Lithuania: Employers must ensure proper procedures for terminating employment agreements

Failing to follow the requirements for proper termination of employment agreements can prove very costly to employers.

It’s been almost 5 years since adoption of Lithuania’s new labour code. It seems that employers have long been familiar with the new regulation the labour code brought. However, our experience clearly shows that sometimes employers do not pay attention to existing laws and their negligence costs them dearly. In this article we remind employers what must be considered in order to avoid costly consequences for non-compliance with current legislation.

The Labour code provides multiple options both for employers and employees to terminate employment relations. However, the employer bears the burden of ensuring that termination of the employment is carried out precisely according to the law, regardless of the grounds of termination.

Consequently, even if an employment agreement is terminated at the employer’s initiative due to employee fault, the employer still needs to precisely follow the procedure for terminating the employment agreement. Failure to do so could mean that termination the Labour Dispute Commission (a pre-court institution for labour disputes) or later the Court holds termination unlawful.

The consequences of unlawfully terminating an employment agreement can result in hefty compensation awarded to the employee. Depending on different variables (i.e., salaries, accumulated leave days), the amounts awarded to employees for unlawful employment termination can amount to tens of thousands. Very often these consequences can be avoided by following a few simple rules:
• Always strictly follow the formal procedures provided by the law.
• If necessary, gather as much supporting evidence as possible to prove the employee’s misconduct.
• In the case of a labour dispute, follow the procedures and comply with requests from the authorities.
If an employer/employee dispute ends up in the Labour Dispute Commission, which then adopts a decision unfavourable to the employer, the employer must respond and act accordingly:
• The decision of the Commission comes into force within a month from its adoption. If the employer does not agree with the decision, a claim must be filed with the court within a month of adoption of the decision.
• If the employer does not proceed to court, the Commission decision becomes an enforceable document, and the employee gains the right to initiate enforcement proceedings against the employer.
• If the employer does not comply with the Commission decision, the employee obtains the right to approach the Labour Dispute Commission to fine the employer for not complying with the decision. The Labour Code provides that fines of up to EUR 500 can be levied against the employer for each week of non-compliance with the decision of Labour Dispute Commission.

This means that the employer must not only strictly follow legal procedures when terminating employment relations, but also be actively involved in labour disputes. Failure to strictly follow these procedures might end up in costly consequences, which otherwise could be easily avoided.

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