Albania

Albania PEO & Employer of Record

WeHG suggests an International PEO and global Employer of Record service in Albania to companies that are willing to enter the Albanian market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Albania.  On the other hand, our solution allows you to start the operations in Albania within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Albania fast facts

Population, million: 3
Land area: 28,748 km²
Capital: Tirana
Local currency: Lek (ALL)

GDP per capita:$ 14,866
GDP in currency:$ 42.594 billion

Albania, officially the Republic of Albania, is a country in Southeastern Europe. The country spans 28,748 square kilometres (11,100 square miles) and had a total population of 3 million people as of 2016. It is a unitary parliamentary constitutional republic with the capital in Tirana, the country’s most populous city and main economic and commercial centre. The country’s other major cities include Durrës, Vlorë, Sarandë, Shkodër, Berat, Korçë, Gjirokastër and Fier. Albania lies in the southwestern portion of the Balkan Peninsula bordered by Montenegro to the northwest, Kosovo to the northeast, the Republic of Macedonia to the east, and Greece to the south and southeast. Most of the country is mountainous, including the Albanian Alps in the north, the Korab Mountains in the east, the Ceraunian Mountains in the south and the Skanderbeg Mountains in the center. The country’s coast touches the Adriatic Sea to the west and the Ionian Sea to the southwest that forms the Albanian Riviera. It is less than 72 km (45 mi) from Italy across the Strait of Otranto, which connects the Adriatic to the Ionian.

Hiring, Negotiating and Doing Business in Albania

Necessity of written employment contract

Employment contracts may be agreed orally or in writing. In the even that the employment contract is agreed orally, the employer is obliged to produce a written contract within 30 (thirty) days from the date of the oral agreement, bearing the signature of the employer and that of the employee and containing all mandatory legal elements.

Different forms of engagement: employment, contracting, work with private entrepreneur

The Labour Code provides for the following types of engagement; the parties entering into such engagements are also subject to the conditions of the Albanian Labour Code:

  • Part-time employment agreement (the employee agrees to work on an hourly basis, either half or complete working day for the normal duration of a week or month, which is shorter than that of full-time employees working under the same conditions);
  • Home-based work agreement (the employee is obliged to carry out his job at his home or any other location chosen by him/ her on the basis of the alternatives offered by the employer);
  • Commercial agent agreement; and
  • Agreement for acquiring a specific profession (concluded between the teaching master and the person who is studying to acquire a specific profession).

Furthermore, a service agreement is another type of engagement frequently used in practice in Albania. However, this type of agreement can only be entered into with physical person(s) registered for commercial purposes. The service agreement is a sui generis agreement, and such agreement is regulated by the Albanian Civil Code and not by the Labour Code.

Albania Employment Contract

Types of employment agreements

As defined in the Labor Code, the employment contract is an agreement entered into between the employer and the employee that sets out their respective rights and obligations. The employment contracts may be either oral or written, and it may only be changed with the agreement of both parties. Any change to the written contract to the detriment of the employee should be concluded in writing. The following are the different types of employment

  • Contracts available
  • Definite term contract
  • Indefinite term contract
  • Collective contract
  • Part-time employment contract
  • Domestic employment contract
  • Probationary contract

Albania working hours

Working hours are regulated by the Labour Code and by Law No. 9634 dated October 30, 2006 “On Labour Inspection State Labour Inspectorate”. According to Article 83 of the Labour Code, reasonable working hours shall not exceed 40 (forty) hours per week and that such weekly working hours must be set out either in a collective agreement or in individual employment contracts. The normal daily working hours are 8 (eight) hours.

Overtime

Overtime and extra working hours are also regulated by the Labour Code (Article 91), which provides that the employer shall compensate the employee for any overtime with 25 percent of normal payment if time-off in lieu is not given; or, if agreed, to compensate with time-off in lieu plus 25 percent of the hours of the normal working day, unless otherwise provided for in the collective contract. Extra work performed at weekends or on public holidays will give rise to higher extra payments of 50 percent of the normal payment, unless otherwise defined by the collective contract.

Vacation leave in Albania

Annual vacations are governed by the Albanian Labour Code. The Labour Code provides for minimum paid annual leave of no less than four calendar weeks in one year (pro-rata for those who have worked less than one year). For the purpose of calculating annual leave, sick leave shall be considered working time. The period during which an employee can take annual leave shall be determined by the employer taking into consideration the employee’s preferences. The employee is obliged to give the employer at least 30 days’ prior notice of the dates for his annual leave. Moreover, in cases where the employee receives a salary which includes contribution in kind (e.g. accommodation, food and travel expenses), a bonus equal to the contribution in kind, e.g. travel expenses for homeward travel, is awarded.

Albania Maternity Leave

Employees are entitled to 365 days of paid maternity leave (with a minimum of 35 days before the expected date of childbirth and 42 days after). The monthly benefit is equal to 80% of the average daily wage in the last calendar year for the leave period taken before childbirth and for 150 days after; the benefit is equal to 50% of the average daily wage for the remainder of the entitlement period. For multiple births, the paid leave period is extended to 390 days, including a minimum of 60 days before and 42 days after the expected date of childbirth. Benefits are also payable for the adoption of a child. Compensation is payable for changes of employment due to pregnancy.

