Bereavement Support and Legal Guarantees in Lithuania: Labour Inspectorate and Tax Rules

When an employee suffers a family bereavement, company management and payroll teams must navigate legal requirements regarding leave and financial aid. The State Labour Inspectorate (VDI) clarifies that the Labour Code of the Republic of Lithuania does not impose a general statutory obligation on private employers to pay monetary bereavement benefits. In the private sector, such payments depend on internal company regulations or the individual decision of management.

If a private company has stipulated bereavement support in its collective agreement, remuneration policy, or internal work regulations, this provision becomes legally binding. In that scenario, the employer cannot unilaterally decline the payment. If internal regulations do not provide for such an allowance, the employer may choose to grant it on an individual basis via an executive order following an employee's written application.

Different rules govern the public sector. Under the Law on the Remuneration of Employees of Budgetary Institutions, an allowance of up to 5 minimum monthly wages (MMA) may be granted upon the death of an employee or due to a deteriorated financial situation caused by the death of a family member.

Regardless of whether financial support is granted, Article 137, Part 1, Clause 3 of the Labour Code establishes a mandatory guarantee: employers are required to grant up to 5 calendar days of unpaid leave upon an employee's request to attend the funeral of a deceased family member. The employer cannot refuse this request, and the period must be recorded in the timesheet under the designated unpaid leave code.

For tax purposes, the degree of kinship determines the applicable exemptions. Pursuant to Article 17, Part 1, Clause 1 of the Law on Personal Income Tax (GPMĮ), bereavement benefits paid by an employer upon the death of an employee's spouse, children (adopted children), or parents (adoptive parents) are treated as tax-exempt income, with no statutory cap on personal income tax exemption.

Regarding social insurance contributions, Article 11, Part 1, Clause 1 of the Law on State Social Insurance (VSDĮ) sets a limit. State social insurance (VSD and PSD) contributions are not levied on employer bereavement benefits paid upon the death of a spouse, child, or parent, up to an amount not exceeding 5 government-approved MMAs. Any portion exceeding 5 MMAs is subject to standard social security contributions, while remaining entirely exempt from personal income tax under GPMĮ.

If financial aid is paid upon the death of other relatives (such as siblings or grandparents), the specific exemption under Article 17, Part 1, Clause 1 of the GPMĮ does not apply. In the private sector, such payments are treated and taxed as standard employment-related income.

To substantiate the benefit in corporate accounting, the company must retain the employee's formal application, proof of death (death certificate or official extract), documents confirming kinship (such as a birth or marriage certificate), and the corresponding executive order issued by company management.