Head of a VšĮ: who appoints, employment contract and pay

The head (vadovas) of a public institution (viešoji įstaiga, VšĮ) is appointed and removed by the general meeting of members. The meeting also sets the terms of the head’s employment contract, including pay, unless it has delegated these functions to the board. A head who is paid must have an employment contract. A VšĮ that is registered in JAR as a non-governmental organisation and is not classed as a public sector entity may sign a volunteering agreement instead. The register manager must be notified of the head’s appointment or removal no later than 30 days. The Law on Public Institutions sets a term of office only for a VšĮ in which the state or a municipality holds more than half of the votes.

Who appoints and removes the head

Article 12(1)(4) of the Law on Public Institutions of the Republic of Lithuania (VšĮĮ) says that the general meeting of members appoints and removes the head and sets the terms of the head’s employment contract. If a board has been formed, the meeting may delegate this function to it (VšĮĮ Article 12(2)). If the VšĮ has a single member, that member’s written decision counts as a decision of the meeting (VšĮĮ Article 12(12)).

The head takes office on the day of appointment, unless the decision says otherwise. The head of a VšĮ being set up takes office on the day the institution is registered (VšĮĮ Article 20(1)).

When the meeting or the board decides to remove the head, the employment contract is treated as terminated from the moment the decision is adopted, unless the decision sets a later date (VšĮĮ Article 20(3)). The Supreme Court of Lithuania has held that the employment contract may set terms for the removal, such as notice periods or payments, and that such terms bind the parties (LAT e3K-3-473-248/2016, para. 32). Article 104(1) of the Labour Code of the Republic of Lithuania (DK) also says that the employment contract with the head of a legal entity ends when the head is removed in the way set by law or the founding documents. If the employment lasted more than two years, the removed head receives severance pay equal to one month’s average pay, unless the removal was caused by the head’s own fault (DK Article 104(2)).

Employment contract or volunteering agreement

A head of a legal entity who is paid must have an employment contract. It may also be a part-time contract (DK Article 101(1)). Why an employment contract cannot be replaced with a services contract is covered in Can a services contract replace an employment contract in Lithuania?.

The exception is in VšĮĮ Article 20(3). A volunteering agreement may be signed with the head instead of an employment contract if the VšĮ meets both conditions:

  • it is registered in the Register of Legal Entities (JAR) as a non-governmental organisation;
  • under the Law on Public Sector Accountability it is not classed as a public sector entity.

The head of the legal entity assesses whether it fits the definition of a non-governmental organisation and marks this in JAR (Article 12(2) of the Law on the Development of Non-Governmental Organisations of the Republic of Lithuania (NVOPĮ)). The application to register the mark is filed by the person submitting documents and data (JAR Regulations, point 148²).

Voluntary activity is activity useful to the public that a volunteer carries out of free will and without pay (Article 2(6) of the Law on Voluntary Activities of the Republic of Lithuania (SVĮ)). So the head is not paid for work under such an agreement. However, in the cases set in the agreement, the host organisation reimburses or pays in advance the expenses linked to the voluntary activity (SVĮ Article 9(2)(7)), and a volunteer in long-term voluntary activity may have expenses reimbursed and receive per diems on the conditions in SVĮ Article 13(2). A written agreement is mandatory if the activity is long-term, if expenses are to be reimbursed, or if either party asks for one (SVĮ Article 11(2)). Long-term activity means activity under an agreement made for no less than 60 days (SVĮ Article 2(1)). A volunteer may not, on the same day and doing the same functions, both work under an employment contract and volunteer in the same organisation (SVĮ Article 3(3)).

The law does not directly say what contract is signed with a head who works unpaid where the VšĮ has no NGO mark or is classed as part of the public sector.

Who signs the contract and sets the pay

The employment contract with the head is signed, amended and terminated on behalf of the VšĮ by a person authorised by the body that appoints the head (the general meeting of members or the board), unless a law names another body that appoints and removes the head (VšĮĮ Article 20(3)). The Labour Code sets the same rule: the contract is signed by a person authorised by the competent management body (DK Article 102). So the head does not sign the contract with himself or herself. Name in the meeting’s decision the person who will sign the contract for the institution.

