On 14 March 2020 the Government of Lithuania having regard to the epidemic situation of COVID-19 (coronavirus infection) adopted Resolution No 207 “On Declaring Quarantine in the Territory of the Republic of Lithuania“ and declared quarantine in the entire territory of the Republic of Lithuania effective as of 16 March 2020, 00:00 until 30 March, 24:00 and prohibited or restricted activities in the following areas: Regarding cross-border and domestic movements Regarding the activities of public and private sectors
Regarding cross-border and domestic movements:
• The entry of foreigners into the Republic of Lithuania is restricted, except for drivers and members of crews, who are employed in Lithuanian companies operating international commercial freight transportation, or who carry out international commercial freight transportation by all the means of transport, also persons entitled to reside in the Republic of Lithuania etc.;
• Persons returning to their country of residence shall be allowed to transit through the territory of the Republic of Lithuania without stop until 19 March 2020, 00:00. After 19 March 2020, 00:00, until the end of the quarantine, foreigners shall be allowed to transit through the territory of the Republic of Lithuania only by rail without stopping;
• The citizens of the Republic of Lithuania shall not be allowed to leave the Republic of Lithuania, unless they have to return to the place they live, go to their place of employment or have a permission of relevant authority;
• Entry of cruise ships into Klaipėda State Seaport shall be prohibited.
Regarding the activities of public and private sectors:
• Cultural, leisure, entertainment and sports establishments shall not be visited, and no services shall be provided to visitors;
• All indoor and outdoor events and gatherings shall be prohibited;
• The activities of wellness and health centers, spas and recreation centers shall be prohibited, except for individual medical rehabilitation services that are related to treatment;
• The activities of catering facilities, restaurants, cafes, bars, nightclubs and other entertainment venues shall be prohibited, except where food can be taken away or it can be otherwise delivered to natural and legal persons in accordance with hygiene requirements;
• The activities of shops, shopping and/or entertainment centers, except for the sale of food, veterinary, pharmacy, optical goods and orthopedic technical appliances, and of markets other than food, shall be prohibited. This prohibition shall not apply to online sales and when goods are delivered to natural or legal persons or are collected at collection points in accordance with hygiene requirements;
• Beauty services shall be prohibited;
• Casinos and amusement arcades shall be prohibited.
Due to declared quarantine and restricted operations of private sector both media and business society have been discussing the performance of contractual obligations and possibility to apply the Force Majeure clause (which is considered as a ground for exempting a party from it’s contractual liability).
Force Majeure events are considered when: (i) the contractual obligations were not performed due to the circumstances which could not have been controlled and reasonably foreseen by a party prior concluding the contract and (ii) the party could have not prevented these circumstances or their consequences. Announcement of the quarantine and limiting the business activities in question do not mean that the Force Majeure clause may be applied by default, therefore it is necessary to assess the individual circumstances against the Force Majeure criteria and what the real consequences are.
First, persons who have difficulties in fulfilling their contracts must immediately inform the other party of the unforeseen circumstances of Force Majeure.
Second, it is necessary to determine the law governing the specific contract. If the governing law is other than the law of Lithuania, it must be determined whether the Force Majeure clause is applicable to the contract under the governing law, as well as the possibilities to prove that the quarantine announced in Lithuania meets the criteria of Force Majeure.
Finally, a Force Majeure certificate issued by the Chamber of Commerce, Industry and Crafts may facilitate to prove the existence of Force Majeure circumstances. It does not substant the grounds for exempting from contractual liability, but confirms the facts and may facilitate in negotiating further with the other party or in litigation procedure. Please note that each situation is assessed individually by the Chamber of Commerce, Industry and Crafts and Force Majeure certificates are issued only after a full assessment of grounds set out in the application. For this reason, all the arguments and grounds of the application must be properly established.
Nevertheless, the declaration of quarantine in Lithuania may, where appropriate, be recognized as a constraint on the fulfilment of the contract due to changed circumstances (Article 6.204 of the Civil Code of the Republic of Lithuania), which allows the affected party to initiate an amendment or termination of the contract.
