Key Amendments to the Labour Code Effective from 1 November 2026

2026 is a significant year marked by substantial amendments to the Labour Code of the Republic of Lithuania (hereinafter – the Labour Code or LC), which will affect all employers, regardless of the number of employees or the nature of their activities. Provisions transposing the Pay Transparency Directive have already applied in Lithuania since 7 June 2026, with some provisions taking effect from the beginning of the new year, while further amendments to the Labour Code will enter into force on 1 November 2026. This article provides a brief overview of the key changes.

KEY CHANGES IN THE AREA OF INDIVIDUAL EMPLOYMENT RELATIONS:

Longer probationary period

From 1 November 2026, it will be possible to extend the maximum probationary period to 6 (six) months. However, the longer probationary period may only be agreed with employees whose monthly salary is at least 2 (twice) the national average gross monthly renumeration (hereinafter – 2 National AR). Currently, this amounts to approximately EUR 5,256.40 (gross). If such an employee is employed under a fixed-term employment contract for less than 12 (twelve) months, the probationary period must be proportionately shorter. Furthermore, it is specified that periods of sick leave and annual leave no longer count towards the probationary period.

More flexible employment conditions

Employment contracts with employees earning at least 2 National AR may include broader agreements regarding working conditions and deviations from certain mandatory provisions of the LC, including aspects relating to the termination of employment. For example, it will be possible to agree on a severance payment lower than the statutory amount, provided that the agreement maintains a fair balance between the interests of the employer and the employee. Such agreements will continue to be prohibited from derogating from rules concerning maximum working time and minimum rest periods, the conclusion of employment contracts, minimum remuneration, occupational health and safety, gender equality and non-discrimination.

Changes to remote work

From 1 November 2026, employers may refuse requests for remote work submitted by certain categories of employees who receive statutory protection, such as pregnant employees or employees raising a child under eight years of age, where remote work is not feasible due to work organisation requirements or the nature of the production process. This means employers will no longer be required to prove that remote work would lead to disproportionate costs because of operational necessity or organisational reasons, unless a different procedure is established in a collective agreement. In addition, compensation arrangements for additional costs incurred while working remotely may be regulated not only through individual agreements but also through collective agreements

Termination of an employment contract at the employer’s initiative due to the employee’s fault

From 1 November 2026, the calculation of time limits applicable to dismissals initiated by the employer due to employee fault will be revised. The employer must continue to make the decision to terminate employment for a gross breach of duties within one month of becoming aware of the violation and no later than six months from the date the violation occurred. However, periods during which the employee is absent due to temporary incapacity for work or annual leave will not be included in these time limits.

Termination of an employment contract at the employer’s will

From 1 November 2026, employers will be permitted to terminate employment at their own discretion under Article 59 of the Labour Code even in situations where at least one of the grounds listed in Article 57(1) of the Labour Code exists. In all cases, however, the reason for termination must be substantiated. Employees must still be notified of dismissal at least 3 (three) working days in advance and must receive a severance payment of no less than 6 (six) times their average salary.

New ground for termination of an employment contract

From 1 November 2026, employment contracts may be terminated where an employee no longer meets the statutory requirements of impeccable reputation. This amendment is particularly relevant to regulated industries, including financial services, insurance, payment services, and other regulated sectors. It should be noted that impeccable reputation requirements are typically established in sector-specific legislation; therefore, all relevant legal acts should be assessed collectively.

Working time on the eve of public holidays

Employees’ working time on the day preceding a public holiday is reduced by 1 (one) hour. From 1 November 2026, the Labour Code will expressly provide that employees whose remuneration depends on work norms must receive their average renumeration (hereinafter – AR) for the reduced hour. Furthermore, where reducing the working day is impossible due to organisational requirements or the employer’s continuous operation, the additional hour must be paid as overtime work.

Passive on-call duty at home

From 1 November 2026, passive on-call duty at home may not exceed 168 hours within a 4 (four) week period. Currently, the Labour Code provides that such on-call duty may not last longer than 1 (one) uninterrupted week during a 4 (four) week period. The new regulation replaces this rule with a precise hourly limit. Furthermore, the additional allowance for passive on-call duty at home will be calculated for each hour of on-call duty rather than for an entire on-call week. The allowance must be at least 20% of the employee’s hourly wage

Final settlement with the employee and late-payment compensation

Upon termination of employment, all employment-related payments must be made no later than the employee’s last working day. 

From 1 November 2026, the parties may agree that the portion of payments exceeding 1 (one) month’s AR may be paid later, but no later than 3 (three) months following the termination of employment. The portion of payments amounting to up to 1 (one) month’s employee‘s AR must still be paid on the last working day, except where the parties agree to settle within 10 (ten) working days after dismissal. 

The amount of default interest, which is linked to the consumer price index, will also increase. From 1 November 2026 the resulting amount will be multiplied by five.

KEY CHANGES IN THE AREA OF COLLECTIVE EMPLOYMENT RELATIONS:

Annual leave

The right to use accrued annual leave expires 3 (three) years after the end of the calendar year in which the employee became entitled to the full annual leave entitlement. However, a collective agreement concluded at a level above the employer may shorten this period to 2 (two) years. In such a case, employees may receive monetary compensation for the accrued annual leave exceeding the amount corresponding to 2 (two) years of annual leave entitlement.

Works council guarantees

From 1 November 2026, the position of works council members will be strengthened. Employers and works councils may conclude agreements regulating the implementation of works council functions, organisation and financing of activities, additional guarantees, and professional development opportunities for works council members. The operation of the works council and the professional training of its members must in all cases be financed by the employer.

Changes concerning strikes

From 1 November 2026, the duration of a warning strike will increase from 2 (two) to 4 (four) hours. In addition, for a period of 3 (three) months following the end of a strike, the essential terms and conditions of employment of employees who participated in the strike may not be worsened unless the trade union has been informed in writing in advance.

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