, and common perks
• Ensure your hire is registered with Sodra and a contract is in place before Day 1
• Reassurance that all local employment laws and Lithuanian labor code processes are followed accurately

Ready to hire in Lithuania?

Hiring in Lithuania involves more than finding the right candidate. From payroll management, tax obligations, and benefits administration to ensuring full compliance with Lithuanian Labor Law, Rivermate handles the complexities so you can hire with confidence.

Talk to a Lithuania Hiring Expert

Sources:

Sodra – 2026 employer contribution rates
State Tax Inspectorate (VMI) – Personal income tax changes from 2026
Government of Lithuania – 2026 minimum wage resolution
State Data Agency (Statistics Lithuania) – Main indicators
e-Seimas – Labour Code of the Republic of Lithuania
e-TAR – Law No. XV-1058 amending the Labour Code (from 1 November 2026)
Ministry of Social Security and Labour – Working and rest time, Guarantees for parents and Maternity benefit
State Labour Inspectorate – Work-life balance
Migration Department – Foreign worker quota tracker
Work in Lithuania (Invest Lithuania) – 2026 quota and salary thresholds
Invest Lithuania – Why investors choose Lithuania
Eurostat – Tertiary education attainment 2025 and Monthly unemployment
Eurofound – Notice periods and Severance pay
EU Immigration Portal – Employed worker in Lithuania
LRT – 2027 minimum wage, 2026 quota exhausted and sick pay rules
KPMG – 2024 changes for third-country nationals
Deloitte Legal – Changes in the employment of foreigners
Sorainen – 2026 changes in employing foreign nationals
WTW – Lithuania pay transparency legislation
Ius Laboris (COBALT) – Salary information in job adverts
Trusaic – Lithuania delays right to information to 2027