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Business Law Group "FORESTA"
The amendments of the Law on Amendment of the Art.13 of the Law on Enterprises of the Republic of Lithuania entered into force from 23 October 2002 by which the list of activities subject to the licenses has been changed. Pursuant to those amendments the license should be acquired for the business activities related to printing of marks for the marking of processed tobacco, ethanol and alcohol.
On 19 September 2002, the Parliament passed the Law on Amendment and Supplement to the Articles No. 3, 4, 6, 7, 11 of the Law of the Republic of Lithuania on Taxes for State Natural Resources. It is noteworthy, that legal and natural persons shall pay taxes of settled amount for not only obtained but also for potentially possible to obtain amount and quality of natural resources.
This law will come into effect on 1 January 2003.
Pursuant to the amendments of the Company Law of the Republic of Lithuania which entered into force on 23 October 2002 the employment contract with the head of administration at the same time being the member of the companyís board in a company, in which the supervisory council is not formed, must be signed not by the person authorised by the general meeting of shareholders, but either by the chairman of the board or by the member of the board authorised by the board.
State Control Commission for Prices and Energy approved the new Order No. 92 on the Submission and Investigation of the Applications for the Prices at the Commission, which entered into effect on 19 October 2002. Pursuant to this order there is no demand to present to the commission information about the familiarisation of the consumers with the grounding of the application for the new prices before the reconciliation of the prices for the central heating, cold and hot water at the commission. There is also no demand for obtaining advanced price confirmation at the municipality (only the notice about the intended change of the prices should be presented to the mayor of the municipality). The commission shall not determine the content of the supplierís public announcement. Besides, the commission shall have the right to consider the applications of the minor enterprises (suppliers) and to adopt a decision straight after they receive an appropriate application of the supplier. The commission shall settle the price unilaterally if the council of the municipality shall not confirm within 60 days the prices coordinated by the commission with the municipality controlled company.
Government of the Republic of Lithuania passed Resolutions No.1628 and 1630, which entered into effect on 19 October 2002. Those resolutions have amended the orders regulating sale and lease of the new and already used state land plots for the purposes of non-agricultural activities. Pursuant to those amendments state owned land plots in which temporary constructions, owned by natural or legal persons the period of usage of which has expired exist, shall be considered, as a new state owned non-agricultural land plots.
It will be allowed to sell to the owners of severalty without auction only those free state owned land plots which are intervened between the severalty and which do not exceed 0.04 ha in territories in which the construction of dwelling houses is planned or 0.5 ha in territories where such construction is not planned. There is no requirement to sign the consent with the conditions of the development of facilities proposed by the board of the municipality before the purchase of state land plots. Although such a land plot must be consolidated with the main land plot within 6 months after the conclusion of the agreement.
The purchaser or respectively the lessee shall have to pay the expenses of the conclusion of the agreement on sale-purchase or lease of the free or used state owned land plots, including the expenses for the confirmation of the agreement by the notary.
Pursuant to the new order land plots near the tenement houses are considered as the homestead land plots. Persons may acquire land plots near the buildings and facilities owned only of such size, which is necessary for the maintenance of the buildings and facilities owned for their direct purpose.
Used land plots in which only the engineering networks are netted or (and) only the courtyard facilities are built up and also land plots in which there are buildings, constructions and facilities owned by the state which are anticipated to be removed shall be sold only in an auction, while the lease of them shall be prohibited. The building or reconstruction of new constructions and facilities in used tenement may begin only in case it is indicated in the lease agreement or with the consent of the lessor and if such a building or reconstruction is not contradictory to the determined mode of running of the territory.
On 10 October 2002 a new wording of the Rules on Licensing on Production of Tobacco Products and Import of Tobacco and Tobacco Products to the Republic of Lithuania came into force (hereinafter ñ the Rules).
It is noteworthy that the new Rules do not require annual reregistration of disposable licences on production of tobacco products and import of tobacco and tobacco products. The State Council on Control of Tobacco and Alcohol shall issue the licences for unlimited term of duration.
