Minimum Wage

As of 2022, the national minimum wage in Albania is set at ALL 34,000 per month. This amount represents the minimum compensation that employers must pay their workers. While many employers pay more than this minimum, it serves as a baseline for salary negotiations and compliance with labor laws.

Minimum Wage	Amount (ALL)
Current Minimum Wage	34,000

Income Tax

Albania employs a progressive income tax system for individuals. The tax rates are structured as follows:

• 0% for monthly income up to ALL 30,000
• 13% for income between ALL 30,001 and ALL 200,000
• 23% for income exceeding ALL 200,000

Employers are responsible for withholding these taxes from employees’ salaries and remitting them to the tax authorities.

Income Level	Income Tax Rate (%)
Up to ALL 30,000	0%
ALL 30,001 – ALL 200,000	13%
Over ALL 200,000	23%

Payroll Cost

The total payroll cost for employers in Albania includes various mandatory contributions. Employers are required to contribute approximately 16.7% of an employee’s gross salary towards social security and health insurance. The breakdown of these contributions is as follows:

• Social Security Contribution: 15%
• Health Insurance Contribution: 1.7%

Employees also contribute to social security and health insurance at rates of 9.5% and 1.7%, respectively.

Cost Component	Employer Contribution (%)	Employee Contribution (%)
Social Security	15%	9.5%
Health Insurance	1.7%	1.7%
Total Payroll Cost	16.7%	11.2%

Overtime Pay

In Albania, the standard working hours are set at 40 hours per week. Overtime is permitted but must comply with specific regulations:

• Overtime pay must be compensated at a rate of at least 25% more than the standard hourly rate.
• For work performed during weekends or public holidays, the minimum rate increases to 50% more than the standard hourly rate.
• Employees cannot work more than 200 hours of overtime per year, and no employee may work more than 48 hours in any one week, except under exceptional circumstances.

Overtime Regulation	Pay Rate
Standard Overtime	+25% of regular pay
Weekend/Public Holiday Work	+50% of regular pay

This comprehensive overview covers the minimum wage, income tax structure, payroll costs, and overtime regulations in Albania. Understanding these aspects is crucial for employers to ensure compliance with local labor laws while effectively managing workforce costs.

Regular & Maximum Working Hours

In Albania, the standard working hours are defined by law. The typical workweek consists of 40 hours, with a maximum of 8 hours per day for adult employees. For employees under 18 years of age, the daily working hours are limited to 6 hours.Employees are entitled to at least one full day of rest each week, typically on Sunday. However, exceptions can be made based on specific business needs or public service requirements.

Working Hours Regulation	Standard Hours	Maximum Daily Hours	Maximum Weekly Hours
Regular	8 hours	8 hours	40 hours
Under 18 Years	6 hours	6 hours	30 hours

Overtime Pay

Overtime is defined as any work performed beyond the standard 40 hours per week or 8 hours per day. According to Albanian labor law, overtime must be compensated at a minimum rate of 25% above the regular hourly wage. If overtime occurs during weekends or public holidays, the pay increases to 50% above the standard rate.Employers cannot require employees to work overtime without their consent, and employees are limited to a maximum of 200 hours of overtime per year.

Overtime Regulation	Pay Rate
Standard Overtime	+25% of regular pay
Weekend/Public Holiday Work	+50% of regular pay

Leave

Albanian labor law provides various types of leave for employees:

Annual Leave：Employees are entitled to 28 calendar days (20 working days) of paid annual leave after completing one full year of service. Employees with less than one year of service will receive a pro-rata amount based on their time worked.

Parental Leave：Parental leave consists of 12 days of paid leave for parents to care for their children. Employees with children under three years old are entitled to an additional 3 days and can request up to 30 days of unpaid leave per year if needed.

Sick Leave：Sick leave is available for employees who are unable to work due to illness. For the first 14 days, employers pay 80% of the employee’s salary. After this period, social insurance covers 70% of the salary (or 80% if the employee has more than ten years of contributions).

Bereavement Leave

In the event of the death of an immediate family member, employees are entitled to 2 days of bereavement leave.

Type of Leave	Duration/Compensation
Annual Leave	28 calendar days after 1 year
Parental Leave	12 days paid; additional 3 days for children under 3
Sick Leave	First 14 days at 80%; thereafter at 70% or 80%
Bereavement Leave	2 days

Public Holidays

Albania recognizes several public holidays throughout the year, during which employees are entitled to paid time off. If a public holiday falls on a weekend, it may be observed on a weekday.

Key Public Holidays Include:

1. New Year’s Day – January 1
2. Summer Day – March 14
3. Labor Day – May 1
4. Independence Day – November 28
5. National Youth Day – December 8
6. Christmas Day – December 25

Public Holiday	Date
New Year’s Day	January 1
Summer Day	March 14
Labor Day	May 1
Independence Day	November 28
National Youth Day	December 8
Christmas Day	December 25

This comprehensive overview provides essential information regarding working hours, overtime regulations, various types of leave, and public holidays in Albania. Understanding these aspects is crucial for employers to ensure compliance with local labor laws while effectively managing their workforce.

