The Lithuanian Labour Code came into effect in 2003 and has been amended several times since. It regulates both collective and individual employment relationships and it applies the principle that parties are free to agree their own contract terms provided they are no less favourable to the employee than the Labour Code.
Employment contracts must be in written form and be consistent with the model established by law. Employment contracts are mainly of indefinite length but can be for fixed terms in certain circumstances provided that a fixed term cannot exceed 5 years.
Trade Unions in Lithuania are relatively weak and so are not influential in Lithuanian labour relations. In part this is because there is an historic preference for a separate union for each enterprise. As a result, the terms agreed in collective agreements do not form a significant part of contracts of employment. The Labour Code provides for the establishment of Works Councils but the system is not yet functioning fully.