Lithuanian Labor Code Amendments from 1 November 2026: Dismissal Rules and Final Settlements

On 25 June 2026, the Parliament of the Republic of Lithuania adopted Law No. XV-1058 amending the Labor Code, which enters into force on 1 November 2026. The statutory updates introduce significant adjustments to individual employment relationship regulations, directly affecting disciplinary time limits, termination procedures, and employee payout schedules.

A fundamental update applies to Article 59 of the Labor Code, governing contract termination at the employer's initiative without employee fault. From 1 November 2026, an employer exercising this right must state a justified reason for dismissal. Consequently, termination notices and orders can no longer merely cite the legal article; they must detail the underlying factual grounds. The statutory obligation to give 3 working days' notice and pay a severance indemnity of at least 6 average monthly earnings (VDU) remains intact. In addition, the former restriction barring the application of Article 59 when circumstances under Article 57(1) apply has been removed.

Article 58 of the Labor Code has also been modified regarding terminations due to employee misconduct. The law requires the termination decision to be taken within one month from the day the violation came to light. Under the new wording, periods during which the employee was absent due to temporary incapacity for work or annual leave are excluded from this one-month window, effectively suspending the statutory deadline during those absences.

Changes to Article 146 establish updated rules for final settlements upon contract termination. On the day of dismissal, the employer must disburse an amount of at least up to one average monthly salary (VDU), or conclude a settlement within 10 working days if agreed at the moment of dismissal. If the total calculated compensation (including severance and unused annual leave pay) exceeds one VDU, the parties may agree in writing to pay the remaining excess amount in installments over a period not exceeding 3 months from the termination date.

Furthermore, Article 147 significantly tightens the financial consequences of late settlement: late payment interest (delspinigiai) is increased fivefold compared to the previous formula linked to the consumer price index.