Termination Requirements

In Albania, the termination of employment contracts is governed by the Labor Code, which outlines specific requirements that both employers and employees must follow. Termination can occur for various reasons, including mutual agreement, expiration of a fixed-term contract, or justified cause.The following are key points regarding termination:

• Mutual Agreement: Both parties may agree to terminate the employment relationship.
• Expiration of Contract: Employment contracts may be terminated upon reaching the agreed-upon end date.
• Justified Cause: Employers may terminate an employee for valid reasons such as performance issues, misconduct, or operational needs.
• Written Notification: Employers must provide written notice specifying the reasons for termination and arrange a meeting with the employee at least 72 hours in advance to discuss the termination.

Termination Type	Description
Mutual Agreement	Termination by consent of both parties
Expiration of Contract	Ends when the contract term is completed
Justified Cause	Termination based on valid reasons
Written Notification	Required from employers to specify termination reasons

Notice Period

The notice period required for termination varies based on the length of service:

• Up to 6 months: 2 weeks
• More than 6 months but up to 2 years: 1 month
• More than 2 years but up to 5 years: 2 months
• More than 5 years: 3 months

These notice periods cannot be reduced by mutual agreement. Employers must also send a written invitation for a meeting at least 72 hours before the termination discussion.

Length of Service	Notice Period
Up to 6 months	2 weeks
More than 6 months – 2 years	1 month
More than 2 – 5 years	2 months
More than 5 years	3 months

Severance Pay

Severance pay in Albania is calculated based on the employee’s length of service and the reason for termination. If an employee is terminated without justified cause, they are entitled to severance pay as follows:

• For employees with less than one year of service: 1 month’s salary
• For each additional year worked beyond one year: 1 month’s salary per year, up to a maximum of 12 months’ salary.

Severance pay is not required if the termination is due to justified cause.

Length of Service	Severance Pay
Less than 1 year	1 month’s salary
Each additional year	+1 month’s salary
Maximum	Up to 12 months’ salary

Probation Periods

In Albania, the probation period is typically set at a maximum of 3 months. During this time:

• Either party can terminate the employment relationship with a notice period of 5 days.
• After the probation period, standard notice periods apply.

The probation period allows both employers and employees to assess whether they are a good fit for each other before committing to a long-term employment relationship.

Probation Period Duration	Notice Requirement
Up to 3 months	5 days notice

This detailed overview outlines the requirements and regulations surrounding termination in Albania, including notice periods, severance pay calculations, and probation periods. Understanding these aspects is essential for employers to ensure compliance with local labor laws while managing workforce transitions effectively.

Contractor Misclassification

In Albania, the distinction between employees and independent contractors is crucial for compliance with labor laws. Misclassification occurs when an employer incorrectly labels an employee as an independent contractor to avoid legal obligations such as social security contributions and labor benefits. This can lead to significant legal repercussions, including fines and penalties.

Key Factors for Classification

The Albanian Labor Code defines employment based on the relationship between the worker and the employer. Key factors that determine whether a worker is classified as an employee or an independent contractor include:

• Control: Employees typically work under the direction and control of the employer, while independent contractors have more autonomy over how they perform their tasks.
• Economic Dependency: Employees are economically dependent on their employer for their livelihood, whereas independent contractors operate their own businesses and are not reliant on a single client.
• Supervision: Employees usually receive regular oversight and direction, while independent contractors work independently without direct supervision.

Classification Factor	Employee	Independent Contractor
Control over work	High	Low
Economic dependency	Present	Absent
Level of supervision	Regular	Minimal

Legal Implications of Misclassification

Misclassifying an employee as an independent contractor can result in various liabilities for employers:

• Unpaid Taxes: Employers may be liable for unpaid social security contributions and income taxes that should have been withheld.
• Backdated Benefits: Misclassified workers may claim retroactive benefits such as paid leave, sick leave, and severance pay that they were denied.
• Penalties: The Labor Inspectorate or Tax Authorities may impose fines for misclassification, viewing it as an attempt to evade employment obligations.

Contractor Agreements

When hiring independent contractors in Albania, it is essential to have a well-drafted agreement that outlines key terms of engagement. Important elements of a contractor agreement include:

• Scope of Work: Clearly define the tasks and responsibilities expected from the contractor.
• Payment Terms: Specify payment rates, schedules, and methods.
• Duration of Contract: Indicate whether the contract is fixed-term or ongoing.
• Intellectual Property Rights: Address ownership of any intellectual property created during the contract.

Tax Responsibilities

Independent contractors in Albania are treated as self-employed individuals for tax purposes. They must register with tax authorities and are responsible for calculating and paying their taxes. The taxation options available include:

• Income Tax: Independent contractors must pay income tax based on their earnings, following the progressive tax rates applicable in Albania.
• Social Security Contributions: Contractors are responsible for making their own contributions to social security, which is approximately 15%.

Taxation Method	Description
Income Tax	Paid based on earnings according to progressive rates
Social Security Contributions	Self-paid contributions to social security

This comprehensive overview of contractor misclassification, legal implications, contractor agreements, and tax responsibilities provides essential insights for employers looking to engage independent contractors in Albania. Understanding these aspects is crucial for ensuring compliance with local labor laws while effectively managing workforce needs.