Hire in Albania through our Employer of Record (EOR)

Albania's employment landscape is characterized by a shrinking workforce due to an aging population and emigration, gender disparities in labor force participation, and high youth unemployment. The country faces challenges in aligning workforce skills with market demands, leading to a significant skills gap. Despite these challenges, Albania is working towards improving its labor market through investments in vocational education and training.

Overview of Labor Laws

Albania's labor laws are designed to protect workers' rights and establish fair employment practices. The main legislation governing employment relationships is the Labor Code of the Republic of Albania. This code covers various aspects of employment, including:

• Employment contracts
• Working hours and overtime
• Minimum wage requirements
• Annual leave and public holidays
• Termination procedures
• Collective bargaining rights

The Labor Code also prohibits discrimination in the workplace based on gender, race, ethnicity, or other protected characteristics. Additionally, Albania has ratified several International Labor Organization (ILO) conventions, further strengthening workers' rights and aligning the country's labor practices with international standards.

Cultural Considerations When Hiring in Albania

Understanding Albanian workplace culture is crucial for successful business operations in the country. Key cultural aspects to consider include:

1. Work ethic: Albanians are known for their strong work ethic and often work long hours.

2. Family-centric: Family is highly valued, and employees may prioritize family commitments.

3. Direct communication: Albanians tend to be direct in their communication style, which may be perceived as blunt by some.

4. Relationship-building: Investing time in building strong interpersonal relationships is essential for successful business interactions.

5. Hierarchical structure: Albanian workplaces often have hierarchical structures with respect for authority.

6. Evolving workplace culture: Younger generations are bringing fresh perspectives and emphasizing work-life balance.

Challenges of Direct Hiring Without an Employer of Record in Albania

Direct hiring in Albania can present several challenges for foreign companies:

1. Skills mismatch: There is often a gap between the skills required by employers and those possessed by job seekers.

2. Brain drain: Skilled workers often seek opportunities abroad, making it challenging to find and retain top talent.

3. Language barriers: While English proficiency is increasing, language barriers may still exist, especially outside major urban areas.

4. Complex labor laws: Navigating Albania's labor laws and regulations can be complicated for foreign employers unfamiliar with the local legal system.

5. Cultural differences: Understanding and adapting to Albanian workplace culture can be challenging for foreign companies.

6. Administrative burden: Managing payroll, taxes, and social security contributions in compliance with local regulations can be time-consuming and complex.

7. Limited talent pool: The shrinking workforce and high youth unemployment may limit the available talent pool in certain sectors.

To overcome these challenges, many foreign companies choose to partner with local experts or consider alternative employment solutions, such as working with an Employer of Record in Albania. These options can help navigate the complexities of the Albanian labor market while ensuring compliance with local laws and regulations.

Albania's payroll and tax system is structured to support the country's social welfare programs and public healthcare system. Both employers and employees contribute to these systems through various mandatory deductions and contributions. Understanding the intricacies of this system is crucial for businesses operating in Albania and for employees working in the country.

In Albania, the payroll process involves careful calculation of gross salaries, deduction of employee contributions, and addition of employer contributions. The tax system is progressive, meaning higher earners pay a larger percentage of their income in taxes. Both employers and employees have specific responsibilities and contributions to make, which we'll explore in more detail below.

Employer Contributions

Employers in Albania are required to make several contributions on behalf of their employees:

1. Social Security Contributions: Employers contribute 15% of the employee's gross salary towards social security. This funds public pension plans and other social welfare programs.

2. Health Insurance Contributions: A contribution of 1.7% of the employee's gross salary goes towards public healthcare coverage.

3. Contribution Base: It's important to note that Albania has set minimum and maximum salary levels for these contributions. The monthly minimum is ALL 34,000, and the maximum is ALL 149,953.

4. Withholding and Remittance: Employers are responsible for withholding employees' contributions and remitting both employee and employer portions to the Albanian tax authorities. This must be done by the 20th of the month following the salary payment.

5. Record Keeping: Employers must maintain comprehensive payroll records as per the instructions from the Ministry of Finance.

6. Personal Income Tax (PIT): Employers are also responsible for withholding PIT from employee salaries and remitting it to the tax authorities.

Given the complexity of these obligations and the potential for changes in Albanian labor and tax laws, it's advisable for employers to consult with local tax experts or payroll specialists to ensure compliance.

Employee Contributions

Employees in Albania also have several mandatory contributions deducted from their salaries:

1. Social Security Contributions: Employees contribute 9.5% of their gross salary towards social security.

2. Health Insurance Contributions: A further 1.7% of the gross salary is deducted for health insurance.

3. Personal Income Tax (PIT): Albania uses a progressive tax system for PIT. The current structure is:

   • 0% on monthly income up to 50,000 ALL
   • 13% on monthly income from 50,001 ALL to 60,000 ALL (on the portion above 35,000 ALL)
   • 23% on monthly income above 60,000 ALL, with specific breakdowns:
     • First 30,000 ALL is tax-free
     • Income from 30,001 ALL to 200,000 ALL is taxed at 13%
     • Income above 200,001 ALL is taxed at 23%, plus an additional fixed tax of 22,100 ALL

4. Contribution Base: Like employer contributions, employee contributions are calculated based on the gross salary, with the same minimum (ALL 34,000) and maximum (ALL 149,953) monthly salary levels applying.

