How much does it really cost to hire in Lithuania in 2026?
On an open-ended contract, the employer pays just 1.77% on top of gross salary into Sodra. Almost the entire social insurance load sits on the employee at 19.5%, deducted from pay. That flips the usual cost picture. A Lithuania hire carries one of the lightest employer oncosts in the EU once you read who pays what.
· Lithuania guide
Illustration · Vilnius, Lithuania
Lithuania puts almost all of the social insurance load on the employee. The employer pays just 1.77% on an open-ended contract. It rises to 2.49% on a fixed-term contract. That is one of the lowest employer oncosts in the EU.
The employee carries 19.5% of gross, deducted from their pay. That covers pension, sickness, maternity, and health. Health insurance alone is 6.98% of that. Sodra contributions stop above an annual ceiling of €138,729/year.
Income tax changed in 2026. Pay is taxed at 20% up to 36 average wages a year, then 25%, then 32% above 60 average wages. Tax is withheld from the employee, not an employer cost.
Every employee gets 20 days of paid annual leave a year, plus 14 public holidays. There is no mandatory 13th-month salary in Lithuania. Budget leave as time, not as an extra cash line.
The headline figure on a Lithuania hire
Start with gross salary. Add employer Sodra at 1.77% for an open-ended contract. That covers unemployment, work-accident, the guarantee fund, and the long-term employment fund.
The table below shows illustrative totals at a EUR 60,000 annual salary. These are worked from verified 2026 rates and labelled illustrative. They are not statutory figures.
Lithuania's employer add-on is small. On an open-ended contract the employer contributes 1.77% of gross into Sodra. The standard work-accident class sits at 0.14% within that. The heavy social insurance is the employee's: 19.5% of gross is withheld from their pay, not added on top by the employer.
| Line | Illustrative cost on EUR 60,000 annual salary | Source |
|---|---|---|
| Gross salary | EUR 60,000 | Contract |
| Employer Sodra at 1.77% (open-ended contract) | EUR 1,062 (illustrative) | Sodra: 2026 contribution rates |
| Employer Sodra at 2.49% (fixed-term alternative) | EUR 1,494 (illustrative) | Sodra: 2026 contribution rates |
| Annual leave: 20 days a year (paid, built into salary) | Included in salary | Labour Code |
| Public holidays: 14 a year | Included in salary | Labour Code |
| Mandatory 13th-month salary | None | Labour Code, wage chapter |
| Total illustrative employer cost (open-ended) | ~EUR 61,062 before the Teamed fee | ~101.8% of gross (illustrative) |
These figures are illustrative. They apply the 1.77% open-ended employer rate, or the 2.49% fixed-term rate, to a EUR 60,000 gross. They are not statutory figures. The employee's 19.5% and income tax come out of the same gross, so they do not raise the employer's cost. Once an annual salary passes €138,729/year, Sodra contributions stop on the excess.
Add Teamed from $599 per employee per month and the total rises by that flat fee, with zero FX mark-up in any currency. Use the Employer Cost Calculator to run your own salary figures.
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Start with gross salary
Confirm the agreed gross salary in euros. Every other line builds on this number, including the employer Sodra rate.
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Pick the contract type
Apply the open-ended employer Sodra rate, or the higher fixed-term rate where the contract has an end date. The difference is the unemployment component.
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Add the employer Sodra contribution
Apply the employer rate to gross pay up to the annual ceiling. Above the ceiling, no further contribution is due on the excess.
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Model leave and sick pay as time and events
Annual leave and public holidays are built into salary. The first sick days are a small per-event employer cost. Budget them as variable, not fixed.
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Reserve for notice and severance
Notice and severance arrive at the end of an employment, not on payday. Build a reserve and good dismissal process into your planning from the first hire.
Sodra: why the employer line is so light
The employer pays 1.77% of gross on an open-ended contract. It pays 2.49% on a fixed-term one. The gap is a higher unemployment rate on fixed-term work.
The employee pays the rest: 19.5% of gross, withheld from pay. Both sides stop once yearly pay passes €138,729/year.
The employer contribution
On an open-ended (permanent) contract the employer pays 1.77% of gross into Sodra. That rate bundles unemployment insurance, work-accident and occupational-disease insurance, the guarantee fund, and the long-term employment fund. On a fixed-term contract the employer rate is 2.49%, because the unemployment component is higher for fixed-term work. The work-accident class for a normal office employer is 0.14%, the lowest of four risk classes.
