How to correctly calculate annual leave in Lithuania?

In Lithuania, during annual leave, employees are paid the average salary also known as holiday pay. The calculations of these holiday pays are regulated by the Resolution of the Government of the Republic of Lithuania No 496 “On the Implementation of the Labour Code of the Republic of Lithuania”, which approved the “Description of the Procedure for Calculation of the Average Wage”. According to this description, the following amounts are included in the calculations of average salary:

• The basic salary for the work performed, calculated on the basis of the monthly salaries and hourly rates provided in the employment contracts;
• Extra pay for work on the rest days and public holidays, overtime, night work and other conditions of work;
• An additional part of the salary agreed between the parties or paid in accordance with labour law or the system of remuneration applicable in the workplace;
• Salary supplements and bonuses, monthly bonuses paid for work performance, other payments provided in the employment contracts;
• Additional bonuses and other cash payments for performed work, established by the agreement between the parties or in accordance with labour law provisions, except for holiday and anniversary bonuses paid on the initiative of the employer.

The calculation of the average salary does not include days or hours when the worker has not actually worked (e.g. holiday time, unpaid leave time, sick days) and the amounts paid for those days (e.g. holiday pay, sickness leave paid by the employer for the first two days of illness).

How is the average salary calculated?

The average salary for vacation days specified in the employee’s application are calculated by taking the last three calendar months preceding the month for which the average salary is calculated and paid. For example, if an employee is on vacation in July, the days or hours worked in April, May and June and the amounts calculated for them will be taken for the calculation of his daily or hourly average salary.

Bonuses paid during the last three months considered for the calculation of the current month’s average salary are included as follows:

• the monthly bonuses referred to in point 4 above, shall be included in the total amount calculated for that month, which shall be used for the calculation of the average salary and shall be divided by the number of days or hours worked in that month to calculate the average salary per day or hour;
• for quarterly bonuses, there is taken one amount of such bonus paid in the last three months (if there is paid more than one quarterly bonus, then the last bonus paid is included).
• For an annual bonus, ¼ of such bonus is taken if the bonus was paid in the last 12 months preceding the month for which the average salary is calculated.

If the employee has not worked and has not been paid during the last 3 months preceding the current month for which the holiday pay is calculated, the average salary will be calculated by taking the employee’s contractual salary during the reference period and dividing it by the number of days or hours the employee has been scheduled to work during that period.

If the employee has worked for the company for less than 3 months, the average salary will be calculated by taking the amounts and the days or hours of the months that he actually worked for.

Examples of average salary calculations

If in the employment contract there is set 3000 eur gross salary, employee had no absences in the previous months and worked all the days scheduled in the calendar, the calculation of the average salary calculated in July will be as follows:

If in June there was paid 500 eur gross quarterly bonus, average salary calculated in July will be:

If in January there was paid 5000 eur gross annual bonus, the average salary for July will be: