When a fixed-term employment contract ends because its term expires, severance pay is usually not due. It is due only where the employment under the fixed-term contract lasts longer than two years. In that case the employee receives severance pay equal to one month of their average pay (Article 69(4) of the Labour Code of the Republic of Lithuania (DK)). Compensation for unused annual leave is paid when the employment ends, subject to the limits in DK Article 127(5). If you sign a new fixed-term contract with the same employee for the same job function, and no more than two months pass between the contracts, the contracts are added together. Once the total exceeds two years, the contract is treated as open-ended, except, among other cases, where the employee was hired temporarily to fill the job of an employee who is temporarily absent. And when you dismiss an employee on the employer's initiative without fault on the employee's part, you cannot replace the notice period with money on your own \u2013 only with the employee's consent.<\/p>\r\n
How much notice to give and what severance to pay on a dismissal without the employee's fault, we have already covered in Dismissal at the employer's initiative without employee fault: how much notice and how much to pay<\/a>. That article also says by when final pay must be settled. Which documents to prepare, and in what order, is in Dismissing an employee in Lithuania: which documents, in which order<\/a>. This article is about fixed-term contracts.<\/p>\r\n Article 69(1) of the Labour Code (DK) provides that a fixed-term employment contract ends when its term expires. The employer does not terminate anything in that case. It records that the employment contract has ended (Article 65(1) of the Labour Code (DK)). This decision must be in writing and must state the ground, the legal provision and the date on which the employment ends (Article 65(3) of the Labour Code (DK)).<\/p>\r\n The payments that may be due:<\/p>\r\n Note also that the employee's illness or leave does not postpone the end of a fixed-term contract. Article 65(6) of the Labour Code (DK) provides that the end date is postponed if on that day the employee is temporarily incapacitated for work or on leave, but this rule does not apply, among other cases, when the term of a fixed-term contract expires.<\/p>\r\n The end must also be formalised on time. A fixed-term employment contract becomes open-ended if the employment in fact continues for more than one working day of the employer's administration after the term expires (Article 69(2) of the Labour Code (DK)). The exception is the case referred to in DK Article 67(3). So if the employee keeps coming to work after the term ends and there is no new contract, you risk an open-ended employment relationship.<\/p>\r\n A typical situation: the contract gives a start date and, as its end, the same date two years later. The employee worked on both the first and the last day. Counted in calendar days, that is one day more than two years. Is that already \"longer than two years\"?<\/p>\r\n The Labour Code has a general rule on counting periods. Article 14(2) of the Labour Code (DK) provides that a period defined as a length of time starts on the day after the calendar date or event that defines its start. Article 14(3) of the Labour Code (DK) adds that periods defined in years end on the corresponding day of the year. Under these rules, a two-year period counted from a given date ends on the same date two years later. So it is not exceeded.<\/p>\r\n In our view, you can rely on DK Article 14, and the answer it supports is that the two-year limit is not exceeded. But in a dispute the employee may argue that the employment in fact lasted longer and claim severance pay. In our view, the same count also decides whether the two-year maximum was exceeded, so in a dispute the employee may also argue that the contract became open-ended (DK Article 68(2)). The body hearing the dispute may count differently. If you want to avoid this risk, set the end date when you sign the contract so that it clearly stays short of the two-year limit.<\/p>\r\n This is where the biggest risk sits. Article 68(1) of the Labour Code (DK) provides that the maximum term of a fixed-term employment contract, and the maximum total duration of successive fixed-term contracts concluded with the same employee for the same job function, is two years. One exception is where the employee is hired temporarily to fill the job of an employee who is temporarily absent. Contracts separated by a period of no more than two months are treated as successive. There are other exceptions. Other laws may allow fixed-term contracts of up to five years with elected or appointed employees, employees in creative professions and researchers, employees appointed by collegial elected bodies, and other employees for the purpose of protecting the public interest, and the other provisions of Article 68 do not apply to such contracts (Article 68(4) of the Labour Code (DK)). Other provisions of the Labour Code may also set exceptions (DK Article 68(5)).<\/p>\r\n The consequence is set out in Article 68(2) of the Labour Code (DK): if the term set or extended is longer than two years, or the total duration of successive contracts is longer than two years, the contract is treated as open-ended. The periods between the contracts count towards the length of employment, but are not paid.