Lithuania: As an employer, are you in arrears with your employee?

Consequences: default interest on late payment of salary or benefits, or a contractual penalty following the termination of the contract

Pursuant to Art 147 of Lithuania’s ‘Labour Code’, an employer is obliged to pay a contractual penalty to an employee if their salary and other work-related benefits (such as travel allowance, compensation for leave not taken, etc) are not paid on time.

The amount for this contractual penalty depends upon whether or not any default occurs during the employment relationship or following the termination of the employment contract.

Defaulting during the employment relationship

The Minister of Social Security and Labour determined on 1 February 2024 that an employer must pay interest on arrears of 0.1% for each day in arrears in the event of any late payment for salary or other employment-related benefits within the framework of an existing employment relationship. This obligation arises if the employer is at fault.

Defaulting following the termination of an employment contract

If the employment relationship ends and the employer is in arrears with outstanding payments through no fault of the employee, the employer must pay liquidated damages to the amount of one average monthly salary amount for the employee in proportion to the number of days in arrears. The maximum upper limit for such a contractual penalty is six average monthly salary amounts.

Legal remedy for the employee

The employee has the option of asserting their rights in this regard before the Labour Inspectorate’s Labour Disputes Commission, and within three months of the date upon which the employee became aware – or should have become aware – of the fact that their rights had been violated.


Lithuanian Labour Code

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