The Rules set the new obligation for the company, which applies for the licence, to indicate the shareholders whose holdings exceed 50 % of the companyís shares (according to the previous wording the shareholders whose holdingsí par value exceed 1/10 of the authorised capital had to be indicated). The company must enclose the copies and translations of the contracts on purchase of tobacco, concluded with the foreign entities, in the applications to the State Council on Control of Tobacco and Alcohol for license to import tobacco to Lithuania. However, the notarisation of the aforesaid copies is not necessary, it is sufficient to confirm the copies by the signature of director and seal of the company.
The Rules establish more new obligations for the companies, which have obtained the licenses. The company, which has lost the license, must announce about that loss at least in one newspaper published in Lithuania. The copy of the aforesaid announcement must be attached to the application to the State Council on Control of Tobacco and Alcohol in order to get a license duplicate. Furthermore, in case of the change of the companyís address the licensee must inform the State Council on Control of Tobacco and Alcohol hereof within 10business days. In accordance with the Rules, validity of the licenses to import tobacco and tobacco products may be suspended. The State Council on Control of Tobacco and Alcohol shall be entitled to suspend the validity of the licenses if the company, which has been warned about eventual suspension of the license, does not eliminate the indicated infringements.
On 25 September 2002 the Government of the Republic of Lithuania passed new wording of the Order on Licensing the Production of Alcoholic Products. State Council on Control of Tobacco and Alcohol issues license for unlimited duration. The Order establishes documents, which shall be submitted to State Council on Control of Tobacco and Alcohol by an entity in order to receive a license. State Council on Control of Tobacco and Alcohol issues license during 30 days after the day of receiving of properly formalized documents. The Order establishes rights of licensee, cases when licensing authority is entitled to warn licensee about termination of license validity and grounds on cancellation of license. This Order came into effect on 3 October 2002.
On 4 June 2002, the Parliament adopted the Law on Approval, Coming into Effect and Implementation of the Labour Code (hereinafter ñ the Law on Coming into Effect of the Labour Code) whereby the new Labour Code (hereinafter ñ the Code) was approved. The Code shall come into effect on 1 January 2003. It will replace the Code of Labour Laws, which has been in force since 1972; some other labour laws also will cease to be effective. This article will focus on peculiarities of coming into effect and application of the Code as well as on the main novelties in regulation of representation of labour law subjects, employment contract, working time, wages, labour discipline and liability.
Coming into Effect of the Code
The Law on Coming into Effect of the Code provides that the labour relations, which have emerged prior to the date coming into force of the Code, shall continue and shall be further governed by the provisions of the Code. Therefore after the Code comes into effect the provisions whereof will apply to the labour discipline or termination of employment contract notwithstanding the employment contract had been concluded before the Code became effective. It must be noticed that other Lithuanian laws and regulations effective prior to the date when the Code comes into effect will be effective to the extent that they comply with the Code, except for the cases, when the Code provides for the supremacy of provisions of the other laws or regulations.
As the Code regulates a rather extensive area of labour relations and the provisions of different labour laws are included into the Code the following laws will become invalid: (1) The Code of Labour Laws; (2) The Law on Wages; (3) The Law on Collective Agreements and Contracts; (4) The Law on Employment Contract; (5) The Law on Rest Leave; (6) The Law on Regulation of Collective Disputes; (7) The Law on Hearing of Labour Disputes; (8) The Law on Holidays. The aforesaid list is exhaustive and other labour laws (e.g. the Law on Safety and Health of Employees) will be valid only to the extent that they comply with the Code.
Peculiarities of Application of Foreign Law
The Code implements the rules that regulate application of foreign law, international agreements and national legislation to labour relations, which have international character. According to the Code the labour laws shall apply to labour relations in the territory of Lithuania regardless of whether the person is employed in Lithuania or has been employed abroad under the assignment of his employer. However, the labour laws of Lithuania shall not apply to the labour relations, which occur between foreign employers and employees, when the employees work under the assignment of the employer in the territory of Lithuania.