It's worth noting that while these contributions are deducted from the employee's salary, the employer is responsible for calculating, withholding, and remitting these amounts to the Albanian tax authorities.

Understanding these contributions is crucial for both employers and employees in Albania. It helps employers ensure compliance with local regulations and allows employees to better understand their take-home pay and the benefits they're entitled to through their contributions.

Albania offers a comprehensive set of employee benefits, both mandatory and optional, that contribute to a robust and attractive employment landscape. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local labor laws while also helping companies implement optional perks that can enhance their appeal to top talent. By leveraging an EOR's expertise, businesses can navigate the complexities of Albanian employment regulations and create competitive benefits packages that support employee well-being and satisfaction.

Mandatory Benefits

• Annual Leave: 28 calendar days (20 working days) of paid leave for employees with one year of service
• Public Holidays: 12 official paid public holidays
• Sick Leave: Paid sick leave as per national guidelines
• Maternity Leave: 365 days of paid leave, including 35 days before and at least 42 days after childbirth
• Probationary Period: Maximum duration regulated by law
• Overtime Pay: Mandated rates for work beyond standard hours
• Severance Pay: Eligibility and calculation outlined in the Labor Code

Optional Benefits

• Private Health Insurance: Access to wider medical services and shorter wait times
• Life Insurance: Financial security for employee's family
• Wellness Programs: Gym memberships, fitness classes, or healthy lifestyle seminars
• Retirement Savings Plans: Supplemental plans with employer and employee contributions
• Profit Sharing: Programs allowing employees to share in company success
• Flexible Work Arrangements: Remote work options or compressed workweeks
• Paid Time Off (PTO) Banks: Additional flexibility for vacations, sick leave, or personal days
• Subsidized Meals or Transportation: Easing financial burdens and improving convenience
• Language Training: Professional development through language learning programs

Termination and offboarding processes in Albania are important aspects of employment relationships that both employers and employees should understand. While specific procedures may vary depending on the company and circumstances, there are general guidelines and legal requirements to follow.

Termination Process

In Albania, employment termination can occur for various reasons, including:

1. Mutual agreement between the employer and employee
2. Expiration of a fixed-term contract
3. Employee resignation
4. Dismissal by the employer

When terminating an employee, employers must adhere to the following guidelines:

• Provide written notice of termination, stating the reasons for dismissal
• Observe the required notice period, which varies based on the employee's length of service
• Pay any outstanding wages, bonuses, or other compensation owed to the employee
• Compensate for unused annual leave

Offboarding Process

The offboarding process helps ensure a smooth transition for both the departing employee and the company. Key steps in the offboarding process include:

1. Exit interview: Conduct a meeting to gather feedback and insights from the departing employee
2. Knowledge transfer: Arrange for the employee to hand over their responsibilities and share important information with colleagues
3. Return of company property: Collect any company-owned equipment, access cards, or other assets
4. Update systems and records: Remove the employee's access to company systems and update internal records

Legal Considerations

Employers should be aware of Albania's labor laws to ensure compliance during the termination and offboarding process. Some important legal considerations include:

• Protecting against unfair dismissal claims
• Observing anti-discrimination laws
• Maintaining confidentiality of sensitive information
• Fulfilling all financial obligations to the departing employee

By following these guidelines and legal requirements, companies can manage the termination and offboarding process in Albania effectively, minimizing potential conflicts and ensuring a professional conclusion to the employment relationship.

Albania has been making efforts to attract foreign investment and talent in recent years, which has led to some changes in its visa and work permit regulations. Here's a concise overview of the requirements for foreign workers in Albania:

Visa Requirements

Most foreign nationals need a visa to enter Albania, except for citizens of certain countries who can enter visa-free for short stays. For those who require a visa, there are several types available:

• Tourist visa: For short-term visits
• Business visa: For attending meetings or conferences
• Work visa: For those intending to work in Albania

Work Permit Process

To work legally in Albania, foreign nationals typically need to obtain a work permit. The process generally involves the following steps:

1. The employer must apply for a work permit on behalf of the foreign employee.
2. The application is submitted to the National Employment Service.
3. Required documents include a valid passport, employment contract, and proof of qualifications.
4. Processing time can take several weeks to a few months.

Residence Permit

Foreign workers staying in Albania for more than 90 days must also obtain a residence permit. This is usually applied for after entering the country with a work visa.

Key Considerations

• Work permits are usually issued for one year and can be renewed.
• Some professions may require additional documentation or recognition of qualifications.
• It's advisable to start the application process well in advance of the intended start date of employment.

While Albania has been working to streamline its processes for foreign workers, it's important to note that regulations can change. It's always best to consult with the Albanian embassy or a legal professional for the most up-to-date information and guidance tailored to your specific situation.