Amendments to the Labour Code

Amendments to the Labour Code were adopted in order to reduce the cases of illegal employment.

Amendments to the Labour Code are also aimed to promote fair competition, ensure right of employees to fair remuneration and social guarantees. In addition, the amendments eliminated the provision of Labour Code which contradicted the Constitution of the Republic of Lithuania.

Article 98 (3) of the Labour Code indicating that if a person is discovered as illegally employed, employer shall pay him the agreed remuneration, however not less than the minimum monthly salary established in accordance with the requirements of Article 187 of the Code and for not less than three months (unless it is proved that the illegal employment was being performed for a different period of time). The mentioned amendments shall become effective as of 1 January 2015.

While considering the amendments to the Labour Code, the provisions on illegal work have been evaluated, especially taking into account the item 31 of the Resolution on Effective Labour Inspections as a Strategy to Improve Working Conditions in Europe of 14 January 2014 adopted by the European Parliament (hereinafter – the Resolution). The mentioned provision of the Resolution specifies that the sanctions will be effective only if employers employing undeclared employees will have no benefit from such employment. Additionally, the risk of the employers shall not be limited to the costs which should have been incurred in case of employment of registered employees.

The amendments also establish that disputes regarding payment of remuneration between a person who is illegally employed and an employer shall be examined under the procedure of settlement of individual employment disputes.

In addition, Article 301 of the Labour Code indicates that the employee shall be awarded the amounts of remuneration and other amounts related to employment relationships due to him for not longer than 3-year period. This provision shall no longer be valid as of 1 January 2015. The amendments were adopted taking into account the Ruling of the Constitutional Court of the Republic of Lithuania of 8 May 2014 determining that Article 301 of the Labour Code contradicts the Constitution of the Republic of Lithuania.

Amendments to the Resolution of the Government of the Republic of Lithuania “On Public-Private Partnerships“

Rules regarding the development and implementation of public-private partnership projects (PPPs) were amended in order to improve and regulate the procedures on preparation and implementation of PPPs more clearly.

Amendments to the Resolution of the Government of the Republic of Lithuania “On Public-Private Partnerships” set forth the rules on preparation and implementation of PPPs in a new wording.

The amendments provide that the authorities implementing PPPs shall prepare an investment project (as an opposite to feasibility study, as it was established in the previous version). They shall evaluate the project and complete the partnership questionnaire on a basis of the prepared investment project. It is important that the mentioned documents are in compliance with the guidance documents prepared by the PPPs Competence Centre (the Central Project Management Agency, hereinafter – the CPMA). Thus, the CPMA will evaluate documents, prepared by authorities implementing PPPs from perspective of their compliance with the guidance documents. 

According to the newly adopted amendments, the Ministry of Finance shall only assess financial conditions of contracts of PPPs. Additionally, the time set for the Competence Centre to assess the documents is shortened. Minding the said, it is believed that the whole coordination process of PPPs will also be shortened.

Amendments of the Resolution provide that the authorities implementing PPPs shall submit procurement documents to the CPMA. After having assessed the compliance of such documents with the guidance documents as described above, the CPMA will provide suggestions. It has to be noted that the mentioned amendment might slightly prolong the period of preparation and implementation of PPPs. However, the earlier practice proved that the whole procurement process was prolonged due to inadequately prepared procurement documents. As such, the legislator believes that pre-evaluation of procurement documentation will help to save time in subsequent stages of the procurement.

In order to accelerate implementation of PPPs, the period of 30 days is determined within which the CPMA shall adopt all the necessary decisions regarding preparation and implementation of PPPs. In addition, it is established that a responsible person (project manager) or a group of persons (project management unit) shall be appointed to coordinate the preparation and implementation of PPPs.

It is expected that the amendments to the Resolution “On Public-Private Partnerships” will make the process of PPPs more simple and efficient. Accordingly, projects will be implemented more rapidly.

Draft Law on Restriction of Payments in Cash of the Republic of Lithuania

The proposed draft law sets restrictions of cash settlements as well as of any other payments in cash under transactions between the parties, determines maximum amounts for cash settlements as well as for any other payments in cash under transactions between the parties and indicates cases where these restrictions are not applicable.

The purpose of the Law on Restriction of Payments in Cash drafted by the Government of the Republic of Lithuania (hereinafter – the Law) is to reduce preconditions of “the shadow economy”, to increase the control effectiveness and traceability of potentially illegal transactions as well as financial discipline of companies, transparency of financial operations and reliability, to reduce the possibility to avoid tax obligations and to ensure security of payments.

The provisions of the Law do not apply to the settlements as well as to any other payments between the parties related to labour relations.

It is proposed to introduce the following restrictions for persons paying in cash:

  1. Payments exceeding EUR 5.000 in cash shall be forbidden. This provision is applicable if the contract is concluded between natural persons who are not engaged in commercial activities.
  2. Payments exceeding EUR 3.000 in cash shall be forbidden. This provision is applicable if one of the parties of the contract is a legal person, or a natural person engaged in commercial activity.