The Code enables application of foreign law in cases when it is established by the international agreements and laws of Lithuania or agreements between the parties of the employment contract. Though foreign law shall not be applied if application thereof would be contrary to the Constitution or public order of the Republic of Lithuania. In such cases labour laws of Lithuania shall apply. The mandatory provisions of the labour law of Lithuania shall apply regardless of the fact that the parties have chosen to apply foreign law. It is worthy to notice, that the choice of the applicable law by the parties shall not invalidate the mandatory legal provisions on employeesí protection and safety at work of the state the laws whereof would apply in the absence of an agreement on the applicable law concluded between the parties.
If international agreements of Lithuania establish rules other than the ones set by the Code and other labour laws of Lithuania, the rules of the international agreements of Lithuania shall apply.
The Code establishes a new institute of employeesí representation in collective labour relations ñ Labour Council. Pursuant to Article 19 of the Code the rights and interests of the employees in labour relations may be represented and protected by the trade unions. Though in case of absence of functioning trade union in the company and if the staff meeting has not transferred the function of employeesí representation and protection to a trade union, the employees shall be represented by the labour council elected by secret ballot at the general meeting of the staff. The labour council shall possess all the rights of the entities of collective representation, however, the labour council may not perform functions recognised under laws as the prerogative of trade unions (e.g. to announce and govern strikes). It must be noticed that all the provisions concerning labour councils will enter into force after the law that regulates the status and order of establishment of labour councils is adopted. Employment Contract In the new Code there appears new types of employment contracts such as contracts for temporary work (up to 2 months), additional work, outwork and certain kinds of supply services (personal household services), besides the types of employment contracts, which exist now.
The main amendments of the requirements while admittance to work:
- The employer shall have an obligation but not a right to require that the person being employed should present his/her personal identification document and when the minor is employed he/ she should also present the permission of his/her attending paediatrician. However, only state or municipal institutions and enterprises should require the documents certifying the execution of the conscription;
- The employer shall be obligated under the court decision to pay to the person who was unlawfully refused to be employed the compensation amounting to the minimum wage for a period from the day of a refusal to the day of the execution of the court decision but not from the day of employeeís application for admittance to work;
- The employer who has recognised that the results of a trial of an employeeís suitability for the assigned work are unsatisfactory, may not dismiss the employee without giving an employee written notice, the Code shall require written notice to be given three days in advance;
- It shall be prohibited to conclude a fixed-term employment contract if the work is of a permanent nature, even if there is a consent of the employee, except for the cases when this is provided by the other laws or collective agreements;
- If an employment contract, upon the expiry of its term, is not extended or is terminated, but within one month from the day of its termination another fixed-term employment contract for the same work shall be concluded with the employee dismissed, then such a contract shall be recognised as concluded for an indefinite period of time but only at the respective demand of the employee. Regulations of the expiry of the employment contract shall be changed also:
- The partyís offer to another party to terminate the employment contract under mutual agreement between the parties shall be valid for a longer time ñ not 5 but 7 days;
- The employee shall be obligated to give written notice to the employer at least 14 days in advance when he/she insists to terminate not only a non-term but also fixed-term employment contract;
ï If the employee insists to terminate the employment contract because of the reasons set at Section 2 Art. 127 of the Code (illness, disability, employerís failure to fulfil his/her obligations, etc.) he/she shall have to notice an employer at least 3 days in advance. Those grounds and the notification order shall apply not only for the fixed term, but also for non-term employment contracts. Persons having the right to the old-age pension shall have the right to terminate in such way only the non-term employment contract (in case of fixed term contract ñ notice before 14 days is compulsory);
- An employee shall be entitled to terminate the employment contract due to circumstances beyond the employeeís control in 3 days period after the submission of the request (earlier ñ at least 7 days).
