How to onboard top talent in Lithuania, Latvia, or Estonia — before your legal entity is even registered
You’ve identified the opportunity. You’ve found the right candidate. Maybe a recruiter even handed you their CV last week. The role needs to be filled in two months, and the business case is solid.
Then comes the question that quietly derails more Baltic expansion plans than any market analysis: “Which legal entity are we hiring them under?”
If you’re a UK-based company — or any business operating outside the EU — this question hits harder than you might expect. Post-Brexit, British companies no longer benefit from the streamlined EU passporting rules that once made cross-border employment relatively frictionless. Setting up a UAB (a private limited company) in Lithuania, for instance, involves share capital registration, a local registered address, tax registration with the State Tax Inspectorate (VMI), and Social Insurance Fund (Sodra) enrolment. In Latvia and Estonia, the process is structurally similar. Done properly, it takes weeks — sometimes months — and requires ongoing compliance obligations from day one.
But your candidate isn’t going to wait three months. And your client isn’t going to hold the project.
The Compliance Gap Nobody Budgets For
Under Lithuanian labour law (Darbo kodeksas), all employees working in Lithuania — regardless of where their employer is headquartered — must have a legally compliant employment contract governed by Lithuanian law if they habitually carry out their work there. This isn’t optional, and it isn’t waiveable by contract. The same principle applies under Latvian and Estonian labour legislation, all of which align with EU Directive 2019/1152 on transparent and predictable working conditions.
For UK companies specifically, there is no longer an EU-wide social security coordination framework that automatically applies. Since 1 January 2021, the UK–EU Trade and Cooperation Agreement governs matters between the UK and EU member states, and while social security coordination provisions exist, they require careful structuring to avoid dual contribution obligations or coverage gaps.
What this means in practice: if you pay a Lithuanian employee directly from a UK payroll without a registered Lithuanian entity, you are likely creating an unregistered permanent establishment, triggering local tax obligations, and exposing both yourself and the employee to penalties.
The risk is real. The Lithuanian State Labour Inspectorate (VDI) actively monitors employment arrangements, and social insurance contributions to Sodra are mandatory from the first day of employment.
Employer of Record: The Bridge Between Now and Later
This is where the Employer of Record (EOR) model becomes not just convenient — but strategically essential.
An EOR is a locally registered company that formally employs a worker on behalf of a foreign client. The employee works exclusively for the client, follows the client’s direction, and is integrated into the client’s operations. But the EOR handles everything that requires local legal standing: the employment contract under Lithuanian law, monthly payroll, Sodra contributions, income tax withholding, and full HR administration.
In the UK, this model is well-established and recognised. HMRC guidance is clear that where a third party is the legal employer, PAYE obligations rest with that employer — not with the end client. The arrangement is commercially clean and legally transparent.
For companies scaling across the Baltics, this model removes the single biggest bottleneck in international hiring: the need to establish a legal entity before onboarding a single person.
What Emplonet Brings to the Table
Emplonet is a Lithuania-focused recruitment and workforce solutions firm with direct experience navigating the country’s labour market and employment compliance requirements. Whether you need to place one specialist or build a team ahead of your entity registration, Emplonet can act as the employer of record in Lithuania — legally, compliantly, and quickly.
The value isn’t just administrative. It’s strategic. You get access to Baltic talent markets without the lead time of entity formation, with a partner who understands both the local labour market and the compliance requirements that foreign companies consistently underestimate.
If you’re exploring growth in the region, the question isn’t whether you can hire before your entity is ready. The question is whether you have the right partner to do it properly.
Emplonet is that partner.
Get in touch to discuss your Baltic hiring needs: https://emplonet.lt/en/