<\/p>\r\n In practice this means: if the first contract lasted almost two years, a new one for the same job function is signed within two months, and the total exceeds two years, the new contract is treated as open-ended (DK Article 68(2)). It will then not end by itself on its end date. You will be able to terminate it only on the general grounds, for example when the job function becomes redundant (Article 57(1)(1) of the Labour Code (DK)). And then you will have to give notice and pay the severance set by DK Article 57.<\/p>\r\n The options that remain:<\/p>\r\n There are other limits too. A fixed-term contract becomes open-ended when, during the employment, the circumstances that defined its term cease to exist (Article 67(3) of the Labour Code (DK)). And fixed-term contracts for work of a permanent nature may not exceed twenty per cent of all employment contracts the employer has concluded (Article 67(4) of the Labour Code (DK)).<\/p>\r\n Note also Article 69(5) of the Labour Code (DK): the provisions of paragraphs 2 and 3 of Article 69 do not apply to employees referred to in DK Article 68(3). Read literally, for employees with whom successive contracts are concluded for different job functions (DK Article 68(3)), neither the rule that the contract becomes open-ended if work continues after the term nor the duty to give notice of the end applies. In our view the wording is unclear, so even then it is safer to give notice and not let the employee work after the term expires.<\/p>\r\n The question comes up when an employee is dismissed on the employer's initiative without fault on the employee's part. The usual notice period is one month, or two weeks if the employment has lasted less than one year. For some employees it is doubled or tripled (Article 57(7) of the Labour Code (DK)).<\/p>\r\n The Labour Code does not allow the employer to shorten this period on its own by paying compensation: the contract is terminated after notice (DK Article 57(7)). Article 64(5) of the Labour Code (DK) allows another route, but only with the employee's consent. At any time before the notice period ends, the employer may decide to terminate the contract and not let the employee work during the notice period. But it must pay the wages due to the employee for the whole notice period. The date on which the employment ends is then moved to the last day of the notice period. This matters: formally the employment continues until the notice period ends, even though the employee no longer works.<\/p>\r\n Pay for the notice period is not severance pay. Severance is paid separately: two months of average pay, or half a month of average pay if the employment has lasted less than one year (Article 57(8) of the Labour Code (DK)). A long-service benefit is also paid in the manner set by law, depending on the employee's continuous service with that employer (Article 57(9) of the Labour Code (DK)). Compensation for unused annual leave is also paid (DK Article 127(6)).<\/p>\r\n If you want the employment to end sooner, the other route is an agreement. Article 54(2) of the Labour Code (DK) allows a written proposal to terminate the contract, setting out the terms: from when the employment ends, the amount of compensation, how unused annual leave will be dealt with, and how final pay will be settled, among other things. Either party may make the proposal (DK Article 54(1)).<\/p>\r\n DK Articles 14, 54, 57, 64, 65, 67, 68 and 69 cited here do not change in the future editions in force from 1 November 2026 and from 1 January 2027. Article 127 changes (described above), and so does one general rule.<\/p>\r\n Article 33(4) of the Labour Code (DK) allows an employment contract whose monthly pay is at least two times the latest national average monthly gross wage published by the State Data Agency (Valstyb\u0117s duomen\u0173 agent\u016bra<\/em>) to depart from mandatory rules, provided the contract strikes a balance between the interests of the employer and the employee. Until 31 October 2026, the exceptions that cannot be departed from include the rules on concluding and ending the employment contract. From 1 November 2026, ending the employment contract (and also the minimum wage) is removed from these exceptions, while concluding it stays (DK Article 33(4), as in force from 1 November 2026). So such contracts will be able to set different rules on how the employment ends, but only where the contract strikes a balance between the interests of the employer and the employee. If it is found that a term conflicts with mandatory rules and no such balance is struck, the term cannot be applied and the Labour Code rule applies instead (DK Article 33(4), as in force from 1 November 2026). In our view, the rules on the length of a fixed-term contract are close to the rules on concluding it, so we would not advise using this route to get around the limits in DK Article 68.<\/p>\r\n Send us copies of the fixed-term employment contracts, any extensions or new contracts, and the job descriptions. We will assess whether the contract will end on expiry, which payments will be due, and how to conclude the next contract safely.<\/p>\r\n Phone +370 5 212 1506, email info@linden.lt<\/p>\r\nWhat to pay when the contract ends on expiry<\/h2>\r\n
How to count the two years<\/h2>\r\n
Renewing, or a new contract for the same job function<\/h2>\r\n
Can the notice period be replaced with money?<\/h2>\r\n
What changes from 1 November 2026<\/h2>\r\n
How to start<\/h2>\r\n