Significant changes regarding the regulation of labour relations and their taxation were adopted in 2019 and they took effect from 1st January 2020.

  1. The statutory minimum wage was increased.

Minimum monthly wage was increased to 607 Eur (EUR 555 in 2019).

  1. Maximum tax-free income

Maximum monthly tax-free income for 2020 – EUR 350, intended for residents whose income from employment or from an employment relationship is of a nature which does not exceed that of MMA.

  1. The progressivity of income tax is increasing

Income tax rate of 20% is applied to the amount of annual earnings up to 84 national average wages (up to EUR 104.277,6 per year/average EUR 8.689,8 / month before taxes).

Income tax rate of 32% is applied to the amount of annual earnings over 84 national average wages (from 2021 over 60 national average wages).

  1. The average wages of the state increase

The average wages of the state will be EUR 1.241,4 in 2020 (EUR 1.136,2 in 2019).

  1. Paternity leave

30 calendar days Uninterrupted parental leave will be granted at any time from birth of the child by the time the child reaches the age of 1 year.

  1. Employee annual leave

Employees, that have unused annual leave of more than three years’ employment before the entry into force of the Labour Code, shall be entitled to such leave until 1st July 2020.

  1. Additional holiday day

The list of public holidays set forth in Article 123 of the Lithuanian Labor Code has been supplemented. 2nd November – The Day of Remembrance of the Dead becomes a public holiday

  1. Simplified termination of employment in the event of employer bankruptcy

The obligation to consult the work council or the trade union regarding dismissal of the group of employees in the event of the bankruptcy of the company is removed.

  1. Expiry of a collective agreement

In the event of the employer’s bankruptcy, the collective agreement expires upon termination of the employment contracts with all employees.

ECOVIS Proventus tax specialists are prepared to assist you promptly, if you have any questions regarding employment tax.