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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Albania

Notice period

In Albania, the Labour Code outlines the legal requirements for notice periods during employment termination. These requirements vary depending on the type of employment contract and the duration of employment.

Notice Periods for Indefinite Term Contracts

Indefinite term contracts, also known as open-ended contracts, are the most common type of employment contract in Albania. The Labour Code mandates minimum notice periods for termination of these contracts by either the employer or the employee. The required notice period increases with the length of employment:

  • For the first six months, two weeks' notice is required.
  • Between six months and one year, one month's notice is required.
  • Between one and five years of employment, two months' notice is required.
  • More than five years of employment requires three months' notice.

The employer must provide a written notice to the employee during this period, specifying the reasons for termination (except in cases of dismissal with immediate cause).

Notice Periods During Probationary Period

The first three months of employment in Albania are considered a probationary period. During this probationary period, either the employer or the employee can terminate the contract with a shorter notice period:

  • Five days' notice is the minimum notice required by law for termination during probation.
  • The Labour Code allows for a shorter notice period through a written agreement between the employer and the employee.

During probation, neither party is obligated to provide a reason for termination.

Exceptions: Termination Without Notice

The Albanian Labour Code allows for termination of employment without notice under specific circumstances, categorized as "dismissal with immediate cause". These circumstances include gross misconduct by the employee, serious dereliction of duty by the employee, and situations that make continued employment impossible.

Severance pay

In Albania, labor laws do provide for potential severance compensation, but this is primarily focused on unlawful terminations.

Unlawful Termination Severance Pay

If an employer terminates an employment contract unfairly or without a valid and lawful reason, the employee may be entitled to severance pay. The courts determine the precise amount, but the Labour Code sets certain guidelines:

  • The court will consider factors such as the employee's length of service, the reasons for termination, and the employee's salary.
  • The severance compensation cannot exceed the equivalent of 12 months' salary.

Collective Dismissals Severance

In the case of collective dismissals, triggered by economic, technical, or organizational reasons within the company, Albanian law outlines specific procedures for the employer to follow.

  • The employer must initiate a consultation process with employee representatives before implementing the dismissals.
  • The employee is entitled to a severance package if the employer cannot adhere to the consultation process adequately. The compensation amount is equivalent to six months' salary.

No Severance for Lawful Terminations

Albanian labor law does not generally require severance pay in cases where the termination is considered fair and lawful. This includes:

  • Termination during the probationary period
  • Termination due to the employee's resignation
  • Termination of a fixed-term contract when the term expires
  • Termination based on mutual agreement

Termination process

Employee termination in Albania is governed by the country's Labour Code, ensuring strict adherence to procedures protects both employers and employees.

Types of Termination

  • Termination by the Employer: The employer can initiate termination for reasons such as employee performance or capabilities, employee conduct, or operational requirements of the business.
  • Termination by the Employee: An employee can terminate the employment contract at their volition.
  • Mutual Agreement: Employer and employee may mutually agree to terminate the contract.
  • Expiration of Fixed-term Contract: A fixed-term contract ends automatically upon reaching the agreed end date; no further process is needed.

Termination by the Employer (General Procedure)

  1. Notice of Termination: The employer must provide a written notice of termination to the employee, stating the reasons for the termination.
  2. Termination Meeting: The employer is required to convene a meeting with the employee to discuss the reasons behind the decision. This provides a space for the employee to respond or ask questions. Strict notice must be given before this termination meeting.
  3. Effective Termination: The termination takes effect after the expiration of the notice period.

Dismissal with Immediate Cause

In certain severe circumstances, an employer can dismiss an employee with immediate effect. These situations include serious misconduct by the employee, the employee being unable to perform their duties, or the employee being sentenced to imprisonment. Even in immediate dismissal cases, the employer must follow a strict procedure and provide a written notice outlining the reasons for termination to the employee.

Employee Rights

  • Right to Challenge Unfair Termination: An employee can challenge an unfair or unjustified termination in court.

Additional Considerations

  • Specific Rules for Certain Categories: There may be additional or specialized termination procedures for specific categories of employees, such as protected employees or those covered by collective bargaining agreements.
  • Importance of Documentation: It is essential for employers to maintain detailed records throughout the termination process to document decisions and procedures followed. This protects them from potential legal challenges.
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