Lithuania: Business Trips and Per Diem Allowances
New rules regarding per diem allowances take effect on October 1. Are you familiar with the changes?
What Every Employer Needs to Know
Why were these changes necessary?
If you have ever dealt with employees going on business trips, you have likely had to decide what per diem amount to pay.
The main purpose of per diems is to compensate the employee’s increased expenses. The Labour Code provides that the maximum tax‑exempt per diem amounts are set by the Government of the Republic of Lithuania. But what if an employer wants to pay lower per diems – is that allowed?
Until now, the Per Diem Payment Procedure stipulated that per diems could be reduced on the basis of objective criteria. The problem was that legislation did not clearly define what qualifies as objective criteria, and case law on this issue was inconsistent. This led to numerous practical questions and debates.
Changes that will make your life easier
Taking this into account, the legislator decided to abolish the requirement to apply objective criteria. From 1 October, per diems may be reduced within clearly defined limits:
- In an internal normative act, per diems may be reduced by no more than 65% of the set amount.
- In a collective agreement, per diems may be reduced by no more than 50% of the set amount.
In both cases, per diems may be reduced only if the business trip lasts at least 7 days.
If the business trip lasts less than 7 days, per diems may be reduced only if this is provided for in a collective agreement concluded with a trade union.
It is also established that the employee is entitled to 20% of the standard per diem where the first and/or last day of the business trip is no longer than 4 hours.
Important to know
It is also important to note that once a decision has been made to reduce travel allowances, the employee must be notified in writing before the day of departure on the business trip. Once the employee has departed on the business trip, the established terms can no longer be changed.
| Please note: Per diem amounts depend on the country to which the employee is travelling. The specific amounts are set out in the Per Diem Payment Procedure. |
Do you have questions after reviewing the changes?
- Can I change the per diem amount if it was specified in the employment contract?
- What should I do if unforeseen circumstances arise that require a change in the per diem amount, but the employee has already left on a business trip?
| Feel free to contact us → vakare.sidaraviciute@lynx.legal. We will be happy to help you find all the answers and work through any issues. |
Author: Vakarė Sidaravičiūtė, Legal assistant, LYNX (Lithuania)