Hiring Employees in Albania: Labor Law, Contracts, and Payroll Guide 2026

This guide covers the Albanian labor law framework: employment contracts, probation, termination, working hours, leave entitlements, and employee rights. For payroll mechanics (salary calculations, contribution math, and monthly filing workflow), see our payroll guide.

The Labor Code (Law 7961/1995, as amended) is the primary statute covering employment in Albania. It sets minimum standards that no employment contract can undercut. Collective agreements and individual contracts can improve on these standards but cannot reduce them.

All employment relationships must be formalized in writing. The law does not recognize an employment relationship that exists only verbally or through conduct. Foreign companies can hire Albanian employees directly or through an Employer of Record (EOR) service -- there is no requirement to establish an Albanian subsidiary first, although most employers find it operationally simpler to hire through a local Sh.p.k.

Every employment contract in Albania must contain these elements in writing: full names of both parties, job description and position title, place of work, start date, gross salary, working hours per day and week, notice period for termination, and contract duration (or confirmation it is indefinite). The contract must be in Albanian -- a bilingual contract is permitted but the Albanian text controls in any dispute.

The 24-hour ISSH registration rule. You must register the employment contract with ISSH (Instituti i Sigurimeve Shoqerore) within 24 calendar hours of the employee's first day of work. Registration is done electronically through the ISSH portal -- your accountant can handle this on your behalf. The fine for failing to register on time is ALL 25,000 to ALL 50,000 (EUR 216 to EUR 431) per unregistered employee. Inspectors from the State Labour Inspectorate conduct routine checks, and fines are applied per person found without proper registration.

Indefinite-term contract (standard). The indefinite-term contract is the legal default and the form Albanian law actively favors. When an employment relationship is not clearly characterized as fixed-term, the law treats it as indefinite. Most employers should default to indefinite-term contracts for any genuinely ongoing position.

Fixed-term contract. Permitted for specific, time-limited work. Maximum duration: 2 years. Renewable once, after which the contract must either convert to indefinite-term or terminate. If renewed more than once without conversion, courts treat it as indefinite by operation of law. Use fixed-term contracts for project-based, seasonal, or genuine temporary replacement work -- not as a mechanism to reduce employee protections.

Part-time contract. Fully permitted. Part-time employees have the same rights as full-time employees on a pro-rata basis: minimum wage, annual leave, sick pay, and termination protections all apply proportionally.

Probationary period. Standard positions: maximum 3 months. Management roles: maximum 6 months. During probation, either party can terminate with 5 days notice. The probationary period must be stated explicitly in the contract and counts toward total length of service for all other purposes.

The national minimum wage is ALL 50,000 per month gross (EUR 431), effective January 2026. This is a 25% increase from the ALL 40,000 minimum that applied through 2025. The government has signaled continued annual increases as part of the broader goal of raising Albanian wages toward EU levels.

The minimum wage applies to all employees regardless of sector, age, or type of work. No contract, no collective agreement, and no individual arrangement can pay below this floor. If a contract specifies a lower salary, the statutory minimum applies automatically.

The standard working week is 40 hours (8 hours per day, 5 days per week). The maximum working week including overtime is 48 hours.

• Overtime: minimum 125% of the normal hourly rate (25% premium). Employers and employees can agree to higher premiums but not lower.
• Night work (typically 22:00 to 06:00): minimum 20% premium above the normal rate.
• Weekend work: subject to written agreement, typically 125% to 150% of the normal rate in practice.

Every employee earns a minimum of 20 working days of paid annual leave per year (4 working weeks). Employees with 5 or more years of seniority with the same employer earn a minimum of 24 working days per year.

Annual leave cannot be waived. An employee cannot agree to forgo leave entitlement in exchange for payment while continuing to work. If unused leave accumulates and the employee leaves the company, all unused days must be paid out at termination. This is a real cash liability on the employer's books -- accountants recommend encouraging employees to take leave regularly rather than accumulating large balances.

Social security in Albania is split between employer and employee contributions, both calculated as a percentage of gross salary:

The employee's 11.2% is withheld from their gross salary by the employer and remitted to the DPT. The employer's 16.7% is an additional cost on top of gross salary.

Worked example: ALL 100,000/month gross salary (EUR 862).

• Employer total cost: ALL 116,700 (EUR 1,006) -- gross salary plus 16.7% employer contributions.
• Employee net take-home: approximately ALL 81,156 (EUR 699) -- after 11.2% employee contributions and 13% PIT on the portion of taxable income above ALL 30,000.

For employer cost breakdowns at other salary levels, see our Albania company tax rates guide.

