What an employee really costs an employer in 2026

An employee costs an employer considerably more than the figure they see "in hand". In Lithuania in 2026, the total workplace cost is built from three layers: net (take-home pay), gross (the contract figure), and the full cost of the workplace, which adds the employer's Sodra contribution on top. In practice the full workplace cost is roughly 1.8–3% higher than gross, while the gap between net and total workplace cost reaches 40% or more — and that is the number your business needs to budget for.

Below we explain each figure in plain terms, show the employer's contributions, walk through the calculation logic, and give worked examples across several salary levels.

When planning a hire, budget the full workplace cost, not the gross — only then do you see the true investment in each employee.

Three numbers: net, gross and workplace cost

Most of the confusion comes from people talking about pay in three different ways:

• Net (take-home) — what lands in the employee's account after personal income tax (GPM) and the employee's Sodra contributions.
• Gross (on paper) — the figure stated in the employment contract. The employee's taxes are deducted from it: GPM and Sodra.
• Workplace cost — gross plus the employer's Sodra contribution. This is the company's real monthly outlay per employee.

From the gross, the following deductions apply to the employee (2026 rates, source — VMI and Sodra):

• GPM — 20% (the standard wage rate; above certain annual thresholds, 25% or 32% rates apply via the annual return).
• Sodra contribution — 19.5% (pension and social insurance 12.52% plus mandatory health insurance 6.98%).
• GPM is calculated not on the full gross but on the taxable part, reduced by the tax-exempt amount (NPD).

On top of the gross, the employer pays its own Sodra contribution — more on that in the next section.

Why NPD matters

NPD is the part of the gross that GPM is not charged on. In 2026 a single simplified formula applies: the maximum NPD is EUR 747 per month (for salaries up to the minimum wage), and for higher salaries it shrinks by the formula NPD = 747 − 0.49 × (gross − minimum wage), disappearing entirely once gross reaches roughly EUR 2,677. The larger the NPD, the lower the GPM and the higher the net — which is why at the minimum wage the gap between gross and net is proportionally smaller than at high salaries.

Figures are illustrative, 2026 — always verify exact thresholds and rates on the VMI and Sodra pages.

Employer Sodra contribution 2026: rates by group

Beyond the employee's taxes, the company also pays an employer Sodra contribution on top of the gross. In 2026 the base employer rate is about 1.77% of gross. To this is added the accident-at-work and occupational-disease insurance contribution, whose size depends on the company's assigned risk group:

• Group I — about 0.14% (lowest-risk activities, e.g. office services, IT, consulting).
• Groups II–III — medium risk, roughly 0.5–0.9%.
• Group IV — about 1.4% (higher-risk activities, e.g. construction, manufacturing).

In practice this means the total employer Sodra rate in 2026 ranges from roughly 1.9% to 3.2% of gross, depending on the activity. For most service and office businesses it sits near the lower end.

Sodra assigns the group based on the type of activity and accident statistics, so you will see your exact rate in your personal Sodra account. Rates are illustrative, 2026 — check your company's current rate at Sodra.

How to calculate the full workplace cost

The logic is simple — work outward from the gross in both directions:

1. Start from the gross (the salary you agreed in the contract).
2. Subtract the employee's taxes to get net: GPM (20% on gross reduced by NPD) and Sodra 19.5%.
3. Add the employer's contribution on top of gross (about 1.77% + the risk-group share) to get the workplace cost.

A quick rule of thumb: workplace cost ≈ gross × 1.018–1.03, and workplace cost ≈ net × 1.4–1.55, depending on the NPD and salary size. The higher the salary, the larger the ratio between net and workplace cost (because the NPD shrinks and the effective GPM rises).

Want an exact result for a specific salary? Use our salary calculator — it shows net, gross and workplace cost instantly, with 2026 rates.

Worked examples across salary levels

Below are three illustrative examples (2026 rates, risk group I, standard NPD, no additional pension accumulation). Actual figures may differ slightly depending on NPD application, accumulation tiers and risk group.

Minimum wage (EUR 1,153 gross)

• Gross: EUR 1,153
• NPD: EUR 747, so GPM is charged on ~EUR 406 → GPM ~EUR 81
• Sodra (19.5%): ~EUR 225
• Net (take-home): ~EUR 847
• Employer contribution (~1.77%): ~EUR 20
• Workplace cost: ~EUR 1,173

Gap between net and workplace cost: ~EUR 326 per month (about 38%).

Around the national average (EUR 2,312 gross)

• Gross: EUR 2,312
• NPD almost exhausted (~EUR 179), GPM on ~EUR 2,133 → GPM ~EUR 427
• Sodra (19.5%): ~EUR 451
• Net (take-home): ~EUR 1,434
• Employer contribution (~1.77%): ~EUR 41
• Workplace cost: ~EUR 2,353

Gap between net and workplace cost: ~EUR 919 per month (about 64%).

Above average (EUR 3,500 gross)

• Gross: EUR 3,500
• NPD = 0 (threshold exceeded), GPM on the full gross → GPM ~EUR 700
• Sodra (19.5%): ~EUR 683
• Net (take-home): ~EUR 2,117
• Employer contribution (~1.77%): ~EUR 62
• Workplace cost: ~EUR 3,562

Gap between net and workplace cost: ~EUR 1,445 per month (about 68%).

The pattern is clear: the higher the salary, the proportionally more expensive the workplace relative to net — because the NPD disappears and the effective GPM rises. All figures are illustrative, 2026; for an exact result use the salary calculator and the official VMI and Sodra calculators.

Why businesses should budget workplace cost, not just gross

If you budget only the gross, you will constantly be short — the employer contribution, small as it is in percentage terms, adds up across the whole team and the full year. On top of that, the true workplace cost includes things the tax tables don't show:

• Paid leave and sick days — an average of 20 working days' holiday a year means you effectively pay for more than the person works.
• Workspace and equipment — laptop, phone, software, office space.
• Training and onboarding — the first months are often less productive.
• Administration — payroll, declarations and HR records take up a manager's or accountant's time.

So when planning a new role, calculate the full annual workplace cost, not just the monthly gross. This lets you compare objectively whether a given job is best done by hiring a person or by handing part of the routine to a system.

How automation lowers administrative costs

Part of the workplace cost isn't the salary itself — it's the routine around it: issuing invoices, building reports, triaging customer requests, entering data. These tasks eat hours yet rarely require human judgement.

This is where process automation helps. Instead of hiring an extra person for the routine, you can often:

• automatically issue and send invoices and overdue-payment reminders;
• collect customer requests from forms, email and messages in one place;
• generate weekly and monthly reports without manual Excel work.

The practical effect: the team stays the same size but gets more done, and you hire a new person only when you genuinely need them for value-creating work, not routine. You'll find more examples and calculators in our tools section.

Want to know exactly what a specific role costs — and how much you could save by automating the routine? Start with the salary calculator, explore your automation options, and if you'd like a tailored assessment for your business, book a free consultation — together we'll work out where, in your case, investing in a person pays off faster than investing in a system, and vice versa.