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.

Declare the employee before they start. You must declare every new employee to the tax authority (DPT) at least one calendar day before their first day of work (Law 9920, Article 119). Not on the first day. Before it. The declaration is filed electronically through the DPT e-filing portal (tatime.gov.al) -- your accountant can handle this on your behalf. The fine for an undeclared employee is ALL 200,000 for VAT- or profit-tax-registered taxpayers (ALL 50,000 for others) per undeclared employee, plus assessment of back tax and social contributions. Inspectors conduct routine checks, and fines are applied per person found without proper declaration.

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. Repeated or long-running fixed-term contracts convert to indefinite-term by operation of law under the Labor Code, so they cannot be used to keep a genuinely ongoing role permanently temporary. 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. Maximum 3 months for all roles (Neni 142). 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 500), 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 (22:00 to 06:00): at least a 50% premium above the normal rate (Neni 81/2). Evening work (19:00 to 22:00) carries at least a 20% premium (Neni 81/1).
• Weekend or rest-day work: at least a 50% premium above the normal rate.

Every employee earns a minimum of 22 working days of paid annual leave per year (the statutory floor since Law 91/2024, in force 24 August 2024). Any leave above this minimum — for example longer entitlements tied to seniority — exists only where a collective or individual employment contract provides it; the Labor Code itself sets no automatic increase.

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 79,700 (EUR 687) -- after ALL 11,200 in employee contributions (11.2%) and ALL 9,100 in PIT (13% on the portion of gross salary 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 DPT e-filing portal (tatime.gov.al). Deadline: the 20th of the following 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: late submission triggers penalties under Law 9920. 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 80% of the employee's average daily salary.
• From day 15 onwards: ISSH pays the employee directly -- 70% for employees with less than 10 years of insurance, 80% for those with 10 or more.

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 daily net wage for the prenatal period and the first 150 days after birth, then 50% for the remainder of the leave, 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 a larger group of employees trigger additional notification and consultation requirements (collective-dismissal rules under Neni 148 apply).

Notice periods by length of service:

Severance pay applies to economic dismissals only (not just-cause or disciplinary terminations). Under Kodi i Punës Neni 145, the seniority reward (shpërblim vjetërsie) is a minimum of 15 days' salary for each completed year of service, payable to employees with at least 3 years of service. Wrongful termination remedies in labor court: reinstatement or compensation equivalent to the salary for the unlawful period.

Under Law 79/2021, most foreign nationals need a Unique Permit (Leje Unike) -- a single document combining the right to work and the right to reside -- obtained through the migration authority via the e-Albania portal. The permit is employer-specific: it authorizes work for one particular employer, so if the employee changes employer a new application is required.

EU and EEA citizens benefit from simplified procedures, and citizens of countries with bilateral labor agreements with Albania may also have streamlined access. Certain categories are subject to annual quotas, so check availability before beginning recruitment for a foreign candidate.

The employer (not the employee) drives the application through the migration authority on e-Albania. Required documents include the employment contract and proof of employer registration. Plan for several weeks of 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. Declare the employee to the DPT before their start date. This is the single most important deadline: the declaration must be filed at least one calendar day before the employee begins work. Your accountant can handle this electronically.
3. Set up your e-payroll account on the DPT e-filing portal (tatime.gov.al). 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. Salaries are typically paid by bank transfer.
6. Engage a licensed accountant to handle monthly payroll processing. E-payroll submission, social security payment, and PIT remittance all fall due by the 20th of the following 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.