Calculation of Annual Holiday Pay and Average Wage in Lithuania: Rules and Updates

During annual leave, employees in Lithuania are entitled to an average wage (VDU). The calculation is regulated by the Description of the Procedure for Calculating the Average Wage, approved by Resolution No. 496 of the Government of the Republic of Lithuania. Generally, the average wage is calculated based on the data of the last three calendar months preceding the month in which the annual leave begins.

Significant amendments to this procedure (Government Resolution No. 744) came into effect on October 31, 2025. The updated regulation mandates that quarterly, annual, and other periodic bonuses must be included in the average wage calculation based on their accrual (calculation) moment, rather than the date of actual payment. Businesses must ensure their accounting processes and internal work rules reflect this change.

The payment terms for holiday pay are strictly governed by Article 130 of the Lithuanian Labor Code (DK). According to Paragraph 2, holiday pay must be disbursed no later than the last working day before the start of the annual leave. However, under Paragraph 3, holiday pay may be paid along with the regular salary if the employee submits a separate written request. Employers are prohibited from using mandatory template requests that force employees to waive their right to advance payment.

If an employer delays the holiday pay, the employee has the right to claim compensation. Under Article 130, Paragraph 4 of the Labor Code, the delayed period can be added to the employee's next annual leave, provided the employee submits a request within the first three working days after returning from the current holiday.

In cases where an employee's working time norm changes (for example, reducing from a 40-hour to a 20-hour workweek), the calculation must be adjusted. According to clarifications from the State Labor Inspectorate (VDI), holiday pay for accumulated leave must be calculated proportionally to the working time norm that applied when the leave was accrued, rather than the working hours applicable at the time of the holiday.