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Description of the provisions of the Labour Code   2016-07-29



The drafters of the Labour Code built on the experience of the Eastern and Central European countries, the provisions of the conventions and recommendations of the International Labour Organization and the European Social Charter (revised), and the majority of the provisions of the European Union directives were transposed.

The Labour Code regulates many issues in a more abstract manner, by excluding those governed by subordinate legislation. It is expected that the Code will help including social partners in the area of labour law creation and will aid to coordinate their interests. It is considered that drafting and implementation of labour laws based on the principle of social partnership will contribute to more flexible, clear and comprehensive regulation of societal labour relations and more objective reflection of interests of the stakeholders in labour relations.

The aim of this Code is to encompass the basic provisions of the European Union and International Labour Organization legislation and those of the European Social Charter (revised), so that they become law in Lithuania. In addition, in view of the increasing significance of social partnership in Europe and Lithuania, this Code is the essential document to coordinate the interests of social partners.

The Labour Code consists of three parts: general provisions, collective labour relations and rules governing individual labour relations.

The first part of the Labour Code, entitled “General Provisions”, consists of six chapters (Chapters I to VI). This part contains the basic principles governing legal regulation of labour, the relationship between the Code and other applicable international and national labour legislation, and the definitions of the participants in labour relations – the employer and the employee. It must be noted that the definition of the “employer” given in the Code differs from the one contained in its predecessor, the Law on Employment Contract, where owners and heads of a particular company were treated as employers. Such a definition did not match the definition of the employer contained in labour law theory and international labour law legislation. For this reason, the Labour Code defines the term “employer” as a company, body, organisation or another organisational structure with working legal capacity. The heads and other authorised persons of such entities are not treated as employers but as their representatives with individual rights and obligations in labour relations.

The Labour Code deals with the problem of collective representation of employees: it enshrines the right of the team of employees in case there is no trade union in the company and the employees have not transferred their collective representation rights to the trade union of a particular branch to elect their representatives to the company’s works council. The Law on Works Councils took effect on 11 November 2004.

It must be noted that the Labour Code adduces particular relevance to collective labour relations and mutual agreements between parties to labour relations. The chapter, entitled “Collective Labour Relations”, contained in the second part of the Code, contains the concept of social partnership, its principles, parties and levels. It also legalises the principle of tripartite cooperation and lays down the legal status and the foundations of activity of the Tripartite Council of the Republic of Lithuania, also a legal possibility to create bipartite and tripartite councils and commissions on other levels (branch, territorial) by agreement of social partners or on the basis of existing laws.

Chapter VIII, entitled “National, Branch and Territorial Collective Agreement”, contains a definition of the concept of collective agreements concluded on branch, territorial and national level; it defines its parties and content issues. It also establishes the procedure and requirements for conclusion, signature, registration, validity and implementation monitoring of such agreements.

Chapter IX, entitled “Company-Level Collective Agreement”, contains the definitions of collective agreements concluded on the level of individual companies or their structural subdivisions, it also regulates issues pertaining to the parties, content, conclusion, validity and implementation of such agreements. The novelty of the Code is that different from collective agreements, which can only be signed on behalf of employees by trade unions operating in a particular branch or territory, the elected representatives of the team of employees may also sign the company-level collective agreement, namely the works council in case there is no operating trade union in the company and the team of employees has not transferred its representational tasks to a trade union of a particular branch. Trade unions refused to accept that provision and suggested that company-level representation of employees and the conclusion of collective agreements remained their exclusive right. However, based on international recommendations and the experience of other Central and Eastern European countries, the drafters of the Code attempted to deal with the problem of collective representation of employees and to encourage signature of collective company-level agreements.

Chapter X, entitled “Regulation of Collective Labour Disputes”, governs the procedure for solving collective disputes, basically reflecting the provisions previously contained in the Law of the Republic of Lithuania Regulating Collective Disputes, by including certain rules and principles established in international practice. According to the recommendations of the International Labour Organization, a provision was included to the effect that the Government, after considering the conclusion of the Tripartite Council, settles claims of the employees working in the companies that are not allowed to strike. Whereas the pre-existing Law Regulating Collective Disputes provided unilateral actions of the Government in this field. However, in view of the principle of collective autonomy and the special position of the employees of such companies, the authors of the Code formulated the above provision. Relying on the same principle, they also established that the minimum services to be ensured at the time of strike of employees working in railway, public city transport, civil aviation, communications, energy, medicine and pharmacy, food, water, sewage and waste removal, oil processing and non-interrupted production companies, were to be determined by the Government, in view of the conclusion of the Tripartite Council, or the municipal board, after consulting the parties to the collective dispute, according to their respective competencies of those bodies.