Open-ended contract employer rate: 1.77%. Fixed-term contract employer rate: 2.49%. Default work-accident class: 0.14%. The employee pays 19.5% of gross, withheld from pay. Contributions on both sides stop above an annual ceiling of €138,729/year.
Source: Sodra: contribution rates for employed persons, 2026
The employee contribution
The employee carries 19.5% of gross. It is deducted from their salary, so it does not add to the employer's cost. That total covers pension, sickness, and maternity insurance, plus compulsory health insurance. The health insurance share alone is 6.98% of gross. For a budget, treat it as a deduction from the worker's pay, not an employer charge.
The annual ceiling
State social insurance contributions are capped. The ceiling for 2026 is €138,729/year, set at 60 average wages. Once an employee's yearly pay passes that level, no further Sodra contribution is due on the excess from either side. For senior hires this makes the social insurance line predictable rather than open-ended.
Income tax: the 2026 progressive bands
Lithuania moved to three progressive income tax bands in 2026. Pay is taxed at 20%, then 25%, then 32%.
Income tax is withheld from the employee. It is not an employer cost. The employer's job is to calculate it, deduct it, and remit it on time.
Personal income tax (GPM) is the employer's monthly withholding duty, not an employer charge. The 2026 reform replaced the old structure with three bands, tied to the average wage (VDU). The 2026 VDU is EUR 2,312.15 a month, so 36 average wages is EUR 83,237.40 a year and 60 average wages is EUR 138,729 a year.
The 2026 income tax bands
| Annual income band | Rate |
|---|---|
| Up to 36 average wages (EUR 83,237.40 a year) | 20% |
| From 36 to 60 average wages (EUR 83,237.40 to EUR 138,729 a year) | 25% |
| Above 60 average wages (over EUR 138,729 a year) | 32% |
Source: VMI: Law on Personal Income Tax, Art. 6(1)
The 25% middle band is new in the 2026 reform. It sits between the 20% entry rate and the 32% top rate. Distributed profit and dividend income are taxed separately at a flat 15% and are not added into the progressive bands. None of this is an employer cost in cash terms. It becomes a liability only if the employer withholds or remits it wrongly.
Leave and sick pay: what the law requires
Every employee gets 20 days of paid annual leave a year on a five-day week. On top of that sit 14 public holidays.
Sick pay starts with the employer. The first two days are paid by the employer at between 62.06% and full pay. From day three, Sodra pays.
Leave and sick pay live in the Labour Code. The standard week is 40 hours across five days.
Annual leave
The statutory minimum is 20 days of paid annual leave per year on a five-day working week. Employees raising children, minors, and people with a disability get supplementary days on top. Accrued and unused leave is paid out when employment ends.
Public holidays
Lithuania has 14 public holidays a year. They sit outside the 20 days leave entitlement. Work on a rest day or public holiday is paid at a higher rate, at least double pay where no time off is given instead.
Sick pay
The employer funds the first two calendar days of sickness, at between 62.06% and full pay of the employee's average wage. From the third day, the State Social Insurance Fund (Sodra) pays the benefit at 62.06% of compensable earnings. Budget the first two days as a small employer cost per sickness event, not a fixed monthly charge.
Maternity leave
Pregnancy and childbirth leave runs to 126 days, made up of 70 calendar days before the birth and 56 after. The after-birth part rises to 70 days for a complicated birth or for more than one child. The maternity benefit is paid through Sodra, not directly by the employer.
The costs that arrive at the end, not on payday
Three costs sit outside the monthly contribution. Notice, severance, and the risk of getting a dismissal wrong.
Each can dwarf the 1.77% monthly employer line if you do not plan for them from the first day.
Notice
For a dismissal without employee fault, the employer gives 1 month of notice in general. If the employment has lasted under a year, notice is 2 weeks. Notice is doubled for employees within five years of pension age, and tripled for pregnant employees, those raising a child under 14 or a disabled child under 18, employees with a disability, and a few other protected cases (Labour Code, Art. 57(7)).