It should be noted that administrative liability is proposed for infringements of procedure of cash settlements (fines for natural persons of up to EUR 900, for legal persons – up to EUR 1.500).

In addition, the Law establishes cases where the above-mentioned restrictions are not applicable:

  1. If the other laws indicate that settlements and any other payments under transactions between the parties may only be performed by non-cash payments or if the laws set the different maximum amount which might be paid to the contracting party in cash. 
  2. If settlements or other payments are executed through the bank or through other payment service provider in case the client’s identity is established.
  3. When the bank or other payment service provider is not able to provide the services whereas under transaction it is necessary to settle immediately. In this case the provisions of the Law shall not apply if relevant information is provided to the State tax inspectorate under the Ministry of Finance of the Republic of Lithuania. 

The Law indicates that the infringement of requirements established in the Law shall not make the contract between parties null or void. 

It is proposed that the Law would become effective as of 1 July 2015. 

Amendments to the Law on Real Estate Tax

Amendments to the Law on Real Estate Tax reduce non-taxable value of total real estate owned by natural persons. At the same time the adoption of the mentioned amendments reduce the tax rate from 1 percent to 0.5 percent of the taxable value of real estate.

Amendments to the Article 7(1)(6) of the Law on Real Estate Tax establish that value of real estate which does not exceed EUR 220,000 and which is owned by natural persons, shall not be subject to real estate. As a reminder, the non-taxable value applicable in 2014 was LTL 1,000,000 (EUR 289,620.02). Additionally, the tax rate applicable for the mentioned real estate is reduced from 1 percent to 0.5 percent.

The amendments to the Law on Real Estate Tax become effective as of 1 January 2015.  

Amendments to the Article 6.927 of the Civil Code

The amendments to the Article 6.927 of the Civil Code establish that at the request of the bank, the bank account agreement may be terminated at any time if there are no funds held in the client‘s account for more than one year and if no operations have been performed through the client‘s account for more than one year, unless otherwise established in the bank account agreement. Moreover, the Civil Code is being supplemented by the provision establishing that the bank account agreement may also be terminated if the funds held in the account have been arrested or other restrictions on the funds held in the account exist. 

Amendments to the definition of commercial (industrial) secret

Article 1.116 of the Civil Code was supplemented clarifying which information shall not be considered commercial (industrial) secret. The amendments relate to the companies providing public services. The legislator believes that the amendments will have positive influence on business as they will increase transparency in public procurement processes. 

Under the newly supplemented Article 1.116 of the Civil Code the information on prices of services and goods as well as operating expenses of entities providing public services shall not be considered as commercial (industrial) secret. 

The above mentioned amendments were prepared taking into consideration the frequent practice of companies providing public services where such entities refuse to provide information to their consumers and their representatives stating that such information is considered to be commercial secret. For example, heat provider refuses to provide information to the consumers and their representatives on the price of biofuel which is one of the main parts forming the heat price.

Draft amendments to the Law on Tax Administration 

The aim of the draft amendments to the Law on Tax Administration is to restrict the rights of central tax administrator to perform reinvestigation during the tax dispute.  

According to the draft amendments to the Law on Tax Administration, in case of tax dispute, the central tax administrator shall be able to perform reinvestigation only if new circumstances are revealed during examination of the complaint and these circumstances could have influence on the results of disputed investigation. It is required that the named circumstances were not and could not be known during the investigation. 

Additionally, it is suggested limiting the scope of such reinvestigation to the matters relating to such newly established circumstances as described above. 

The legislator believes that these amendments shall ensure that reinvestigations are performed only if it is objectively necessary and justified. It is also believed that this will impel tax administrator to perform investigations in more detailed and qualified manner. Moreover, it is expected that the suggested amendments shall reduce the number of reinvestigations performed and shorten the time period for the adoption and receipt of the final decision of the tax administrator. 

Draft amendments to the Law on Consumer Protection

The draft amendments to the Law on Consumer Protection were introduced in order to limit potential harm of unsafe products, additives and electromagnetic devices emitting harmful radiation. 

The current wording of the Law on Consumer Protection does not determine any obligations of product sellers to inform their customers what is the intensity of radiation emitted by the devices. For this reason it was suggested supplementing the Articles 3, 5, 10, 13 and 21 of the Law on Consumer Protection. According to the draft amendments, the producers, sellers and service providers are obliged to mark in the label the specific energy absorption rate of devices emitting electromagnetic fields.

The draft amendments to the Law on Consumer Protection also suggest amending the Article 5(1) by establishing that producer, seller and service provider are obliged to provide information on specific energy absorption rate of devices emitting electromagnetic fields. Additionally, it is suggested to strengthen the protection of consumer rights, coordinate the preventive measures and to consult consumers on the products which may have effect on their health.