The third part of the Labour Code, entitled “Individual Labour Relations”, governs individual labour relations and related relations: recruitment issues, issues related to labour contracts, working and rest periods, issues pertaining to wages and other guarantee payments and compensations, work discipline, material liability and employee health and safety conditions, and the procedure for settling individual labour disputes.

Chapter XI, entitled “Employment”, contains only general principles and provisions in the field of employment relations, detailed in the special Law of the Republic of Lithuania for the Support of Employment.

Chapter XII, entitled “Employment Contract”, consists of four sections governing the content of an employment contract and its conclusion, types of employment contracts, their implementation and termination. Compared to previous legislation, the Labour Code contains an extended list of types of employment contracts. In addition to fixed-term, indefinite and seasonal employment contracts, short-term employment contracts, teleworking employment contracts were foreseen. The Code provides that an employment contract may be terminated only for important reasons, namely circumstances pertaining to the employee’s qualification, professional capacities, and his or her behaviour at work. An employment contract may also be terminated for economic, technological reasons or structural transformations of the company and for other analogous important reasons. In such case an employer is allowed to decide on the necessity and the basis for termination.

At the same time, the Code contains a list of reasons that may not form a legal basis to terminate an employment contract. They are the following: membership in a trade union or participation in trade union activities outside one’s working hours, and upon the employer’s consent – also within one’s working hours; implementation of employee representation tasks in the past or at present; involvement in proceedings against the employer accused of breaches of laws or other normative legislation or collective agreement, also application to administrative bodies; sex, sexual orientation, race, nationality, language, origin, citizenship and social status, religion, marital and family status, beliefs or views, belonging to political parties and societal organisations; age. Based on ILO Convention No. 158 Concerning Termination of Employment at the Initiative of the Employer, Article 129(3) of the Labour Code contains a requirement to the effect that within the period of notice on termination of employment contract an employer must give time free from employment duties to the employee to search for a new job, which must amount to at least 10% of the working time rate per employee within the notice period.
The Labour Code also changed the principle governing severance payments. Until 1 January 2003, the Law on Employment Contract stated that the amount of the severance payment depended on the ground of termination of the employment contract, however, the Labour Code included a provision that the amount of the severance payment depended on the length of service of the respective employee in that company. According to Article 140 of the Labour Code, the amount of such payment may be increased up to six months’ average wage of that employee, where the uninterrupted length of service of the employee in that company exceeds 240 months.

Chapters XIII and XIV of the Labour Code govern working and rest periods. The provisions of these chapters implement the European Union legislation and comply with its requirements.

Chapter XV governs issues related to wage and other guarantees adduced to employees. It provides that, in view of the opinion of the Tripartite Council, the Government may determine different rates of minimum monthly wage for different branches of economy or different groups of employees. It also provides that employees working in abnormal working conditions are compensated for such work by applying an increased tariff, compared to normal working conditions, and the particular rates of such tariff are determined in collective agreements or employment contracts. In terms of disciplinary penalties governed by section 16, it must be noted that, compared to the list previously contained in the Code on Labour Laws, their list has been amended. The disciplinary penalty of serious reprimand is no longer included. Chapter XVII governs the requirements and procedure for material liability of employers and employees.

For reasons of integrity of the Labour Code, Chapter XVIII contains the basic principles governing health and safety at work, and the provisions regulating working conditions of young people, women and people with disabilities. The provisions of this Chapter have been harmonised with the provisions of the existing Law of the Republic of Lithuania on Worker Health and Safety, as this Law remained in force after the entry into force of the Labour Code.

The last chapter XIX, contained in part three of the Labour Code, governs the procedure for settling individual labour disputes.

After the entry into force of the Labour Code, the following legislation expired: the Code on Labour Laws, the Law on Payment for Work, the Law on Collective Agreements and Contracts; the Law on Employment Contract; the Law on Leave, the Law Governing Collective Disputes, the Law on Settlement of Labour Disputes. After the entry into force of the Labour Code, the following pieces of legislation were adopted to enforce its particular provisions: the Law on Works Councils, the Law on European Works Councils. One of the essential novelties of this Law is that the Labour Inspectorate is assigned with a new task of supervision (control) of compliance with collective agreements. New Government resolutions were adopted to detail the following provisions of the Labour Code: the procedure for calculating length of service, particularities of different types of employment contracts, the procedure and requirements for annual additional and prolonged leave, the procedure for recruiting foreign nationals seconded to Lithuania for a limited period of time into the companies operating in Lithuania, the procedure for qualification requirements and examinations, and the list of posts requiring a recruitment competition. In addition, some of the existing legislation was clarified.

CodeLabour Code of the Republic of Lithuania

Last updated on: 2016.07.28

Information from the website of Ministry of Social Security and Labour