The Code does not provide a comprehensive list of termination grounds of an employment contract under the initiative of an employer, although in this case, if there is no fault of the employee, the employment contract may be terminated only for the essential reasons: the reasons related to the qualification, professional skills or conduct of the employee. An employment contract may be also terminated on economic, technological grounds or due to the restructuring of the workplace, as well as for other similar valid reasons. In these cases the employer shall be obliged to give written notice to the employee on termination at least 2 months before the termination of the contract, and to employeesí of certain categories at least before 4 months.
The termination of an employment contract without notice is regulated separately (it also includes termination of the employment contract when there is fault of an employee). Upon these grounds it would be possible to terminate a contract even during the employeeís holiday leave.
The list of reasons by which the employment contract shall not be legally terminated and the list of employees with whom the employment contract may be terminated only in extraordinary cases are stipulated in Section 4 of the Part XII of the Code. The new thing is that the employees who are elected to the representative bodies of the employees collective have supplemented the list of employees, which enjoy the right of priority to retain the job. The amounts of severance pay were reduced in the Code, especially for the employees having a short period of continuous length of service and more elaborate grounds and order of suspension from work were provided.
Working Time and Rest Period
The main amendments in regulation of the working time are the following:
- Work of administrative officials, which exceed the set working time, shall not be deemed as overtime work, but a list of such positions should be established in collective agreements or internal discipline rules;
- The beginning of work at night shall be counted not from 10:00p.m., but from 12:00 p.m. to 6:00 a.m.;
- Women raising a child who is younger than 14 years old will not have the right to demand that the employer should set the part daily working time or part weekly working time, although such a right is empowered to employees under 18 years of age;
- The additional privileges are provided for the persons raising a child (extra rest days per month or setting of the shorter working time while paying the average wage). Amendments of the regulations on leave:
- The Code legitimates the annual additional leave - for the conditions of work which are not in conformity with the normal work conditions, for a long uninterrupted employment and for a special character of work;
- Annual 35-calendar-day leave shall be also granted to the employees who, as single parents, are raising a child before he/she has reached the age of 14;
- A number of years entitling an employee to annual leave shall not include the period of parental leave while the child is under 3 years of age and the time of training for a new profession of persons who are dismissed from their job due to staff reduction or liquidation of an enterprise;
- The employer shall be obliged to pay allowance for the unused annual leave but not more than for 3 years (earlier ñ for all the years);
- A list of special - purpose leave was supplemented by creative leave (for the completion of a thesis, writing a textbook) and leave for performance of official or public duties;
- The Code enumerates the finite list of reasons when at the request of an employee the unpaid leave shall be provided (for other reasons it must be agreed in the collective agreement).
The condition of payment for the work is no more an essential condition of the employment contract, hence for the amendment of it there is no requirement for the advanced written consent of the employee, but only in that case when the wage of the employee is not reduced and other conditions provided by the Code are complied. Besides, if the employee gives a written consent for the reducing of the wage the employer shall not be obliged to compensate by payments up to the earlier average wage of the employee for 3 months more if the wage was reduced for the reasons unrelated to the employee.
The Code shall not provide the fixed amount allowance for the work in the event of non-conformity with the normal working conditions, i.e. if the working environment is harmful or very harmful. In these cases the pay for work under such conditions should be higher than the pay rate applicable under the normal working conditions while at this moment extra payments not lesser than one and a half tariff wage or monthly wage when the working conditions are harmful and not lesser than twice amount when the working environment is very harmful. Although if the employeeís scope of work is increased in comparison with the prescribed scope, the employer shall be obliged to pay a proportionately higher wage.
When the employment contract is terminated with the employee who does not already work on the day of dismissal, the employer shall be obliged to settle accounts with the employee not on the day of dismissal but within 1 day after the date when the employee dismissed from work requested to be paid. In the event of the employeeís death, the settlement shall be made with the persons who have the right to accept the settlement within 3 working days after a document certifying employeeís death has been submitted.
After the payment of wages the employer shall be also obliged to give payment statements to all employees showing gross pay, take-home pay and deductions.
