Albanian Labor Code and the cost

1. Employment Contract

• Articles 12-15: Employment contracts can be:

• Article 142: During the probation period (maximum 3 months), either party can terminate the contract with a 5-day notice period.

2. Working Hours and Leave

• Article 77: The maximum working hours are 8 hours per day and 40 hours per week.

• Article 92: Employees are entitled to 4 weeks of paid annual leave for every full year of work. Leave is calculated in working days, excluding Saturdays, Sundays, and official holidays. This means:

Starting up a company in Albania

Leave Calculation:

• Article 93: Employers are required to ensure that employees take their annual leave within the calendar year, or compensate them if the employment relationship ends and the leave hasn’t been taken.

3. Salary and Compensation

• Article 111: The minimum wage is set by the Council of Ministers, and no employee should be paid less than the established minimum wage. Salaries must be paid at least once a month.
• Article 113: Salary for overtime work and work on public holidays is compensated as follows:

4. Health and Safety at Work

• Articles 39-53: Employers are responsible for ensuring a safe working environment and taking appropriate measures to prevent accidents and occupational diseases. This includes providing safety equipment, conducting regular checks, and organizing training for employees on emergency protocols.

Employer Responsibilities for safety include:

• Providing safety equipment
• Periodic checks on workplace conditions
• Organizing safety training for emergencies

5. Termination of Employment

• Articles 141-143: If either the employer or the employee wishes to terminate the employment relationship, they must respect a notice period that depends on the employee’s length of service:

6. Protection for Women and Minors

• Article 104: Pregnant women are entitled to paid maternity leave for up to 365 days, with:

• Article 99: Minors (under 18) cannot be employed in hazardous or physically demanding work. They are entitled to shorter working hours and extra protection in the workplace.

7. Trade Unions and Collective Bargaining

• Articles 176-187: Employees have the right to organize and join trade unions to protect their interests at work. The relationship between trade unions and employers is regulated through collective agreements. Employers cannot discriminate or punish employees for being part of a union.

8. Employer Obligations

• Article 95: Employers are required to register every employee with the relevant authorities for social security and maintain updated records of payrolls, social insurance, and contributions for each employee.

Example of Leave Calculation

If an employee has worked a full year and requests 4 weeks of leave, the 20 days of leave are calculated in working days (Monday to Friday). Saturdays and Sundays are not counted as part of the 4 weeks of leave.

Labor Costs in Albania: A Detailed Overview

Labor costs in Albania include gross salary, income tax, and social/health insurance contributions for both employers and employees.

Minimum Gross Salary

The current minimum gross salary is 45,000 ALL per month.

Income Tax

Income tax is progressive:

• 0% for salaries up to 50,000 ALL.
• 13% on amounts exceeding 35,000 ALL for salaries between 50,001 – 60,000 ALL.
• 13% on amounts exceeding 30,000 ALL for salaries above 60,001 ALL.

Social and Health Insurance Contributions

Net Salary and Total Labor Cost

Net Salary for Employee (45,000 ALL gross):

Total Cost for Employer (45,000 ALL gross):

Summary

1. Net salary for an employee earning 45,000 ALL gross is 39,960 ALL.
2. Total cost for the employer is 52,515 ALL.
3. Income tax applies progressively for salaries exceeding 50,000 ALL.