Remuneration for work

The remuneration of employees who work in companies, institutions and organizations under employment contracts is regulated in accordance with the Labor Code of the Republic of Lithuania. Labour Code of the Republic of Lithuania defines main principles of organization of remuneration for work, payment for overtime and night work, payment for work during rest days and holidays, payment for idle time as well as other remuneration guarantees and also outlines the determination of the minimum wage.

New Labour code established that employers are required to approve a remuneration system unless this is already established in the collective agreement. In workplaces with an average number of employees of twenty or more, the remuneration systems must be approved by the employer. Said must be available for all employees to become acquainted with.

Before approving or revising the remuneration system, information and consultation procedures must be carried out.

The remuneration system specifies the employee categories based on position and qualification as well as the salary range (minimum and maximum) and forms of payment for each of them, the grounds and procedures for allocating additional payment (bonuses and allowances), and the procedure for wage indexation.

Employers are obliged to prepare the remuneration system in such a way so as to avoid any kind of gender-based discrimination: equal pay for the same or equal work. A definition is provided for what is considered the same or equal work.

The new Labour Code, which came into force on July 1, 2017, establishes the newness that the minimum monthly wage can only be paid for unskilled labour. For the first time, a definition is provided for unskilled labour. This is work that does not require any special qualification skills or professional expertise.

Since 1 January 2023 the Government of the Republic of Lithuania, taking into account recommendation of the Tripartite Council of the Republic of Lithuania, on 7 October 2022 approved the minimum monthly wage amounting to 840 EUR (hereinafter referred to as the “MMW”) (increased by 15.1 percent as compared with the previous MMW) and the minimum hourly rate amounting to 5.14 EUR. The decision was made after evaluation of the economic situation in the country, the financial possibilities of the State budget and municipal budgets and employers, in particular, small employers, to pay higher minimum monthly wage.

The increase in the MMW affected approximately 127 thous. employees including around 17 thous. employees of budgetary institutions.

Remuneration of civil servants

The conditions for remuneration of civil servants are regulated by the Law on the Civil Service of the Republic of Lithuania.

Remuneration of judges

The salaries of judges and the procedure for their calculation are established by the Law on the Remuneration of Judges of the Republic of Lithuania.

Remuneration of state politicians and state officials

The amount of remuneration for state politicians and state officials is determined by the Law on Remuneration for Work of State Politicians and State Officials of the Republic of Lithuania.

Basic wage

According to the provisions of Article 29(2) of the Republic of Lithuania Law on Civil Service, Article 4(1) of the Republic of Lithuania Law on Remuneration of State Politicians and Public Officials, Article 3 of the Republic of Lithuania Law on the Remuneration Judges, and Article 6 of the Republic of Lithuania Law on Remuneration of Employees of State and Municipal Institutions and commission member's remuneration for work each year basic wage (salary) must be approved for the coming year. 

According to the concluded 2023 national collective agreement, the Seimas approved the basic wage (salary) for the year 2023 - € 186, by the Law on the basic wage (salary) of state politicians, judges, state officials and civil servants of the Republic of Lithuania, applicable in 2022, No. XIV-1530.

Under the provisions of the aforementioned laws, if the national collective agreement is not concluded or amended by 1 June of the current year, the basic amount for the coming financial year shall be approved by the Seimas on the proposal of the Government.

Remuneration of Managers of State Enterprises

Basic wage contributes to creation of a unified system of remuneration of public sector managers and an effort to systematically make remuneration uniform for managers at state-controlled companies and public institutions owned by the state or where the state has a majority of votes in the general meeting of shareholders, a recast Procedure for the Establishment of Remuneration of Managers of State Enterprises and State-Controlled Joint Stock Companies and Closed Joint Stock Companies[4] came into force on 1 July 2017. Said procedure applies directly to heads of state enterprises, the fixed part of whose monthly salary was increased by approximately 34 per cent while simultaneously decreasing the variable part to a maximum of 50 per cent; establishment of the salary for the head of the Ignalina Nuclear Power Plant was regulated, as well as the salary for the heads of newly-established state enterprises for the first year of operation; and the principles of allocating bonuses to manager was established. It was also stipulated that the enterprise’s founding documents must establish that the monthly salaries for the manager’s deputies be fixed as 10–20 per cent less than that of the manager of the enterprise. The Government recommended that this resolution also be applied to state-controlled companies.

Remuneration of Managers at public institutions

A recast procedure for remuneration of managers at public institutions owned by the state or where the state has a majority vote in the general meeting of shareholders[5] came into force on 1 October 2016. This procedure lays down that a public institution’s founding documents must establish that the monthly salaries for the manager’s deputies be fixed as 10–20 per cent less than that of the manager of the public institution, that the public institution category will be determined annually, that the procedure for establishing the salary of the manager of a newly-founded public institution for the first year of operation shall be regulated, that the sizes of coefficients applied to establish the salary of managers of public institutions will be increased by equalising the upper and lower limits of the coefficients of adjacent categories, that the variable part of the monthly salary of a public institution manager may also depend on targets set specifically for him or her taking the outcome thereof into account, and that the owners and shareholders of public institutions are obligated to provide the Ministry of Social Security and Labour with information on how the resolution is being implemented on an annual basis.