Pay is set by the same body that sets the contract terms, that is, the general meeting of members, or the board where the function has been delegated to it (VšĮĮ Article 12(1)(4); VšĮĮ Article 12(2)). So a raise or a cut in pay is decided by that body, not by the head.

Where the state or a municipality is the owner or a member of the VšĮ, the articles must also state how the head’s pay is set, or refer to the legal act that sets it (VšĮĮ Article 8(3)(3); VšĮĮ Article 8(4)(3)).

Registering the head in JAR

JAR records the members of the legal entity’s management bodies (Article 2.66(1)(7) of the Civil Code of the Republic of Lithuania (CK)). The register also records the dates on which their powers begin and end (JAR Regulations, point 18.7).

The person authorised by the general meeting of members must notify the register manager of the head’s appointment and removal no later than 30 days (VšĮĮ Article 9(4)). Changes to the data on management body members take effect only from the day they are registered in JAR, except where the law provides otherwise (CK Article 2.66(6)). So register a new head without delay: until the change is registered, the register shows the previous head. For failing to file documents and data with the register manager on time, Article 223(1) of the Code of Administrative Offences of the Republic of Lithuania (ANK) sets a fine on the head or another person named in law or in the founding documents.

Is the head’s term of office limited?

The Law on Public Institutions sets no term of office for the head, except in the VšĮs listed below. If another law governs the VšĮ’s activity, the VšĮĮ applies to it only so far as that law does not provide otherwise (VšĮĮ Article 1(2)). The Labour Code rules on the consequences of a fixed-term contract ending do not apply to the employment contract of the head of a legal entity (DK Article 104(3)).

Special rules apply to a VšĮ in which the state or a municipality holds more than 1/2 of the votes at the general meeting of members:

  • the head is hired for a 5-year term through a competition, or without one where the law allows, and a person may not serve as head of the same institution for more than two consecutive terms (VšĮĮ Article 20(4));
  • the head may be appointed for a second term without a competition if the institution met all the aims set for it during the first term (VšĮĮ Article 20(4));
  • the head must keep confidential information secret during employment and for 3 years after the employment contract ends (VšĮĮ Article 20(5)).

Where the state or a municipality is a member, whatever its share of votes, a candidate for head and the head must have an impeccable reputation (VšĮĮ Article 20(7)). Such a head reports at least once a year to the institution exercising the owner’s or member’s rights on how the VšĮ meets the state’s or municipality’s aims and expectations (VšĮĮ Article 20(6)).

The head’s duties and liability

The head runs the VšĮ, acts in its name, and signs and terminates employment contracts with staff (VšĮĮ Article 20(1)). The head is responsible for organising the accounting, preparing and filing the annual statements, filing members’ data with JADIS, convening the general meeting of members, and the other matters listed in VšĮĮ Article 20(2). Who else may sign the institution’s documents is covered in Who signs company documents: manager, representative or shareholders?.

The head organises his or her own working time, within the limits on maximum working time and minimum rest (DK Article 103(1)). For damage caused as an employee, the head is liable under labour law and the terms of the employment contract, and for failing to perform civil duties or performing them badly, under civil law (DK Article 103(2) and (3)). Disputes over a refusal to sign the employment contract, the lawfulness of its termination and the head’s civil duties are heard in court (DK Article 105(2)).

A VšĮ is a public legal entity (CK Article 2.34(2)). So an employee of the VšĮ who is appointed head has the right to return to the previous job when the employment as head ends, unless the contract was terminated by the employer because of the employee’s fault (DK Article 58). The employee must give notice of the wish to return no later than three working days after the contract ends (DK Article 106).

How a VšĮ is set up and who acts as head until registration is covered in Setting up a public institution (VšĮ): members, articles, registration.

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How to start

Send us the VšĮ’s articles and a JAR extract, and tell us whether the head will be paid or work as a volunteer, and whether the institution has the NGO mark.

Phone +370 5 212 1506, email info@linden.lt

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