Severance
On a dismissal without fault, severance is 2 months of the employee's average wage where service reaches one year or more. Where service is under a year, severance is 0.5 months of the average wage. A separate long-service benefit, based on continuous service, is paid by Sodra from a dedicated fund, not by the employer. Treat severance as a cost you reserve for from year one.
Unlawful dismissal exposure
Get a dismissal wrong and the court can award average pay for the forced absence, capped at one year, plus compensation of one average monthly wage per two years of service. That compensation is capped at 6 months of average wages where reinstatement is not ordered. A poorly run dismissal can cost far more than the social insurance line. Good process from day one is the cheapest protection.
Probation
The trial period runs to a maximum of 3 months and cannot be extended by agreement. During or at the end of probation, the employer can end the contract for unsatisfactory results on 3 days of written notice, with no severance. This keeps the early-stage cost of a wrong hire low.
How Teamed handles Lithuania employment costs for you
Teamed becomes your legal employer of record in Lithuania for from $599 per employee per month, with zero FX mark-up in any currency.
Sodra, income tax withholding, payslips, and the full Lithuania compliance stack run on one platform.
Real HR and legal experts handle your Lithuania hires from the first contract through every Sodra filing and income tax return. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the Sodra line and any leave liability. Nothing hides inside the management fee.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Lithuania contractor who converts to employment keeps their record. That same employee can graduate from EOR to your own Lithuanian entity without switching systems. EOR is the right structure for a first Lithuania hire, until it isn't. Teamed tells you when the model no longer fits. Start from the Lithuania hiring overview or run the Employer Cost Calculator to see the full picture.
Frequently asked questions
What does it cost an employer to hire someone in Lithuania in 2026?
The employer add-on is small. On an open-ended contract the employer pays 1.77% of gross into Sodra. On a fixed-term contract it is 2.49%. The employee, not the employer, carries the heavy 19.5% social insurance load, which is withheld from pay. There is no mandatory 13th-month salary. Add Teamed from $599 per employee per month for the full employer-of-record service, with zero FX mark-up in any currency.
Why is the employer social insurance rate in Lithuania so low?
Lithuania puts most of the social insurance contribution on the employee. The employer pays 1.77% on an open-ended contract, covering unemployment, work-accident, the guarantee fund, and the long-term employment fund. The employee pays 19.5% of gross, deducted from their salary, which funds pension, sickness, maternity, and health insurance. So the employer's cash oncost stays light.
Is there a cap on social insurance contributions in Lithuania?
Yes. State social insurance contributions stop above an annual ceiling of €138,729/year for 2026, set at 60 average wages. Once an employee's yearly pay passes that level, no further Sodra contribution is due on the excess from either the employer or the employee. This makes the social insurance line predictable for senior hires.
How is income tax structured in Lithuania for 2026?
Lithuania uses three progressive income tax bands from 2026. Pay is taxed at 20% up to 36 average wages a year, 25% from 36 to 60 average wages, and 32% above 60 average wages. Distributed profit and dividend income are taxed separately at a flat 15%. Income tax is withheld from the employee and is not an employer cost.
What annual leave and public holidays apply in Lithuania?
Every employee gets 20 days of paid annual leave a year on a five-day working week, plus 14 public holidays that sit outside that entitlement. Employees raising children, minors, and people with a disability get supplementary leave days. Accrued and unused leave is paid out when employment ends.
What are the termination costs to budget for in Lithuania?
For a dismissal without fault, the employer gives 1 month of notice in general, or 2 weeks where service is under a year. Severance is 2 months of average wage at one year or more of service, and 0.5 months of average wage under a year. An unlawful dismissal can add average pay for forced absence plus compensation capped at 6 months of average wages. Reserve for these from the first hire.
Lithuania is the rare market where the employer oncost barely moves the cost model. On an open-ended contract the employer pays 1.77% on top of gross, and nearly all of the social insurance sits on the employee, withheld from their own pay. That makes the monthly cost very easy to budget. The real money in Lithuania is at the end, in notice and severance, so reserve for it from the first hire rather than the fifth year.
Lithuania puts 19.5% of the social insurance load on the employee and just 1.77% on the employer.
That flips the usual cost picture. The monthly oncost is tiny, so the numbers that matter are notice and severance.
Know who pays what. Know the ceiling. Reserve for the exit before you sign the offer.