For employers and self-employed persons, the benefit is equal to the basic old-age pension.

Albanian Severance Laws

The notice period for the termination of the employment contract is defined in the individual employment contract. In the event that the parties have not defined the notice term in the employment contract, reference shall be made to the Labour Code. According to the Labour Code, the notice period for termination within the 3 (three) month probationary period is at least five days, which may be changed by the written agreement of both parties.

The Labour Code provides for mandatory minimum notice periods to be applied in the case of termination of an indefinite (open) term contract by either the employer or the employee, as follows:

  • during the first six months: two weeks;
  • between six months and one year: one month;
  • between one and five years of employment: two months;
  • for more than five years of employment: three months.

Albania Tax

A foreign employee working in Albania is, as a rule, always taxed in Albania.

If a foreign employee is a national of a country with which Albania has a double taxation treaty, the employee will be exempt from employment tax if:

  • Their total stay in the country is less than a certain period (usually less than 183 days in a 12 month period, but this differs depending on the individual tax treaty).
  • The employer is not an Albanian registered taxpayer or does not have a permanent establishment in Albania.

Employment tax rates are as follows:

  • For salaries from ALL0 to 30,000: 0%.
  • For salaries from ALL30,001 to 130,000: 13%.
  • For salaries above ALL130,001: 23%.

Employment contribution rates payable by the employee are as follows:

  • Social security: 9.5%.
  • Healthcare: 1.7%.

The social security contributions are calculated on the actual gross salary, if it falls within the following thresholds (corrected annually):

  • Minimum ALL24,000.
  • Maximum ALL105,850.

The healthcare contributions are calculated on the actual gross salary if it is higher than the minimum threshold for social security. No maximum threshold applies.

An employer is required to withhold employment taxes and contributions from salary and pay them to the authorities on a monthly basis.

Non-tax resident employees

Employment tax rates and filing procedures are the same as for tax resident employees (unless the foreign employee can avoid Albanian taxes under a double tax treaty).

The social security and healthcare contribution rates and filing procedures are also the same as for tax resident employees. In limited cases, subject to the terms of applicable treaties, a non-tax resident employee can be exempt from social security contributions if he is already covered by social security in his country of origin.

Employers

Employment contribution rates payable by employers are:

  • Social security: 15%.
  • Healthcare: 1.7%.

The same calculation rules described above for tax resident employees also apply to employers.

An employer must pay on a monthly basis:

  • Social security contributions.
  • Healthcare contributions.
  • Any employment taxes and contributions withheld from an employee’s salary.

Health Insurance Benefits in Albania

The benefit is equal to 70% of the average daily wage in the last calendar year if the insured has less than 10 years of contributions; 80% with 10 or more years. The benefit is payable from the 15th day of medical certification (the first 14 days are paid by the employer) for up to 6 months. The benefit may be extended for an additional 3 months if the Medical Experts Committee certifies the likelihood of recovery in that period. The benefit is equal to 50% of the average daily wage during periods of hospitalization, provided there are no dependents. Income compensation is also available for changes of employment due to health reasons.

Additional Benefits in Albania

Old-age pension (social insurance): The monthly pension is the ratio of the insured’s coverage period to the coverage period required by law (36 years and four months in 2018; gradually rising by four months a year until reaching 40 years in 2029) multiplied by the amount of the old-age social pension, plus 1% of the insured’s average covered earnings for each year of coverage.

Disability pension (social insurance): The monthly pension is the ratio of the insured’s coverage period to the coverage period required by law (36 years and four months in 2018; gradually rising by four months a year until reaching 40 years in 2029) multiplied by the amount of the old-age social pension, plus 1% of the insured’s average covered earnings for each year of coverage.

Disability social pension (social assistance): 10,850 leks a month is paid for non-work related disabilities; 10,330 leks a month if paraplegic or tetraplegic (due to work-related or non-work-related causes); 11,730 leks a month if blind.

General market practice benefits/additional allowances

Performance-based bonuses are common in Albania.

Albania Holidays

There’re 12 Public Holidays in Albania:

  • New Year’s Day
  • Summer Day
  • Nevruz Day
  • Easter Sunday
  • Labour Day/May Day
  • End of Ramadan
  • Feast of the Sacrifice
  • Mother Teresa Beautification Day
  • Independence Day
  • Liberation Day
  • National Youth Day
  • Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

 

FAQ Albania

  • Working hours in Albania

    The normal daily working hours are 8 (eight) hours.

  • What are the main holidays in Albania?

    • New Year’s Day
    • Summer Day
    • Nevruz Day
    • Easter Sunday
    • Labour Day/May Day
    • End of Ramadan
    • Feast of the Sacrifice
    • Mother Teresa Beautification Day
    • Independence Day
    • Liberation Day
    • National Youth Day
    • Christmas Day
  • What are payroll taxes in Albania?

    • Social security: 15%.
    • Healthcare: 1.7%.
  • Hannah Kohl
    Author:
    Hannah Kohl. Head of Customer Success. Has extensive experience in the HR and IT industries. Helped 100+ international clients to achieve their global goals.

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