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Eversheds Saladžius insights on the new Labour Code

Eversheds Saladžius insights on the new Labour Code
  • Lithuania
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On 14 September, 2016 the Parliament of the Republic of Lithuania has rejected the President’s veto regarding newly adopted Labour Code, thus the previous version of the new Labour Code approved earlier this summer remains in force. We want to remind that the provisions of the new Labour Code will come into force from 1 January 2017. We would like to draw your attention to a few changes that are important to businesses and for which you should prepare in advance. 

Changes of the new Labour Code, which will affect some employers, are as follows: in case on 1 January, 2017 an average number of employees in the workplace will be 20 and more, the employer will be required to initiate a formation of the Works Council. Also, at least once per year the employer will be required to provide to the Works Council or trade union (if there is one) a depersonalised information about employees’ (except Head of the Companies) average wage in different occupation groups and gender. In the workplaces, where the average number of employees on 1 January 2017 will be higher than 50, the employer shall be required to adopt and announce personal data processing policy and organisational and technical security measures and also to publish measures for implementation of equal opportunities policy. 

We also want to draw your attention to a few important aspects related to the conclusion of employment contracts, i.e., as of 1 January, 2017 the employment contracts will come into force from the day the employee starts working in the company, not from the day when the employment contract was concluded, as it is at present. Also, in comparison to the current version of the Labour code, the newly adopted version provides that more terms of the employment contract shall be considered as essential (meaning, that without these terms, the contract shall be considered as void), i.e. not only the workplace (the specific company or department) or functions of the employee shall be provided, but also the payment of the salary for the work shall be discussed. Based on the current Labour Code the employment contract is considered to be concluded even though there are no provisions regarding payment of the salary.  

New labour code establishes changes which will influence all employers. New amendments are introduced in the area of holiday calculations, notice terms upon redundancy and amounts paid as a redundancy payment. Also, new principles, such as respect of a family life, are introduced. Paragraph 3 of Article 28 „Behaviour and actions of and employee shall be assessed by the employer seeking to support practical and overhaul implementation of work and family consistency.“ Among other novelties which can be useful for both: employees and employers, it is worth mentioning a possibility to share a working position. New labour code establishes that „Without exceeding a maximum allowed working time for each person, two employees may agree with an employer to share a single work position.“

One of the essential amendments, which is expected to make working environment more flexible, and related to a new type of labour agreement introduced in the new law, i.e. indeterminate labour agreements. According to these agreements, an employee is paid only for the actual working time.

Another amendment, which is expected to liberalise the working relations, is the increase of an overtime, which has been raised by 60 hours, in comparison to the current Labour Code, and shall amount to a maximum of 180 overtime hours per year. The employer will be able to either pay the employee for the overtime or provide additional holiday, which is not possible under the current labour law provisions.

To summarise the above, it can be concluded, that this new Labour Code shall ease the business conditions in Lithuania and presumably shall stimulate local and International investments. However in the short run, the implementation of new provisions of the labour code shall require time and financial resources from the employers.