Signing an employment contract: e-signature, workplace address, refusal

An employment contract can be signed with a qualified electronic signature. Its legal effect is equal to a handwritten signature. The contract can also be signed in advance, because it only takes effect when the employee starts work. The exact workplace address does not have to be stated in the contract: the contract names the employer’s workplace, and the place where the work is done is stated in the notice of working conditions. An employee may refuse to sign. The consequences differ, though: without a signature there is no new contract, while refusing to work under changed terms can become a ground for dismissal, if the change is driven by significant economic, organisational or production reasons.

What an employment contract must contain, whether you can use your own form and how to state the salary we have already answered in the FAQ on drafting labour law documents. How to change terms and raise pay is covered in a separate article. Here are the questions that remain after that.

Workplace address: in the contract or in the notice

Article 34(1) of the Labour Code of the Republic of Lithuania (DK) requires every employment contract to contain agreement on the job function, pay and the workplace (darbovietė). The workplace is the company or organisation, not a building’s address. Article 34(4) DK says so directly: the place where the job function is performed may differ from the location of the workplace.

The exact place is stated in another document. Article 44(1)(2) DK requires the employer, before work starts, to give the employee information on the place where the job function is performed. If there is no permanent place, the notice states that the employee works in several places and gives the address of the workplace from which the employee receives instructions.

Why this matters in practice. Article 45(1) DK allows the employer to transfer an employee to work in another locality only with the employee’s written consent. Other terms, not mentioned in that part, the employer may change by its own decision when the rules governing them change or where there is an economic, organisational or production necessity (Article 45(4) DK). The employee is informed about changes to the terms stated in the notice before they take effect (Article 44(4) DK). Our recommendation, not a legal requirement: name the workplace in the contract and put the address in the notice of working conditions.

And the employee’s home address? It is not among the three essential terms. We tell clients this: it makes no difference which address is in the contract, the registered one or the actual one. What matters more is that the employer knows where and how to reach the employee, and that the details are kept up to date.

Can it be signed with an electronic signature

Yes. Article 43(1) DK requires an employment contract to be made in writing in two copies. Amendments to the contract are also made in writing (Article 43(2) DK).

The effect of an electronic signature is set by Article 25 of Regulation (EU) No 910/2014 (eIDAS). Its paragraph 2 (Article 25(2) eIDAS) says that a qualified electronic signature has the equivalent legal effect of a handwritten signature. So any signing platform that uses qualified electronic signatures will do.

A simple electronic signature – for example, a tick box or a drawn signature on a platform – is not worthless. Article 25(1) eIDAS prohibits denying a signature legal effect solely because it is electronic. But the regulation gives equivalence with a handwritten signature only to a qualified signature. In our view, if a dispute arose, the reliability of a simple signature would have to be proved. So for employment contracts and their amendments we recommend a qualified signature.

If one party has no electronic signature, another route also works in practice: the contract is signed on paper, a scanned copy is sent to the other party to sign, and the originals are sorted out later. Each party must receive its own signed copy.

Who signs for the employer

Employees are hired by the CEO. Article 37(8) of the Law on Companies (ABĮ) provides that the company’s CEO hires and dismisses employees and concludes and terminates employment contracts with them. The CEO takes office from the day of election, unless the contract with them provides otherwise (Article 37(3) ABĮ). So they can sign other employees’ contracts from that day, even while their own employment contract is still being arranged. But an employment contract with the CEO is mandatory: Article 37(4) ABĮ provides that an employment contract is concluded with the company’s CEO.

The CEO’s own contract is a different matter. Article 102 DK provides that the employment contract with the head of a legal entity is signed on the entity’s behalf by a person authorised by the competent management body. We therefore recommend that the CEO does not sign their own contract or its amendment with themselves. A different person is appointed for this in the decision. Sodra must be notified of the CEO’s hiring at least one working hour before the planned start of work (Article 42(2) DK).