The Parliament of the Republic of Lithuania adopted the amendments of Articles 47 and 49 of the Labour Code of Lithuania, allowing to regulate the labour relationships more versatile in case of the extreme situation on the state level
Under the amendments of the Labour Code of Lithuania an employer may declare the idle time for the employee or for a group of employees when the Government of Lithuania declares extreme situation or quarantine on the state level and hereupon the employer is unable to provide the employee with the work agreed upon in the employment contract.
When the idle time is declared due to extreme situation or quarantine:
1) the employee cannot be required to come to the workplace;
2) during the idle time the employee shall be paid a salary not lower than minimal monthly salary approved by the Government of the Republic of Lithuania, when the employer and the employee agreed on full-time job. The employer’s expense related to the paid salary during the idle time may be reimbursed by the state pursuant to the provisions of the Law on Employment of the Republic of Lithuania;
3) the employer may declare the partial idle time when it reduces the amount of working days per week (reduce by 2 working days or more) or working hours per working day (reduce by 3 working hours or more) for the specific period of time. In such case the employee receives the salary for the labour time, whereas for the idle time the employee is paid proportionally as per Item 2above.
The amendments of the Labour Code of Lithuania also stipulates that once the Government of Lithuania announces extreme situation or quarantine, the employer must propose to the employee to work remotely from home if the state of health of the employee is dangerous for the health safety of other employees. If the employee does not agree to work remotely or does not provide the employer with the response to the employer’s proposal, the employer shall suspend the employee by prohibiting his working and not paying him the salary.
The Parliament of the Republic of Lithuania adopted the amendments of the Law on Employment of Lithuania, to preserve jobs during the idle time due to quarantine, to provide the enterprises with subsidies in order to compensate the paid salaries
To ensure that the employment contracts were not terminated during the idle time due to declared quarantine the Parliament of the Republic of Lithuania amended the Law on Employment of Lithuania and established that the employers preserving the jobs during the idle time will be paid with subsidies to compensate the paid salaries.
The amount of subsidy will be calculated accordingly to the salary of an employee. The amount of subsidy will be 60 or 90 per cent. The subsidy of 90 per cent will be paid to those employers whose activities are restricted by the Government of the Republic of Lithuania due to quarantine. However, the amount of the subsidy will not be higher than the minimal monthly salary approved by the Government of the Republic of Lithuania.
During the extreme situation or the quarantine the subsidy for the salary will be paid for no longer than 3 months. The employers who are subject to subsidy will have to preserve the jobs at least for 3 months as from the date when all subsidy payments are paid.
QUARANTINE IN THE TERRITORY OF THE REPUBLIC OF LITHUANIA
Under Resolution of the Government of Lithuania No 264, dated 25 March 2020, which amended Resolution of the Government of Lithuania No 207 “On Declaring Quarantine in the Territory of the Republic of Lithuania“ dated 14 March 2020, the quarantine in the entire territory of the Republic of Lithuania has been extended until 13 April 2020, 24:00. The following amendments of the quarantine regime came into force (other restrictions effective due to the quarantine remain unaltered):
Regarding cross-border and domestic movements:
Regarding the activities of private sector:
DRAFTS OF LEGAL ACTS
The Ministry of Social Security and Labour of Lithuania drafted amendments of the Labour Code of Lithuania and the Law on Employment, changing the order under which the idle time for an employee is declared and the order under which the subsidies are paid to employers declaring idle time for their employees due to effective quarantine.
The Ministry of Social Security and Labour of Lithuania also drafted the amendment of Resolution of the Government of Lithuania No 496 “On Implementation of the Labour Code of the Republic of Lithuania”, relieving the procedure of leasing the employees to other companies when the extreme situation or quarantine is declared.
The Ministry of Justice of Lithuania drafted the amendment of the Code of Administrative Offenses establishing larger fines applicable to the head of a company or another responsible person at the company for committed violation of labour laws, laws on employees health and safety up to EUR 880.
