Employer of Record in Albania

Comprehensive Guide to EOR, Payroll, Hiring, Compensation & Benefits, Subsidiaries, and Visas & Permits in Albania

1. Employer of Record (EOR) in Albania

An Employer of Record (EOR) is a third-party entity that acts as the legal employer for a company's workforce in Albania. This allows businesses to hire employees without establishing a local entity, simplifying operations and ensuring compliance with Albanian laws.

Services Provided by an EOR:

1. Legal Compliance: Ensures all contracts, taxes, and labour laws are met.
2. Payroll Management: Handles salary processing, tax withholdings, and social contributions.
3. Employee Benefits Administration: Provides health insurance, pensions, and other perks.
4. Work Permits: Manages visa and permit applications for foreign workers.
5. Termination: Handles severance and ensures termination processes are lawful.

Benefits of Using an EOR:

• Reduces legal and administrative overhead.
• Provides faster market entry.
• Ensures compliance with Albania's evolving labour laws.

Industries Benefiting from EOR:

• IT and tech startups.
• Manufacturing and logistics.
• International NGOs.

2. Payroll in Albania

Managing payroll in Albania requires strict adherence to local labour laws and tax regulations.

Critical Components of Payroll:

1. Salary Payments:
   • Paid monthly, usually via bank transfer.
   • Minimum wage: ALL 40,000 (~€335/month).
2. Income Tax Rates:
   • 0% for income up to ALL 30,000.
   • 13% for income between ALL 30,001–200,000.
   • 23% for income above 200,000.
3. Social Security Contributions:
   • Employer: 15% of gross salary.
   • Employee: 9.5% of gross salary.
4. Overtime and Bonuses:
   • Overtime: Compensated at 125–150% of the regular hourly rate.
   • Bonuses: Common for performances or holidays.

Payroll Compliance:

• All employees must be registered with the National Social Security Institute (ISSH).
• Tax filings are submitted monthly.

Software & Providers:

• Local payroll software or third-party providers often streamline compliance and operations.

3. Hiring in Albania

Recruitment Practices:

• Common channels: Online job boards, recruitment agencies, and professional networks.
• Popular job boards: duapune.com, punesime.com, and LinkedIn.

Employment Contract Types:

1. Permanent Contracts: Standard for long-term roles.
2. Fixed-Term Contracts: Used for temporary or project-based roles, renewable up to 3 years.
3. Part-Time Contracts: For reduced working hours.

Mandatory Contract Requirements:

• Job description and responsibilities.
• Salary and benefits details.
• Termination conditions.
• Duration of probation (typically up to 3 months).
• Must be in Albanian or officially translated.

Probation Period:

• Maximum of 3 months for most contracts.
• Employees may be terminated with 2 weeks' notice during probation.

For Foreign Employees:

• Employers must prove no suitable Albanian candidate was available before hiring a foreigner.
• Work permits and residence permits are required.

4. Compensation & Benefits in Albania

Compensation:

1. Minimum Wage: ALL 40,000 (~€335/month).
2. Average Salary: ALL 50,000–60,000 (~€420–500/month).
3. Overtime Pay:
   • 125% for regular overtime.
   • 150% for work on holidays or weekends.

Mandatory Benefits:

1. Health Insurance:
   • Public healthcare is funded through social contributions.
   • Employers may offer private insurance for better services.
2. Paid Leave:
   • Annual Leave: 20 days minimum.
   • Public Holidays: 12 paid holidays.
   • Sick Leave: Paid at 80% of salary, partially covered by the employer and ISSH.
3. Maternity/Paternity Leave:
   • Maternity Leave: 365 days, paid at 80% (pre-birth) and 50% (post-birth).
   • Paternity Leave: 3 days.

Supplementary Benefits:

• Meal vouchers.
• Transportation allowances.
• Training programs.
• Holiday bonuses.

Bonuses:

• Common for performance or year-end holidays.
• Discretionary but often tied to company policies.

5. Subsidiaries in Albania

Types of Subsidiaries:

1. Limited Liability Company (Sh.p.k):
   • Ideal for SMEs.
   • Minimum capital: ALL 100.
   • Simplified management and liability limited to the company's capital.
2. Joint-Stock Company (Sh.a):
   • Suitable for larger corporations.
   • Minimum capital: ALL 3,500,000 (private) or ALL 10,000,000 (public).
3. Branch Office:
   • Extension of a foreign parent company.
   • No separate legal personality but subject to local taxes.

Steps to Establish a Subsidiary:

1. Register with the National Business Center (QKB).
2. Obtain a Tax Identification Number (NIPT).
3. Open a local bank account.
4. Comply with labour and tax laws.

Advantages:

• Direct market access.
• Legal independence from the parent company.

Challenges:

• Higher administrative costs compared to an EOR.
• Complex regulatory requirements.

6. Visas & Work Permits in Albania

Types of Visas:

1. Type C Visa: Short-term visa for stays up to 90 days.
2. Type D Visa: Long-term visa for work, study, or residence (required for work permits).

Work Permits:

• Type A: For seasonal work.
• Type B: For long-term employment contracts (over one year).
• Type C: For executives, highly skilled workers, or intra-company transfers.

Application Process:

1. Work Permit:
   • Apply through the Albanian Migration Directorate.
   • Submit employment contract, proof of qualifications, and employer justification.
2. Residence Permit:
   • Issued after obtaining a work permit.
   • Requires proof of accommodation and financial stability.
3. Visa Application:
   • Apply for a Type D visa at the Albanian consulate in the home country.

Processing Time:

• Work Permit: 15–30 days.
• Visa: 15–20 days.

Costs:

• Work Permit: €50–100 (varies by type).
• Type D Visa: €80–100.

Exemptions:

• Nationals of certain countries may enter Albania visa-free but must still obtain a work permit for employment.

This guide provides a complete overview of employment, payroll, hiring, benefits, subsidiary formation, and visa processes in Albania. Let me know if you need additional details or region-specific insights!