Lithuania to Close Social Security Loophole for Multi-Job Workers

The Lithuanian government has moved to strengthen social protections for thousands of workers who hold multiple part-time positions. A new legislative proposal, approved by the Cabinet of Ministers, aims to ensure that individuals earning less than the minimum wage across several employers still receive full social insurance guarantees. By introducing a proportional ‘social insurance floor,’ the state intends to prevent employers from exploiting fragmented work schedules to avoid tax obligations.

Under the current system, an employer is only required to pay social security contributions based on the actual salary paid. For workers holding two or three micro-jobs, this often results in total contributions that fall below the threshold required to earn a full year of pension credit or qualify for adequate sick pay. The new bill, drafted by the Ministry of Social Security and Labour (SADM), seeks to rectify this by mandating that all employers of a single individual contribute proportionally to meet the Minimum Monthly Wage (MMA) threshold.

Protecting the Most Vulnerable in the Labor Market

According to data from the state social insurance fund, Sodra, more than 8,000 workers currently fall into this precarious category. The impact of the change will be felt most significantly in sectors characterized by fragmented hours and manual labor. Statistics show that nearly a quarter of those affected—approximately 2,202 people—are employed as cleaners, hotel chambermaids, or general assistants in offices and hospitality.

However, the issue is not limited to low-skilled labor. Surprisingly, the data reveals that over 23% of those earning below the minimum wage across multiple employers are listed as managers or administrative heads. Another 9.5% are specialists in advertising, marketing, and sales. This suggests that the practice of ‘splitting’ employment across multiple legal entities is a widespread strategy used to reduce the tax burden on businesses, often at the direct expense of the employee’s long-term social safety net.

Minister of Social Security and Labour Jūratė Zailskienė emphasized that the reform is designed to close a specific legal gap. By ensuring that contributions are paid on at least the minimum wage, regardless of how many hours are worked at a specific site, the state guarantees that these workers will not face a ‘pension poverty’ trap in the future.

How the Proportional Contribution Model Works

The proposed mechanism shifts the responsibility from the individual worker to the collective group of employers. Instead of the current ‘pay-as-you-earn’ model for social insurance, the system will calculate a proportional share of the minimum wage for each employer based on the number of companies the person works for.

For example, if the Minimum Monthly Wage is set at €1,153 (the projected figure for the implementation period) and a person works for two employers, each employer would be obligated to pay social insurance contributions on at least €576.50. If the person works for three employers, the base for each would be €384.33. This ensures that the sum of the contributions always meets the legal ‘floor’ required for full social benefits.

Sodra will be responsible for calculating these additional amounts automatically once all employer data is submitted at the end of the month. The system will also account for periods of sick leave or unpaid absence, ensuring that employers are not unfairly penalized for days when the employee was not active. An exception to this rule will remain for employers participating in temporary employment programs for the unemployed, who will continue to pay contributions based on actual wages.

Broader Implications for the European Gig Economy

This move by Lithuania reflects a broader European trend toward formalizing the ‘gig economy’ and protecting workers with non-standard employment contracts. As more people move away from traditional 40-hour workweeks with a single employer, social security systems across the continent are struggling to adapt. The Lithuanian ‘proportional floor’ model could serve as a case study for other nations looking to balance labor market flexibility with the necessity of maintaining a robust social welfare state.

While the government has signaled its strong support, the bill must still pass through the Seimas (Parliament) before becoming law. If approved, the changes are expected to take effect in early 2025, marking a significant shift in how the state views the relationship between part-time work and social responsibility. For the thousands of cleaners, managers, and specialists currently working multiple jobs, the change represents a vital step toward long-term financial security.

Source: BNS

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Jūratė Zailskienė

#Employment Rights#labor law#Lithuania#Social Security

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