Employers act as tax agents for their employees. Each month, the employer calculates and withholds personal income tax (tatimi mbi të ardhurat nga punësimit) before paying net salary. The 2026 monthly brackets:

These brackets apply monthly. The employer calculates, withholds, and remits the tax every month along with social security contributions. The 0% corporate profit tax threshold for businesses does not affect employee payroll tax -- employees follow this monthly bracket system regardless of the employer's own tax status.

Every employer must submit a monthly e-payroll declaration (listëpagesa) through the ISSH online system. Deadline: last working day of each month. The declaration must include, for every employee: full name and ID number, gross salary, contributions breakdown (employer and employee), personal income tax withheld, and net salary paid.

Payment of contributions and withheld tax to the relevant DPT bank account is due by the same deadline.

Late filing penalty: ALL 5,000 to ALL 25,000 (EUR 43 to EUR 216) per late submission. The fine applies even if payments were made on time. Submission and payment are separate obligations.

For full annual payroll reconciliation requirements, see our annual payroll compliance guide.

When an employee is unable to work due to illness or injury, the rules are:

• The employee must provide a medical certificate (raport mjekësor) for any absence beyond one day.
• Days 1 to 14: the employer pays 70% of the employee's average daily salary.
• From day 15 onwards: ISSH pays the employee directly.

An employer cannot terminate an employee on certified sick leave. This protection applies for the full duration of the sick leave episode. Termination initiated while an employee is on sick leave is void under Albanian labor law.

Maternity leave: 365 days total (52 weeks). Structured as 35 days before the expected birth date and 330 days after birth. ISSH pays 80% of the employee's average gross salary during this period, subject to ISSH payment caps. The employer keeps the position open and continues health insurance contributions during leave.

An employer cannot terminate a pregnant employee or a new mother for any reason related to pregnancy or maternity. This protection extends until 1 year after the child's birth.

Paternity leave: 3 working days, paid by the employer at full salary. Individual contracts and collective agreements can provide more. The 3 days are a statutory minimum.

Albanian labor law recognizes three legitimate grounds for employer-initiated termination:

• Just cause (serious misconduct). Immediate termination without notice -- covers theft, fraud, workplace violence, gross insubordination, and other conduct that fundamentally breaches the employment relationship. The employer must document the specific grounds in writing at the time of termination.
• Disciplinary dismissal (lesser misconduct). A written warning process must precede termination. The employer must identify the issue in writing, allow a reasonable opportunity to correct behavior, and only proceed to termination if the problem continues. Skipping the warning process makes the dismissal unlawful.
• Economic or organizational reasons (redundancy). Covers restructuring, downsizing, role elimination, and closures. Collective redundancies affecting 5 or more employees require notification to the labor authority and a consultation period.

Notice periods by length of service:

Severance pay applies to economic dismissals only (not just-cause or disciplinary terminations). The statutory rate is 1 month of gross salary per completed year of service. Wrongful termination remedies in labor court: reinstatement or compensation equivalent to the salary for the unlawful period.

Foreign nationals must hold a work permit (leje pune) issued by the Ministry of Finance and Economy. The permit is employer-specific -- it authorizes work for one particular employer. If the employee changes employer, a new permit is required.

EU and EEA citizens benefit from simplified procedures. Citizens of countries with bilateral labor agreements with Albania may also have streamlined access. Albania operates a quota system -- annual limits apply to work permits in specific categories. Check quota availability before beginning recruitment for a foreign candidate.

The employer (not the employee) applies for the work permit at the Directorate of Emigration. Required documents include the employment contract, proof of employer registration, and evidence that the role cannot be filled by a local candidate. Plan for 30 to 60 days processing time.

1. Draft the employment contract in Albanian. Include all mandatory elements: parties' names, job description, workplace, start date, gross salary, working hours, notice period. State the probationary period explicitly if you want one.
2. Register the employee with ISSH within 24 hours of their start date. This is the single most important deadline. Your accountant can handle this electronically.
3. Set up your e-payroll account on the ISSH online platform. An accountant can manage this system on your behalf.
4. Confirm your fiskalizimi registration is active. Payroll-related payments to DPT require the same bank account details that appear in your fiskalizimi setup.
5. Confirm a business bank account that can handle payroll payments. Salary payments above ALL 100,000 (EUR 862) must be by traceable bank transfer under the 2026 cash limit rules.
6. Engage a licensed accountant to handle monthly payroll processing. E-payroll submission, social security payment, and PIT remittance all fall due on the last working day of the month.

Our payroll and social security service covers monthly e-payroll, ISSH contributions, PIT withholding, and annual reconciliation.

Disclaimer: The information in this article is provided for general informational purposes only and does not constitute legal, tax, or financial advice. Cross-border tax structuring requires professional analysis of your specific circumstances. We recommend consulting with a qualified tax advisor before making decisions based on this content.