Key Considerations for Employers Hiring in Albania: Labor Law Compliance and Best Practices

Albania has an evolving labor market that offers opportunities for both local and foreign businesses. However, employers must navigate the country’s labor laws to ensure compliance and protect both their interests and those of their employees. This article outlines key legal considerations for employers hiring in Albania, covering employment contracts, working hours, employee rights, termination procedures, and hiring foreign workers.

Employment Contracts in Albania

Albanian labor law requires that all employment relationships be formalized through a written contract. This contract must clearly define the job title and description, specify the salary and payment terms, outline working hours, rest periods and probation period, which is up to three months. Additionally, it should state whether the contract is for a fixed term or indefinite term. Employers who fail to formalize contracts in writing may face legal disputes and financial penalties, making it essential to ensure that employment agreements are properly drafted and legally compliant.

Working Hours and Overtime Regulations

The Albanian Labor Code sets clear parameters regarding working hours. The standard workweek consists of forty hours, typically distributed over five days. When it comes to overtime, employers must compensate extra working hours at an increased rate. Work performed on a weekly rest day must be compensated with at least a twenty-five percent wage supplement or equivalent paid leave, plus an additional paid rest of at least twenty-five percent of the hours worked. Work performed on public holidays that fall on a regular workday must be compensated with a wage supplement of at least twenty-five percent, along with paid leave equal to the hours worked.

Employers should carefully track employee working hours and ensure compliance with overtime regulations to prevent potential disputes and legal consequences.

Employee Rights and Employer Obligations

Employers in Albania must adhere to a set of regulations designed to protect employees’ rights. One key aspect is the minimum wage, which is set by the government and must be honored in all employment agreements. Employees are also entitled to 22 work days of paid annual leave, a crucial component of maintaining work-life balance. Parental leave is another significant benefit, with maternity leave extending for one year, including a mandatory period of thirty-five days before childbirth and sixty-three days post-birth. Fathers are also granted paternity leave. Furthermore, employers must contribute to the social security and health insurance schemes for their employees, ensuring that workers have access to essential benefits. Compliance with these obligations is crucial for fostering a fair and lawful workplace.

Termination of Employment

Terminating an employment contract in Albania must be handled carefully to comply with legal requirements and prevent wrongful dismissal claims. The notice period for termination varies depending on the length of employment but typically ranges from one to three months. In cases where an employee is dismissed without just cause and without following the procedures, they may be entitled to severance compensation. To avoid legal complications, employers should document any performance-related concerns and ensure clear communication before proceeding with termination.

Work Permits for Foreign Employees

Businesses seeking to hire foreign nationals in Albania must comply with visa and work permit requirements. The process generally involves obtaining a residence and work permit (unique permit) for the employee. It is important to note that Albanian citizens are given priority in employment opportunities. The National Agency for Employment and Skills reviews and approves the employment of foreign workers, ensuring that local labor market needs are met before allowing the hiring of non-Albanian employees.

Employers must also demonstrate that the foreign hire meets the necessary qualifications or experience required for the job. Additionally, the employer is responsible for registering the foreign employee with the Albanian tax and social security system. Failure to obtain the appropriate permits may result in fines and legal restrictions, making it essential for businesses to adhere to immigration and labor regulations when hiring foreign staff.

Employer Tax and Contribution Obligations

Employers in Albania are required to contribute to social and health insurance on behalf of their employees. These contributions are shared between the employer and the employee:

• Social Insurance Contributions: Employers contribute 15% of the employee’s gross salary, while employees contribute 9.5%.
• Health Insurance Contributions: Both employers and employees contribute 1.7% each.

Additionally, businesses must deduct personal income tax from employees’ salaries. Personal income tax is calculated based on the gross salary, as follows:

Net Salary = Gross Salary – (9.5% of Gross Salary) – (1.7% of Gross Salary) – Personal Income Tax.

Proper calculation and timely payment of these contributions are crucial to ensuring compliance with Albanian tax laws and avoiding penalties.

How we can help

Navigating labor law requirements in Albania can be complex, but ECOVIS Albania is here to assist businesses in ensuring compliance and optimizing their employment practices.

It is crucial for employers to establish well-drafted contracts, comply with working hour regulations, respect employee rights, follow proper termination procedures, and manage foreign hires appropriately.

By staying informed and seeking legal guidance, businesses can create a lawful and efficient work environment while avoiding costly labor disputes.