Employer of Record (EOR) in Lithuania
An EOR in Lithuania allows businesses to enter the market quickly and help maintain compliance with local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment, from payroll processing to compliant administration.
Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in Lithuania.
Quick Overview of EOR in Lithuania
Expanding into Lithuania doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of local regulations and quickly hire employees, all while maintaining compliance with Lithuania's Labour Code. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like social security contributions to the State Social Insurance Fund (SoDra), so you can focus on growing your business without the need to set up a costly local entity.
The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in Lithuania can cost anywhere from USD 15,000 to USD 30,000 plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.
How an EOR Works
Atlas HXM provides EOR services that ensure your business remains compliant with Lithuania's labour laws while you focus on growing your operations, free from administrative and legal burdens.
Candidate Selection
Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Lithuanian rules, and configuring payroll and statutory obligations correctly.
Employment Contracts
Atlas HXM drafts and administers employment contracts in compliance with Lithuania's Labour Code. In the contract, we clearly outline employment terms to reduce the risk of future disputes, such as:
Job title and responsibilities
Salary, benefits, and working hours
Leave entitlements and notice periods
Payroll & Benefits Management
Payroll is processed in Euros (EUR), including:
Accurate tax withholdings and social security contributions to SoDra
Statutory benefits such as health insurance and pension contributions
The EOR also helps maintain compliance with mandatory benefits, so employees are protected under Lithuania's laws.
Ongoing HR Support
Provides HR support, including: Leave management, employee relations and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.
What to Choose: EOR vs PEO
Work Life in Lithuania
Lithuania's employment framework is designed to balance operational needs with strong employee protections. Here's what you need to know:
Employment Types:
Permanent: Open-ended employment for ongoing roles, with full statutory benefits and strong job security protections under the Lithuanian Labour Code.
Fixed-Term: Hired for a specific project or defined duration, with a maximum term of 2 years in the same role with the same employer (including renewals), or up to 5 years across different functions. Written contracts are mandatory.
Probation Periods: The maximum probationary period in Lithuania is 3 months. For fixed-term contracts lasting less than 6 months, the probationary period must be proportional to the contract term. Probation periods must be explicitly stated in employment contracts. Either party may terminate the contract during probation by providing a 3-day notice, with no severance pay required. The EOR ensures that all terms comply with Lithuanian labour law.
Working Hours & Overtime: In Lithuania, the standard workweek is 40 hours, with average working hours not exceeding 48 hours per week. Working time, including overtime, may not exceed 12 hours per workday or shift and 60 hours over 7 days. Night shift employees cannot work more than 8 hours per shift. For eligible employees, overtime is compensated at 1.5 times the regular salary for standard overtime, 2 times the remuneration for work on days off and night overtime, and 2.5 times the usual wages for overtime on public holidays. The EOR ensures that all overtime is calculated correctly and that employee work hours comply with local regulations.
Leave Entitlements
Leave Type | Eligibility / Duration | Payment / Notes |
|---|---|---|
Annual Leave | 20 working days (5-day week) or 24 working days (6-day week) annually | Average remuneration; full entitlement after working at least half the working days in the first year |
Maternity Leave | 70 days before and 56 days after delivery (extended to 70 days after birth in case of complications or multiple births) | 77.58% of compensated wage paid by SoDra; minimum EUR 440 per month |
Paternity Leave | 30 uninterrupted days, taken before the child turns 3 months old (6 months in cases of complications or multiple births) | 77.58% of compensated wage; minimum EUR 440; paid by SoDra |
Sick Leave | First 2 days paid by employer at 62.06-100% of average salary; from day 3, SoDra pays 62.06% | Requires at least 3 months of contributions in the last 12 months |
Public Holidays | All statutory holidays | At least 2 times regular wages for work on public holidays, or equivalent rest day in lieu |
Payroll & Benefits: The minimum monthly wage in Lithuania effective January 1, 2025 is EUR 1,038. Atlas HXM manages payroll in EUR, social security contributions to SoDra (employer and employee), statutory benefits including health insurance, pension, and unemployment insurance. Supplemental benefits can include private health insurance, meal vouchers, transportation allowances, voluntary pension contributions, and professional development options.
Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with Lithuania's labour laws while businesses can focus on operations without administrative burdens.
What to Choose: Indirect vs Direct EOR
Taxes & Compliance
Lithuania's fiscal year runs from January 1 to December 31. Employers must remit withheld personal income tax and social insurance contributions to the State Tax Inspectorate (STI) and SoDra on a monthly basis, typically by the 15th of the following month. Annual personal income tax returns are due by May 1 of the following year. Corporate income tax returns must be filed by the first day of the sixth month following the end of the tax period. VAT returns are generally due by the 25th day of the month following the reporting period.
Category | Details |
|---|---|
Employer Payroll Tax | Accident at work and occupational disease insurance: approximately 1.77% to 2.49% of gross salary depending on risk category, in addition to standard social security contributions |
Employee Payroll Tax | Social insurance contributions: approximately 19.5% of gross salary, covering 12.52% general social insurance (which bundles pension, sickness, maternity, and unemployment coverage together) plus 6.98% health insurance |
Personal Income Tax | 20% up to about EUR 82,962 of combined annual income, 25% from about EUR 82,962 to EUR 138,270, and 32% above that |
Pension System | Multi-pillar system: Public pillar (SoDra) and private pillar (voluntary pension funds); retirement age currently 64 years 8 months (females) and 64 years 10 months (males), increasing to 65 for both by 2026; minimum 15 years insurance record and 34 years work experience required |
VAT & EOR Costs: Lithuania applies a standard VAT rate of 21% on most goods and services, with reduced rates of 12% and 5% applicable to specific categories. EOR service fees are generally subject to the standard 21% VAT rate. Lithuanian-registered businesses may be able to recover input VAT in accordance with local tax regulations. Foreign companies without a VAT registration in Lithuania may be subject to the EU reverse charge mechanism.
Atlas HXM handles tax compliance, including progressive income tax calculations, social insurance contributions, year-end filings, and expatriate tax planning, ensuring businesses remain compliant with local laws while minimizing administrative burden.
Termination
Employees must give written notice for termination, with statutory notice periods varying based on the reason for termination and the party initiating it. Employees resigning must provide a minimum of 14 days' notice. Employers dismissing employees due to organizational changes must provide 1 month's notice for employees with more than 1 year of service. Severance entitlements range from 1 month's salary to 6 months' remuneration depending on the circumstances. Strong employee protections exist during pregnancy, illness, and other protected periods. The EOR helps ensure proper handling of terminations, including notice periods, severance calculations, final wages, and required documentation.
5 Things to Look for in an EOR Provider in Lithuania
Local expertise and knowledge of Lithuania's Labour Code, SoDra contribution requirements, and immigration regulations.
Advanced technology for payroll, reporting, and HR system integration.
Experience in your industry.
Strong compliance track record and established relationships with Lithuanian government agencies and legal advisors.
Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).
Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently. Atlas HXM's unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2026, Atlas HXM combines compliance, technology, and global expertise.
FAQs
How quickly can I hire employees in Lithuania through an EOR?
You can typically hire employees within 1–2 weeks, compared to several months required for establishing a local legal entity.
What is the minimum wage in Lithuania?
Effective January 1, 2025, the minimum monthly wage in Lithuania is EUR 1,038. Collective agreements may establish higher minimum wages than the government-mandated rate.
Are there restrictions on terminating employees?
Yes, Lithuania has strong employee protection laws under the Labour Code requiring proper notice, just cause where applicable, and severance pay depending on the circumstances of termination.
Is a 13th month salary mandatory in Lithuania?
No, Lithuania does not legally mandate a 13th month salary payment. However, if such payments are included in the employment contract or company policy, they become legally binding obligations for the employer.
What are the main employer payroll contributions in Lithuania?
Employers contribute to SoDra for social insurance obligations, including accident at work and occupational disease insurance at approximately 1.77% to 2.49% depending on risk category, in addition to standard social security contributions.
What is the standard annual leave entitlement in Lithuania?
Employees working a 5-day week are entitled to 20 working days of annual leave per year. Employees working a 6-day week are entitled to 24 working days. Annual leave must be granted at least once per year and employees receive their average remuneration during the leave period.