Remuneration of Employees of State and Municipal Institutions

                    The Republic of Lithuania Law on Remuneration of Employees of State and Municipal Institutions[6] (hereinafter – the Law on Remuneration) entered into force on 1 February 2017. Adoption of the Law on Remuneration was prompted by the shortcomings of the system for remunerating employees of budgetary institutions that was in force until 1 February 2017: significant disproportion between official remuneration coefficients for employees in individual budgetary institution fields; the conditions for payment in individual fields were regulated by orders of the ministers in individual fields; non-transparent conditions for allocating bonuses to budgetary institution managers and employees; official salaries had levelled out for both skilled and unskilled employees; insufficient legal opportunities to establish motivating remuneration for specialists in professions that are in short supply in the labour market. The main objectives of the Law on Remuneration are: to provide equal opportunities for equally educated employees of budgetary institutions to receive fair pay for their work; to strive for employees to receive a respectable regular salary so that the variable part does not have to be paid when their performance outcome is not very good or when additional tasks have not been assigned, with bonuses and allowances (the variable part) only used an additional form of remuneration paid in special cases; to encourage social dialogue between employers and employees.

The disproportion between salaries for budgetary institution employees in individual fields of activity is decreasing. In addition, now that the law has come into force, job complexity and employee qualification is more valued and preconditions are created to reduce the number of specialists who emigrate. Competitive remuneration has been established for employees in professions that there is a shortage of in the labour market.

In the Law on Remuneration, budgetary institution positions are divided, based on the education level required for the specific positions, into four grades according to the employee’s education:

Grade A budgetary institution employment positions are further divided into:

a) Grade A1: positions which require at least a university education with a Master’s degree or equivalent;

b) Grade A2: positions which require at least a university education with a bachelor’s degree or equivalent or a college education with a professional bachelor’s degree or equivalent, and also ballet artist and dancer as well as conservator-restorer positions.

According to the provisions of the Law on Remuneration, the structure of salaries for budgetary institution employees consists of: salary (fixed and variable or only fixed); allowances (no more than 30 percent of the fixed part of the salary for additional work or the execution of the additional duties or tasks); pay for work on holidays and days-off, night work, overtime and on-call work; bonuses.

Bonuses for the previous calendar year’s results and for the performance of extremely important tasks, within the limits of the funds allocated for remuneration.

In determining the coefficient for the fixed part of the salary, the national and international recognition obtained by the heads of national and state cultural and art institutions as well as cultural and art workers of the highest professional artistic level may be evaluated in addition, as may be the qualification category of other employees, including coaches, and the shortage of individual professions in the labour market. On this basis, the coefficient established for the fixed part can be increased by up to 100 per cent. The fixed part of the salary for coaches will be increased according to the qualification category they possess.

The Law on Remuneration establishes the maximum amounts for the variable part of the salary and allowances:

-       the variable part of the salary cannot be more than 40 per cent of the fixed part, and its size will depend on the results achieved during the previous year, measured according to the annual targets established for the manager or employee;

-       the sum total of the variable part of the salary and allowances cannot be more than 60 per cent of the fixed part of the salary.

Compensation for potential wage decreases is provided for: if, upon entry into force of the Law on Remuneration, an employee’s salary decreases, the remuneration (official salary with allowances) established prior to entry into force of this law will be paid for no more than one year. If, upon entry into force of the Law on Remuneration, the fixed part of the salary decreases, the employee shall be paid the salary established prior to entry into force of this law as long as he or she hold the position.  

It should be noted that the Law on Remuneration does not apply to: public institutions; higher education institutions; the employees of state research institutes operating as budgetary institutions; employees working under employment contracts for Republic of Lithuania diplomatic missions, consular offices, representations at international organisations or special missions, or employees participating in cooperation and development projects.

Once the Law on Remuneration entered into force, a Government resolution was adopted which regulates the performance appraisal of budgetary institution employees for the previous year.[9] The goal of annual performance appraisals for budgetary institution employees is to evaluate the previous calendar year’s performance of budgetary institution employees – with the exception of labourers – against annual targets, the intended results and their evaluation indicators. An order of the Minister of Social Security and Labour of the Republic of Lithuania[10] was also adopted by which the methodology for the description of employee positions at state and municipal institutions was approved.

Once the Law on Remuneration entered into force, the Government resolution[11] regulating the size of budgetary institution employee remuneration for teachers, healthcare professionals, cultural and art workers, social workers and other budgetary institution employees working under employment contracts was repealed.

It should be noted that as of 1 February 2017, when the Republic of Lithuania Law on Remuneration of Employees of State and Municipal Institutions came into force, the aforementioned basic amount is also applicable for calculating the salary range for budgetary institution employees working under employment contracts.