Algirdas Pekšys Senior Associate, Head of Corporate Advisory team in Lithuania algirdas.peksys@sorainen.lt

Please note that as of 23 July 2009, the Lithuanian Seimas adopted amendments to the Labour Code to regulate employment relations more flexibly, to encourage employers facing both economic decline and difficulty tuning in to the rapidly changing market environment.

The amendments to the Labour Code allow employers and employees to come to terms in a collective agreement on conditions more favourable to employers as compared to those set out in the Labour Code. Below is a list of matters with which collective agreements may deal from now on:

• Shorter dismissal notice period. Under the Labour Code, employers are required to notify employees in writing of termination of employment (without employee fault) two (and in certain cases – four) months in advance. Henceforth, collective agreements may provide for shorter time-limits, i.e. up to one or two months, respectively.
• Shorter notice period for change in remuneration terms and conditions. Under the Labour Code, employees must be notified one month in advance of new payment conditions. The amendment allows a 2-week term to be included in the collective agreement.
• The amendment allows restriction on dismissal from work to individuals with three years (rather than five, as in the Labour Code) until entitlement to old age pension.
• Under the amendment, a fixed-term employment contract may, along with other grounds, be terminated with the severance pay in the amount of one month average salary.
• The amendment allows employers to pay a lower salary for time out granted to search for a new job (stipulating a minimum hourly pay for time spent searching).

Some amendments to the Labour Code have direct effect, i.e. they do not require embodying in the collective agreement. One major amendment is the possibility for the employer to settle with a redundant employee within a term of three months (rather than on the date of dismissal as was formerly the case), but only if the employee is eligible for severance pay amounting to at least five months’ average salaries.

Another considerable amendment – change of overtime work conditions. From now on, employees may work four hours overtime daily. To date, four hours overtime work was allowed every two working days. However, the annual overtime work norm of 180 hours was not changed.

In addition, other amendments are not directly related to liberalisation of employment relations. An example is a wider concept of illegal work. Illegal work is meant not only as work without an employment contract, but also as work by individuals where the employer does not notify territorial SODRA division of employment of such individuals. Further, the status of employees holding fixed-term employment contracts is made more comprehensive. The amendment proposes that these employees should be subject to conditions of employment, in-service training, and promotion equal to those applicable to employees with indefinite-term employment contracts.

It is noteworthy that the major part of the Labour Code amendments (including the provisions of collective agreements that will be agreed on the basis of these amendments) are only effective until 31 December 2010. The amendments mentioned in the above paragraph are of unlimited duration.