Labour Discipline and Liability
A breach of labour discipline involving gross violation of the provisions of laws and other legal acts which directly regulate the employeeís work, or any other gross transgression of work duties or the prescribed work regulations shall be considered as a gross breach of work duties. The Code does not provide with a finite list of gross breaches of work duties. When the employee commits such a gross breach of duties the employer shall be entitled to terminate an employment contract without giving an employee prior notice thereof.
- Such a disciplinary sanction as strict reprimand was abandoned;
- If a criminal proceedings against the employee were instituted, the employer may impose a disciplinary sanction not later than within 2 months from the termination of the criminal proceedings or from the date when the court judgement became effective (earlier it was within 1 month);
- New limits for the partial liability of the employee were provided ñ not more than the amount of 3 average monthly wages of the employee (earlier ñ 1 average monthly wage and 3 average monthly wages for the officers for unlawful dismissal or transferring to another job);
- Employer shall be entitled to deduct from the employeeís wage recovery of the damage not in excess of employeeís average monthly wage by a written order not within 2 weeks, but within one month from the date of disclosure of such damage.
On 25 September 2002, the Government of the Republic of Lithuania passed legal acts for the implementation of the Law on Income of Residents as follows:
ï Order on Calculation of Periods for 90, 183 or 280 Days Spent in Lithuania with or without Breaks by Individuals;
ï Criteria on Definition of Non-residentís Permanent Activities and of Dependence and Independence of Representativeís (Agentís) Status;
ï Criteria on Final Departure from Lithuania;
ï Order on Permitted Deductions Related to Income from Residentís Individual Activities and Their Calculation;
ï Order on Permitted Deductions Related to Income from Non-residentís Individual Activities and Their Calculation;
ï Order on Transfer of the Income Tax Sum up to 2% to Lithuanian Units/Individuals, which/who are Entitled to Receive Sponsorship under the Law on Charity and Sponsorship. All aforesaid legal acts will come into effect on 1 January 2003. On 21 October 2002, the Government of the Republic of Lithuania passed new wording of the Order on Calculation of the Positive Income, Inclusion of Positive Income into Income of Lithuanian Controlling Unit and A List of Income not Included into Positive Income. Positive income included into Lithuanian controlling units shall be taxed with profit tax according to the Law on Profit Tax and positive income included into the controlling individualís income shall be taxed with the income tax according to the Law on Income of Residents. This Order will come into effect on 1 January 2003.
The order of the nomination of a fiscal agent of a foreign taxable person and the requirements for the person which might be a fiscal agent of a foreign taxable person were amended by Order No. 323 of the finance minister of the Republic of Lithuania which has entered into force on 24 October 2002. A taxable person of the Republic of Lithuania who is engaged in activities of audit or is an attorney at law might be nominated as a fiscal agent of a foreign taxable person irrespective to the period of the registration as a VAT payer (other persons which might be a fiscal agents must be VAT payers for the period exceeding 3 years).
On 1 January 2003 the new Civil Procedure Code of the Republic of Lithuania shall enter into force. The main changes that should be noticed are as follows:
Response to the claim
- The defendant is obliged to present the response to the claim; otherwise the court is entitled to carry the decision in absentia. The court shall establish the term to present the responses, which shall not be shorter than fourteen days and not longer than thirty days.
- The response to the claim must contain as follows: whether the defendant agrees with the claim or not; the motives of such disagreement; the evidence by which the disagreement is grounded; the defendantís opinion on the adjudication in absentia, whether the plaintiff is not going to present preparatory procedural documents (responses to the claims and counterclaim), duplics (the plaintiffís responses to the defendantís response) and triplics (the defendantís responses to the triplic), also information whether the case is going to be conducted through the attorney.
- If the case is prepared to the hearing in court by the preparatory documents, the plaintiff is obliged to present the response to the response to the claim presented by the defendant (duplic) and the defendant is obliged to present response to the duplic (triplic). In the exclusive cases the court may indicate more than two preparatory documents. The term to present the preparatory documents shall not exceed fourteen days.
