Top 5 things Every CEO Needs to Plan when Hiring New Team & Establishing Legal Entity

Prior to starting a company, you should evaluate and select the type of business that is most suitable for you in consideration of the legal and economic aspects. This decision influences not just the amount of required equity funding, but also the legal status of the company along with other business-related concerns. There are also many things to keep in mind, especially when you are responsible for hiring people. Here you can find the most important things you should be aware of.

The legal standards of establishment, legal standing, management representatives, and restructuring of various types of companies in Lithuania are laid out in the Civil Code of the Republic of Lithuania. Every business working in Lithuania now has the legal rights of a legal citizen, based on the current Civil Code.  These legal entities are corporations, agencies, or organizations that have the ability to possess and enforce rights and responsibilities under their own name.

1. Different Types of Business Entities

Any corporation or agency with legal rights and liabilities, including tax filings, is referred to as a legal entity. It is a company that can enter into negotiations as a vendor or a seller, as well as take legal action in court.

Investors have the option of forming a private limited liability company, a public limited liability company, an individual corporation, a joint partnership, a general partnership, a small business, a cooperative, an agricultural company, a branch, or a representative agency. Public and private limited liability corporations, as well as regional or representative offices, are the most popular type of company for international investors in Lithuania.

2. Background Checks for Employees

• Medical checks

Health examinations are required for these classes of workers at the time of hire and on a regular basis throughout the duration of the employment agreement: workers under the age of 18; personnel whose workplace environmental risk assessment indicate that there is or may be a threat to their life or health; staff employed for nighttime or shift workers.

• Degree checks

Relation and degree checks are permitted, with the exception of a reference search from a current job, which requires the permission of the employee.

• Criminal Record checks

Employers are generally prohibited from doing criminal background checks on employees, with the exception of rare legal situations.

3. Job Contract Types

Open-ended work contracts are the most common form of job agreements in Lithuania (concluded for an indefinite term). Although, based on the needs of the company, there are a variety of other forms of work contracts to consider.

Fixed-term employment terms may be signed for a set amount of time, but never more than two years for the same type of job and five years for a variety of jobs. Fixed-term job contracts account for up to 20% of all work contracts if they are for a continuous type of job.

Seasonal job arrangements are made for the purpose of doing seasonal tasks. Seasonal jobs are those that, due to environmental and climatic conditions, are done only over such cycles/seasons of not more than eight months within a span of twelve months in a row.

A temporary work agreement may be signed for a specific duration of time, during which the temporary worker may perform job duties.

When an individual is hired for the purpose of gaining the skill sets required for the job by an apprentice training contract, a traineeship work contract can be created.

A job-sharing contract means that two coworkers may agree with the supervisor to share one job role.

The project job contract is a specified employment agreement in which the worker agrees to perform his or her work duties for the purpose of achieving a particular project’s goal and to work within set hours at one’s workplace or elsewhere.

A job agreement with multiple employers requires an employee to sign a job offer with two or more companies if the employee’s responsibilities warrant this.

4. The legal language usage

Paperwork relating to human resources (e.g., work arrangements, regulations, etc.) must be written in Lithuanian or in Lithuanian and another language(s) that is agreed upon by the parties.

5.  Executive’s law codes

According to their unique position, Managing Directors are subject to non-standard provisions that apply to all workers, such as rules on overtime pay, timekeeping, and termination of job contracts.

Managing Directors are entitled to corporate obligations for which they are responsible regarding the corporation’s compliance with legal principles.

Heads of corporations (Managing Directors) in Lithuania have a dual role: the regulations impose a duty to enter into work agreements with them and state that Managing Directors are responsible to staff in compliance with the labor policies.

The Lithuanian Employment Law also has special provisions for employers with the classification of overseeing employees when it comes to overtime pay. Even so, the percentage of such workers in the sector is small, with an estimate of less than 20% of all personnel classified as overseeing employees.

It makes a visible difference for a company to be able to monitor office records. It does not only assist you in better understanding how your people interact with your information, but it will also encourage you to enhance your documentation.  This also makes it incredibly simple to keep track of the legal side of the business and to provide your workers with all needed documents for their official employment.