On 1 July 2022, amendments to the government resolution on the reimbursement of daily allowances and other business travel expenses, as well as amendments to the Law on Employment, came into force in Lithuania. Below we give you an overview of the most relevant changes and guidance on how businesses could benefit.
Changes to the rules on reduced daily allowances
Until now, in Lithuania, the agreement on reduced daily allowances had to be established in a collective agreement or employment contract (i.e. an agreement between the employee – or the employees’ representatives – and the employer). Since 1 July 2022, companies without a collective agreement no longer need the consent of employees to reduce their daily allowance.
However, lower daily allowances can only be paid if they are differentiated on the basis of objective criteria laid down in a collective agreement, or, in the absence of such an agreement, in a local regulatory act.
New applicable requirements
Reduced daily allowances must be differentiated on the basis of objective criteria, i.e. it is not enough to state in standard terms that the employee shall be paid at least 50% of the daily allowance established by the Lithuanian government during business trips and to apply different rates of daily allowances to different business trips without any criteria. Objective criteria could include the duration and complexity of the business trip, the specific countries involved, the total of other expenses reimbursed by the employer during the business trip, etc.
The decision to reduce the daily allowance must be provided for in a collective agreement or employer’s internal document (e.g. handbook, internal work rules, business trips policy, etc.) and not in the employment contract.
Before introducing a new internal procedure for reducing the daily allowance, an information and consultation procedure must be carried out. Employees’ representatives shall be made aware of the intention to reduce the daily allowance and given the opportunity to express their views. Failure to comply with the information and consultation procedure may lead to the employer’s decision on reduced daily allowances being overturned by labour dispute bodies. Employees must be familiarised with the new procedure in writing.
Recommendations for employers in Lithuania
If the employment contract stipulates that the employer has the right to reduce the daily allowance, there is no need to amend the contract, but the employer will have to comply with the new regulation. So, even if the employee has already agreed on reduced daily allowances in the employment contract, the reduction will still need to be justified by an internal regulation from the employer (or a collective agreement, if one is in place).
If the employment contract does not stipulate that the employer has the right to reduce the daily allowance, there is no need to amend the employment contract. It is enough to introduce a new regulation and adopt relevant internal procedures or policies (or to conclude/amend a collective agreement, if one is in place). Of course, it is important not to skip the information and consultation procedures, and to duly inform employees of the newly adopted procedure in writing.
Amendments to labour law in Lithuania
The amendments to the Lithuanian Employment Law introduce new financial incentives for employees and employers. The aim is to help attract highly qualified specialists from abroad, as well as to bring back to Lithuania expatriates whose professions are on the national shortage list. The amendments also provide for special conditions for Ukrainian citizens working in Lithuania.
Allowances for foreign employees and their employers
Two new benefits will be available: an entry allowance for the employee and an allowance for the employer who recruited the employee. The employee can either be a Lithuanian who has lived and worked as an émigré before, or a foreign national. It is important that he or she has not been considered a permanent resident of Lithuania for the previous five years.
To qualify for the entry allowance, the person will need to meet certain requirements, such as being employed under an open-ended employment contract to carry out work on the territory of the Republic of Lithuania, and an average salary of at least 4.1 minimum monthly wages (EUR 2,993 gross).
The entry allowance will be equivalent to 4.1 minimum monthly wages (EUR 2,993 gross) and will be paid by the Employment Service, to which the employee can apply no earlier than six months after starting to work in Lithuania. The purpose of the allowance is to reimburse the costs of the employee’s relocation to Lithuania.
Employers who recruit an employee, complying with the aforementioned conditions, will also be entitled to benefits. However, the benefits will not be granted if the relocated employee had already worked for the same employer or another company in the same group during the previous five calendar years. In other words, this incentive will not apply to the relocation of employees from one group company (outside Lithuania) to another company in the same group (in Lithuania).
The total benefits for the employer will be equal to the average gross monthly salary of the person employed, up to a maximum of 7.2 minimum monthly wages (EUR 5,256 gross). The benefits will be paid by the Employment Service, to which employers can apply no earlier than 12 months after the employee starts working in Lithuania.
Preferential conditions for Ukrainian nationals
The new benefits will be easier to obtain for Ukrainian nationals who are employed in Lithuania and have left Ukraine because of Russian military aggression.
They are exempted from the requirement to work in an occupation included in the list of high-value-added occupations that are in short supply in Lithuania. An open-ended employment contract for any job function is therefore sufficient. There is also a lower salary threshold: a gross salary of EUR 1,752 is sufficient, instead of the EUR 2,993 applied for nationals of other countries. However, if the average salary paid by the employer to its other employees is higher than EUR 1,752, the employer must pay the same to the Ukrainian nationals as well. In addition, Ukrainian nationals can apply for an entry allowance earlier than is the case for others, i.e. after three months, instead of six months from the start of employment in Lithuania.
It can be concluded that the entry allowance for Ukrainian nationals is primarily a form of support in solidarity with Ukrainians who had to leave their homes due to the war and is intended to encourage them to enter the labour market.
Please note that if an employer employs a Ukrainian national under the aforementioned preferential conditions, they will not be able to apply for the employer’s allowance for recruiting a foreign employee.
Click here if you want to read the original article about the changes to the rules on daily allowances and the Lithuanian Employment Law on the homepage of Sorainen, the exclusive partner of WTS Global in Lithuania!