Small partnership without employees: is a pay system needed?

No. If only its members work in a small partnership (mažoji bendrija, MB) and the MB has not signed a single employment contract, it does not need to adopt a pay system. The law places this duty on the employer (DK, Labour Code, Article 140(3)). The State Labour Inspectorate (VDI) says that all employers must have a system if at least one employee, including the manager, works for pay under an employment contract (VDI FAQ, question 1.6). An MB member cannot have an employment relationship with their own MB, and the MB’s manager works under a civil contract. So an MB in which only the members work has no employees. This changes when the MB hires its first employee under an employment contract.

Why an MB member is not an employee

An MB member may sign civil contracts with the MB for services or works, except contracts that have the features of an employment relationship (Law on Small Partnerships, MBĮ, Article 7(4)). So a member who works in their own MB does not work under an employment contract. VDI says this directly: “A small partnership member cannot have an employment relationship with the small partnership” (VDI, Frequently asked questions).

A civil (services) contract is signed with the MB’s manager (MBĮ, Article 22(2)). This also applies when the manager is not a member. So appointing a manager does not by itself make the MB an employer.

What this means in practice

If the MB has no employees under employment contracts:

• No pay system has to be adopted. The duty to adopt a system and make it available to employees applies to the employer (DK, Article 140(3)).
• There is nobody to inform and consult. These procedures take place before a system is adopted or changed (DK, Article 140(3)).
• No data on employees’ pay and job group will have to be filed with Sodra. From 1 January 2027 employers will file data each month on employees’ pay, working time and job group (DK, Article 23(3), version in force from 2027-01-01). In our view, where there are no employees, there is no such data to file.

The MB’s other duties, such as the annual financial statements or members’ taxes, stay the same. This article does not change them.

When an MB does need a system

A system is needed once the MB has at least one employee under an employment contract. The members’ meeting decides whether the MB needs employees. It also sets the staff list and employees’ pay (MBĮ, Article 13(7)). The manager signs employment contracts with employees (MBĮ, Article 22(8)).

Typical cases:

• The MB hires an accountant, a sales assistant or another employee who is not a member.
• The MB hires a member’s family member under an employment contract.
• The MB takes on a seasonal or short-term employee under an employment contract.

The MB is then an employer, like any private limited company. The law makes no exception by legal form or size (VDI FAQ, questions 1.1 and 1.6). If an employee already works there, the system must be adopted by 31 December 2026 (law amending the DK, Article 23(4)). If there is only one employee, the system can be short: one job group, the salary or salary range and the criteria for setting it (VDI FAQ, question 1.2). Do not forget the indexation criteria and procedure: VDI says this duty applies to all employers (VDI FAQ, question 1.7). See also Small employers: a minimum pay system by 31 December 2026.

Our recommendation: if the MB plans to hire its first employee, adopt the system before signing the employment contract. The salary in the contract will then match the system from day one.

What to check in your MB

1. Has the MB signed at least one employment contract? If not, no system is needed.
2. Does the MB’s manager work under a civil (services) contract? This must always be the case (MBĮ, Article 22(2)).
3. Is the member’s civil contract with the MB free of the features of an employment relationship? Such contracts are prohibited (MBĮ, Article 7(4)). In our view, if a member in fact works as an employee, the problem is not the pay system but the contract itself. It is worth reviewing.

Frequently asked questions

Must an MB in which only a member works have a pay system?

No. The employer must have a system, and an MB member cannot have an employment relationship with the MB (DK, Article 140(3); MBĮ, Article 7(4)).

Is a system needed if the MB has engaged a manager who is not a member?

No, if the MB has no other employees. A civil (services) contract, not an employment contract, is signed with the MB’s manager (MBĮ, Article 22(2)).

Will an MB without employees have to file the SDUP report with Sodra from 2027?

In our view, no. The report carries data on employees’ pay and job group (DK, Article 23(3), version in force from 2027-01-01). Where there are no employees, there is no such data. For how to file when there are employees, see Monthly SDUP report to Sodra from 2027.

The MB will hire its first employee in 2027. What should it do?

From that day the MB is an employer and DK Article 140(3) applies to it. Our recommendation: adopt the system before signing the first employment contract.

Related articles

• Small employers: a minimum pay system by 31 December 2026
• Monthly SDUP report to Sodra from 2027: what to prepare with your accountant
• Pay system self-check: 20 questions for a small company

How to start

Not sure whether your MB or your client’s MB has employees under employment contracts? Check what applies to you: atlygis.linden.lt/patikra. If the MB has employees, you can prepare a pay system at atlygis.linden.lt.

Tel. +370 5 212 1506, e-mail info@linden.lt

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