Can the contract be signed before work starts

Yes, and it is the safest way to do it. Article 42(1) DK treats an employment contract as concluded when the parties agree on the essential terms. Article 42(3) DK provides that the contract takes effect when the employee starts work. So you can sign the contract today and set a later start date.

The same part also sets the consequences if work does not start. If the contract did not take effect through no fault of the employee, the employer must pay compensation of no less than the employee’s pay for the agreed period, but for no more than one month. If it was the employee’s fault, where the employee did not give notice three working days in advance, the employee compensates the damage, up to the pay for a period of no more than two weeks.

Two things must be done before work starts. First, the State Social Insurance Fund administration (Valstybinio socialinio draudimo fondo administravimo įstaiga, known as Sodra) is notified of the hiring at least one working day before the planned start of work (Article 42(2) DK) – more on this in the FAQ on labour law consultations. Second, Article 42(4) DK allows the employee to start work only after being made familiar, against signature, with the working conditions, the workplace rules and the occupational safety and health requirements.

A question we hear often: can the contract be signed later with an earlier date? Our answer: the dates must match reality. In one example, the employee had already started work and the notice to Sodra had not been filed on time. We contacted Sodra, filed the notice with the real start date, and stated the real signing and start dates in the contract. The late notice was accepted in that case. But a contract signed with a backdated date does not cure the delay.

If the employee is a foreign national, the start of work also depends on the migration documents. We covered this in the article on the temporary residence permit.

Can the employee refuse to sign

A new contract – yes. Article 32(1) DK defines an employment contract as an agreement between the employee and the employer. Without agreement there is no contract.

An amendment – also yes, but the consequences are different. The essential and additional terms, the type of working time regime or the locality of work may be changed on the employer’s initiative only with the employee’s written consent (Article 45(1) DK). Article 45(2) DK sets three rules:

• the employee answers within a time limit set by the employer, which may not be shorter than five working days;
• a refusal to work under the changed terms may be a reason to terminate the employment contract on the employer’s initiative without fault on the employee’s part under Article 57 DK;
• a refusal to work for reduced pay may not be treated as a lawful reason to terminate the employment contract.

The ground is set out in Article 57(1)(3) DK: the employee refuses to work under changed essential or additional terms or to change the type of working time regime or the locality of work. And there is a condition that is easy to miss. Article 57(6) DK provides that a refusal can be a reason to terminate the employment contract only where the employer’s proposal to change the working conditions is justified by significant reasons of economic, organisational or production necessity. The law also protects certain groups of employees. Among others, an employee raising a child under three may not be dismissed on this ground (Article 61(3) DK). A pregnant employee, from pregnancy until her baby is four months old, may be dismissed only on the grounds listed in Article 61(1) DK, and this ground is not among them. An employee called up for compulsory military service, voluntary non-permanent military service or alternative national defence service may not be dismissed on the employer’s initiative without fault on their part (Article 61(4) DK). Employee representatives may not be dismissed on the employer’s initiative without the consent of the head of the territorial division of the State Labour Inspectorate (Valstybinė darbo inspekcija) (Article 168(3) DK). Notice periods and severance pay are described in the article on dismissal without fault on the employee’s part.

And the opposite case. If the employer changed the terms without consent, the employee may apply to the body that hears labour disputes. If the employee does not do so within three months of learning, or when they should have learned, of the breach, the employee is deemed to have agreed to work under the changed terms (Article 45(3) DK).

One case: a new contract template for everyone

An employer updated its employment contract template and added a new term on on-call duty. The question was: must all employees sign new contracts, and what happens if someone refuses because of one term?

The answer: no, they do not have to. If an employee does not agree, their existing contract stays in force. A new additional term can be added only with the employee’s written consent. If the dispute is about one clause, the simplest route is to strike it out and sign the rest.

How to start

Send us your employment contract template or the planned amendment, and tell us how you intend to have it signed. We will tell you what to keep in the contract, what to move into the notice of working conditions and how to arrange the signing.

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

More about this service: drafting labour law documents.