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Monday 19.03.2018 | Name days: Jāzeps

Is Lithuania's labour bill just too slack?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULinas Jegelevičius for the BNN

How flexible and loose the new Labour Code can be? If all goes according to the will of the authors of the new bill, Lithuania may soon see a whooshing turnaround in its national labour law – going from a very conservative and stringent Labour Code to a really lax one.

Striking labour contracts verbally, enacting, in some cases, a 72-hours’working week, handing the pink slip right before the sacking and paying little, or not at all in some cases, severance pay is the cream of the proposed new Lithuanian labour legislation. The critics, excoriating the draft, predict the fluffy mash-up of liberalism may put the country’s labour relations in awry.

Law pundits stitched up a contentious Labour Code

Astonishingly to many, the Lithuanian Social Democrat Prime Minister, Algirdas Butkevičius, had embraced the draft having promised Lithuanian business to liberalize labour relations already in 2014. But with the country’s trade unions denouncing the proposals unanimously as detrimental and wiping out all social security guarantees, the debates have extended into this year.

Reportedly, law pundits from Vilnius University, Mykolas Romeris University, Lithuania’s key lawyer associations and scientists from the Institute of Social Researches have drawn up the draft.

«I’m really aghast at this. It’s horrifying to hear the Prime Minister defending the proposals, arguing that Lithuania sits on the bottom- to be exact, in the 124th place – according the flexibility of labour relations. It’s really weird to hear that the PM is not ashamed of Lithuania’s third worst ranking in the European Union according the wage…If the situation is really so good, so then it remains to be answered why 700 thousand people have left the country, most of which are young people,» says Gražina Gruzdienė, chairwoman of Lithuania’s Provisions Producers’ Trade Union.

Another trade unionist, Artūras Černiauskas, President of Lithuania’s Professional Union Confederation, says he is «exasperated and angered» by the proposed changes to the national Labour Code.

«What vexes me most is that its spearheads, as well as the Government have put out only tidbits of it, the entirety, however, remains yet to be seen. Also, what I see happening that the draft, though labelled as «modern and economy-spurring», is harmful in reality for the workers,» Černiauskas told BNN.

«The single proposals that we have heard of, like extending the working week up to 72hours, or cutting people out of the payroll with a notice of just a couple of days, signing short-term labour agreements for otherwise permanent capacities, dismissing workers without having them paid severance pay and some other proposals like that, sound like out of sound mind to many,» he noted.

Trade unionists bristle against draft

Meanwhile, Aleksandras Posochovas, head of Lithuania’s Service Sector Professional Union, says he is most uneasy about the plans to legalize employment based on verbal labour agreements.

«I can’t find an impression that our state is very rich that it wants to allow verbal labour contracts. In other words, it doesn’t want get the money collected to state tax coffers, which is a problem now. If we were to look through now the labour agreements, we’d find that many of them foresee the minimal wage and the rest is in bonuses. With a verbal agreement, getting paid will always be an issue. It is tantamount to giving the green light for wages paid off the books, in the so-called «envelopes», he pointed out.

Andrius Navickas, chairman of Lithuania’s Education Workers’ Union, also pointed out to BNN of the draft’s flaws, saying the proposals are against the workers.

The trade unionists heed that, on the list of EU wages, Lithuanians lags behind other 25 EU member states and is third up from the bottom in that regard.

Besides, they say, one should consider that around one-third of the workforce in Lithuania gets paid the minimum wage, which is EUR 300 now. Only a mere 2-3 percent of Europeans make ends meet with minimum wage, for the comparison.

Meanwhile, Lithuanians hirers have been maintaining that the current Lithuanian Labour Code is lacking flexibility and hampers new job creation.

But some of the project authors insist that the draft Labour Code, as a matter of fact, addresses the needs of workers, not the employers.

«Despite the labelling as a liberal piece of legislation, in fact, it is more favourable to the workers than the employers,» argued Tomas Davulis, lawyer, professor of Vilnius University and also the head of the working group for the new Labour Code.

«When speaking, for example, of fixed-term labour agreements, the working group does not deem fixed-date work contracts as good. But they are quite a simple way to convince employers create new jobs. Besides, there are different ways to prevent possible abuse (of the new Labour Code),» he insisted.

