In my professional experience, a common situation that employers hiring foreign employees face is the dismissal of such employees when their documents granting the right to work in Lithuania expires and are not renewed. In these cases, employers frequently ask: Is terminating the employment contract mandatory? On what grounds? Is the employee entitled to severance pay?
Termination of an employment contract is not always a matter of choice of the parties involved. The Labour Code explicitly defines situations where an employer MUST dismiss an employee, regardless of the wishes of either party.
An employment contract must be terminated without notice under Article 60(1) of the Labour Code if:
- A court ruling or judgment is issued, imposing a
penalty that prohibits the employee from performing their
job.
For example: A security guard loses the right to use a firearm, which is necessary for their job functions. - Special rights to perform a specific job or hold a
certain position are revoked.
For example: A court temporarily prohibits an individual from serving in managerial positions in a bankruptcy case. - The employment contract of an employee under the age of 16 is required to be terminated by their parents, a doctor, or school.
- The employee is unable to perform job functions due to
health reasons and refuses to be transferred to another available
position that fits their health, or such positions are not
available in the workplace.
For example: A pilot, based on a medical commission's conclusion, can no longer continue working due to health issues. - An employee is reinstated to the position held by
another employee.
For example: A court ruling requires the company to reinstate a dismissed employee, so the employee currently holding the position must be dismissed. - Employment relationship is terminated at the request of
the authorities due to illegal employment.
For example: A foreign national is working without a permit, and the State Labour Inspectorate orders the employment contract to be terminated. - The employment contract is in violation of the law and
the issue cannot be resolved, and the employee either refuses or
cannot be transferred to another available position within the
company.
For example: A foreign national no longer holds a valid permit to live and work in Lithuania or where the contract is concluded with a minor without complying with the law requirements.
Is the Employee Entitled to Severance Pay?
Yes, but not always.
According to the Labour Code, an employee is entitled to severance pay in specific situations, including:
🔹 Two months' average wage (or one month's if the employment has lasted less than one year), when:
- The employee is unable to continue working due to health reasons, as confirmed by a medical institution, and either does not agree to be transferred to another suitable position within the company, or no such position is available.
🔹 One month's average wage (or half a month's if the employment has lasted less than one year), when:
- The position is reinstated to a previously dismissed employee.
- The employment contract is found to be unlawful and the issue cannot be rectified.
In all other cases, severance pay is not granted.
What Else Do Employers and Employees Need to Know?
- No notice is required – the employment relationship terminates immediately.
- The decision on termination must be made within 5 working days of learning that the employee can no longer continue the employment relationship.
- This applies to all employee groups, including pregnant women, those on parental leave and others.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