It is planned that the foregoing drafts of laws will be considered by the Parliament of Lithuania the next week. The amended Resolution of the Government of Lithuania will come into force when approved by the Government of the Republic of Lithuania and signed by the Prime Minister.
EUROPEAN UNION FINANCIAL SUPPORT TO LITHUANIA
As announced by the European Commission, European Union will provide the financial support for its member states to counter Covid-19. The member states will be able to use the financial support to mitigate the negative impact of the disease for the labour markets, business etc. Lithuania might expect to receive the support approximately EUR 1.5 billion.
QUARANTINE IN THE TERRITORY OF THE REPUBLIC OF LITHUANIA
On 8 April 2020 the Government of Lithuania proposed establishing the new restrictions during the quarantine in Lithuania and extending the quarantine until 27 April 2020, 24:00.
AMENDMENTS OF LEGAL ACTS
Idle time regulations have been changed
On 8 April 2020 the law amending Article 47 of the Labor Code of Lithuania came into effect. Under the amendment, the order of announcement of idle time for employees due to extreme situation or quarantine in Lithuania has been changed. An employer may declare the idle time for the employee or for a group of employees when the Government of Lithuania announces extreme situation or quarantine on the state level and hereupon the employer is unable to provide the employee with the work agreed under the employment contract if the employee is not able to work remotely due to reasons related to work organization or the employee disagrees to perform a different job offered.
When idle time is announced for an employee on 8 April 2020 or later on, the employer must notify the State Labor Inspectorate about the idle time within one business day.
If an employer announced idle time before 8 April 2020, notification to the State Labor Inspectorate must be submitted not later than 10 April 2020.
Terms and conditions regarding idle time subsidies have been amended
On 10 April 2020 the Law on Employment was amended. The changes established the order under which the employers declaring the idle time for their employees due to extreme situation or quarantine shall be paid with the state subsidies:
An employer which is being paid with the state subsidies will have to preserve at least 50 per cent of jobs supported by the state for at least 3 months as from the day when the subsidy payments to the employer will be terminated.
How to apply for subsidies
An employer which has declared the idle time for its employees is eligible for subsidy payments if it meets the following criteria:
a) The employer is not a budget institution;
b) The employer in not under insolvency or liquidation proceedings;
c) The head of the employer or other members of management have not been fined for illegal work, undeclared employment, violation of employment of foreigners, violation of labor laws, the laws on employees’ health and safety etc. within the recent year.
In order to apply for the subsidy the employers should refer to the Department of the Customer Services of the Employment Services of Lithuania. The necessary documents may be submitted as of 5 April 2020 remotely ( via email or post) to the Department which is assigned to the employer according to its business seat.
The documents shall be provided to the Department of the Customer Services each month, no later than by the 15th day of the following month. When submitting the documents for the first time they can be submitted by the end of the month.
The Employment Services shall assess the documents and adopt the decision to pay the subsidy or not within 5 business days.
The state will pay the subsidies to the employers as long as the quarantine or extreme situation in Lithuania is in effect.
Should you have any questions please do not hesitate to contact KPMG Law professionals.
Subsidies to be paid after the quarantine period
On 15 May 2020 the Law on Employment was amended. The amendment establishes that once the quarantine in Lithuania is revoked the state will continue supporting employers and will pay the subsidies to compensate the salaries for up to 6 months, but not longer than until 31 December 2020.
Upon termination of the quarantine in Lithuania, the state subsidies might be paid to the following employers:
Upon termination of the quarantine in Lithuania, the employers might be paid with the following subsidies:
For the fifth and sixth months:
a) 30% of the salary, but no more than EUR 607, or
b) 30% of the salary, but no more than EUR 1214, if the employer is included in the approved list of activities focusing on the production of advanced technologies, knowledge-intensive services, the pursuit of EU Green Deal targets and social dialogue.
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