- The court may refuse to accept the evidence and motives, if they could be presented in the response to the claim, duplic or triplic and the court considers that later presentation of such evidence and motives would protract the adjudication.
- The appeal court may refuse to accept the evidence and motives, which could be presented at the court of first instance, except when the court of first instance unreasonably rejected them or the necessity of such evidence and motives has occurred later.
- Stamp-duty in property disputes is proportional to claim cost ñ 3percent of claim cost, but not less than 50 LTL; the claim cost amount exceeding one hundred thousand to the sum of three hundred thousand ñ three thousand Litas plus 2 percent of claim cost sum exceeding one hundred thousand; the claim cost amount exceeding three hundred thousand ñ seven thousand Litas plus 1percent of claim cost sum exceeding three hundred thousand. Total amount of stamp-duty shall not exceed thirty thousand Litas. The same stamp-duty shall be paid for appeals and cassation claims.
- In cases of Courtís Order (when court according to the creditorís application due to the money request, also due to adjudgement of the movable thing in two days issues a document, which shall become an executive act if debtor does not contradict) the established stamp-duty is equal to a quarter, in cases of documentary procedure ñ half of stamp-duty sum payable for the claim. If parties conclude a peaceful agreement 75 percent of stamp-duty shall be returned.
- Party, who submitted unfair claim (appeal or cassation claim) or purposely acted against fair and prompt adjudication and settlement of the case can be obliged by the court to compensate damages suffered by another party.
- Partyís costs related with the legal assistance of attorney at law and associate are adjudged in the amount not exceeding the amount established in recommendations on the amount of payment passed by Minister of Justice together with chairman of the Council of Lithuanian Bar Association considering particular complexity of the case, labour and time outlay.
- The parties and the third persons at the cassation instance court hearing may be represented by representatives by law, attorneys, employees of the legal person, who have obtained legal university education, and persons with legal university education, who represent their close relatives or a spouse (a partner).
- If place of residence and workplace of the party are unknown, or the party has no representing body, on the ground of interested partyís application the court may appoint the curator. In such case the copy of claim and other procedural documents may be handed to the curator, until the place of residence, workplace of the defendant become known or the representative of the defendant enters the procedure. Procedural documents shall be considered as handed to the party from the day they were handed to the curator.
- Appeal shall not be allowed in cases where questionable sum is lower than 250 Litas.
- Appeal can be submitted within 30 days from the first day when the decision of the first instance court was carried.
- If a decision is sued by one party the appeal instance court shall not carry a worse decision and judgement than is sued.
- Cassation claim cannot be submitted concerning the decisions of the first instances court where questionable sum is lower than 2 500 Litas and decisions which were not reviewed in the appeal court.
- Cassation claim can be submitted within 3 month after the day when decision, judgement came into force while written response to cassation claim have to be submitted by the parties and can be submitted by other participants within one month from the claim registration with the List of Adjudicated Cases in the Lithuanian Supreme Court.
- Executive act according court decisions may be presented for the execution within ten days after the court decision enters into force.
- All execution expenses shall be paid by the executor, and after the execution of the court decision those expenses shall be recovered by the debtor.
Resolution No.1644 of the Government of the Republic of Lithuania, which entered into force on 24October 2002, stipulates the order of the rectification of the errors made in the course of formation or increase of the authorised capital of the public and private limited liability companies. This order elaborates the provisions of the Section5 of the Art.79 of the Company Law of the Republic of Lithuania in respect of the rectification of the errors made in the course of formation or increase of the authorised capital of the company. After emerging of the errors made in the course of formation or increase of the authorised capital, the company must conclude within 30 days a list of shareholders to whom the number of shares should be reduced. After this the report of the auditor must be prepared and every shareholder must be informed in writing about the errors. The issue of the reduction of the authorised capital may be solved at the general meeting of shareholders only if all the shareholders give their written consent to such issue being included in the agenda of the meeting. The company may rectify the errors by reducing the authorised capital and by reducing the number of shares of the shareholders only until 31 December 2003.