Draft spearhead praises new labour relations

According to Davulis, Lithuania should be getting more open to a variety of labour agreement forms, as well as removing the barriers of new hiring and simplifying the procedures of labour agreement signing.

«I really do not know what you think of verbal labour agreements, but they do exist in many countries worldwide. While putting the draft together, we inquired state labour inspectors what kind of documents they need when checking legality of work. They responded that they possess any of them, as the only data they have available are those on wage from SoDra (Lithuania’s Social Security Agency),» the lawyer pointed out.

Davulis supports the approach that verbal labour agreements would be affordable in all standard labour relations.

«It could be applied, in our opinion, in the simplest forms of labour relations, when there are no special appendixes to the agreement. But we do stand for signing the agreements in the regular way when the worker, for example, does want to work a shorter workday, asks to have his or her education expenses reimbursed and cases like that,» Davulis told

The professor, however, says each worker, regardless of the form of labour relations, has to get checked in with the social security system before the relations’ formalization.

«Apart the labour contract, one should be aware of the EU directive that foresees that each employee in the Union has to be informed within two months since the start of employment of his or her working conditions: work hours, wage, holidays and et cetera. This is document that every workers needs to get,» the labour law expert advised.

Besides the simpler hiring procedures, the draft authors also suggest so slashing the existing severance pay that they were similar to those in Latvia and Estonia.

An array of mind-blowing proposals

The working group has proposed to set requirement of one month of notice for to be laid off workers, one month shorter from the current period. But it would shrink up to two weeks for those employed less than one year and, instead from four to six months, only to two or three months for the to-be pensioners that are about to be let go.

If the draft went into legal force, the severance pay, which size now depends on the years of experience, would be paid out for the last month of employment, not a heft one for the last six months if the experience allows it.

«Pegging the severance pay with the experience is discriminatory on the base of age,» Davulis says.

But Černiauskas, ofLithuania’s Professional Union Confederation, says that Lithuania, on the contrary, should be considering opening a laid-off workers’ warranty fund which funds would be augmented by employers’ direct payments for dismissed workers.

«There is that kind of a fund for workers who lose their job in the wake of bankruptcies now, but I think it should be addressing all people who are let go, especially if the Labour Code is amended,» the trade unionist told BNN.

When it comes to working overtime, the law pundits suggest allowing working overtime without workers’ agreement, but only up to two hours a day.

«But they have to be fixed and paid. In the current regulation, overtime is allowed only in cases of force majeure, requiring the worker give a written consent for that. I believe the downright prohibition prevents from putting it in a civilized form, i.e. the worked has to do it, but it does not show up (in the papers). Then let’s allow them do it (work overtime), but let’s then ask them for registration and control,» the professor said.

Lax Labour Code would fit Scandinavia, not Lithuania

Among other suggestions is a proposal regarding small companies employing up to 10 workers – trim down the formalities of work organization, also revise and simplify technicalities for remote work.

But all the afore-mentioned heads of the trade unions are vociferously bristling against the changes and come in defence of the current Labor Code, arguing it had been compiled in response to the existing labour relations in Lithuania.

«Maybe there we see sometimes too stringent regulating (labor relations). But it has been done not because of happiness, but the lack of respect for the worker. Notably, Lithuania has the least number of collective labour agreements; there is also a threat for showing up bogus trade unions, founded by the employers. Obviously, tough labour laws are not required, for example, in Scandinavia, where the involvement of trade unions in overwhelming. Meanwhile, in Lithuania, you know, the worker gets so cornered up that he or she doesn’t have another way but to quite the job,» Gruzdienė said.

Though PM Algirdas Butkevičius promised to enact it revised yet in 2014, but with the draft turning into a hot potato in all walks of life, the debate over it has dragged on and its enactment in 2015 may be in question, some experts argue.

«I really don’t see the Social Democratic government signing the draft as it is. The fact that issue is controversial pinpoints the iterative postponements of the release of the full document. Initially, it was due November 1, 2014, then by December 1, 2014 and now the date has been moved until March 1, 2015. But if we get past it the possibility of having it passed will start waning, as the ruling coalition parties, and especially the Social Democrats, with Lithuanian Parliament election in 2016 nearing, will be getting too timid to pass it,» Černiauskas told.

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