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COVID-19 in Lithuania: Can employers lay-off employees due to Coronavirus?

2020-03-12

The legislation in force does not provide a possibility of temporary lay-off or lay-off due to force majeure. Nonetheless, employers can take some actions to reduce their costs.

If the employer's capacity to provide work to its employees has diminished permanently or temporarily due to COVID-19, the employer can establish idle time. Idle time is a situation where the employee's obligation to work and the employer's obligation to pay remuneration is temporarily interrupted. In such case, the employer should send the employees home either for a fixed period or indefinitely by closing the workplace completely or by reducing the employee's regular working hours.

The employer shall adopt a unilateral decision to implement idle time in the entire company or a part of the company (e.g. if only some employees are affected). The employees are sent home during idle time and they shall not perform their work functions. The employees should be paid in the following way: full salary for the first day of idle time, 2/3 of the salary for the 2nd and 3rd days, 40% of salary for the rest of the period of idle time. Information and consultation procedure is not required. In case the employees are recalled from idle time and shall return to work or perform their work functions from home, they should be paid their full salary for the time they perform their work functions.

The employer may suggest the employees use annual leave or unpaid leave as alternatives to idle time or dismissal. If possible, the employee and employer may also agree for part-time work from home.

Under the law, lay-offs would only be possible if the economic damage, reduction in orders, etc. is of permanent nature. If economic downturn due to COVID-19 persists, the employer may perform internal restructuring in the company which will serve as a reason for lay-offs. In any case, the employer shall prove that the economic damage was real and has actually affected the business.

Jovita Valatkaitė, Senior Associate at COBALT