The Labor Code of the Republic of Lithuania (LC) stands out as a comprehensive and detailed legal act that regulates many aspects of the relations between the parties to an employment contract. In most cases, the LC sets certain rules and requirements that the parties cannot change. However, alternative arrangements with certain employees are allowed.
Article 33(4) of the LC stipulates, that with employees, whose remuneration, set in the employment contract is no less than 2 State average gross salaries, published by Lithuania’s Statistic Department for the last quarter, the employer might conclude an alternative agreement that deviates from the imperative rules set in the labor law legislation. According to the data published by Lithuania’s Statistics Department, in the 2022 second quarter the state average gross salary (excluding individual enterprises) was EUR 1 780,5, meaning that if the employer seeks to conclude an alternative agreement with the employee in September 2022, the employee‘s monthly remuneration shall be no less than EUR 3 561 gross.
Upon necessity, it might be possible to agree on the following with higher-paid employees:
- limited reimbursement of certain additional expenses;
- longer settlement terms or shorter terms for providing certain information;
- conditions of the employee’s non-competition agreement that are more beneficial to the employer;
- a wider list of cases when the employee must compensate the employer for all the damage caused;
- other aspects that do not conflict with the mandatory requirements of the LC.
It shall be noted that the LC sets a list of aspects, regarding which the parties are not allowed to agree alternatively:
- maximum working and minimum rest time;
- conclusion and termination of the employment contract;
- minimum wage;
- employee’s health and safety;
- gender equality and non-discrimination on other grounds.
In any case, when concluding an agreement with an employee on alternative provisions than those provided for in the LC, it is required to ensure a balance of the interests of the employee and the employer. The employee is considered to be the weaker party in labor relations, thus abuse of such agreements is not recommended.
To summarize, when faced with a situation where the parties to the employment contract consider agreeing on a different procedure than that provided for in the LC, we recommend evaluating:
- whether the employee’s current monthly salary is not lower than 2 average State salaries;
- whether the issue on which the parties seek to agree is not imperative, regarding which the LC does not allow to agree otherwise;
- whether such an agreement will ensure the balance of the interests of both parties.
Only after evaluating the mentioned aspects, the parties should enter into a written agreement. After concluding it, we recommend periodically assessing whether the actual situation has not changed – whether the employee’s salary has not become lower than the 2 state average salaries, and whether the balance of the parties‘ interests has not changed.
If it is established that the clause of the employment contract contradicts the mandatory rules established in the LC, other norms of labor law or the employment contract does not ensure a balance of the interests of the employer and the employee, the clause of the employment contract cannot be applied.
