Hire Employees in Albania

Two routes exist. Registering an Albanian entity is quick and inexpensive by European standards, followed by enrolment with the ISSH and the General Directorate of Taxes.

An Employer of Record removes that setup. The EOR is the legal employer in Albania, runs payroll, remits social and health contributions, files the monthly E-SIG declaration and withholds income tax, while day-to-day direction stays with you.

Engaging someone as a contractor is a third option, but only where the work is independent. Note that the tax administration now cross-checks payroll data against ISSH records electronically, so undeclared workers surface quickly, see the risk check further down this page.

Albania is a competitive nearshore base for EU-facing work, with an average gross salary around ALL 83,400 a month, an EU candidate framework and a personal income tax regime that leaves most wages at or near the minimum untaxed entirely.

One structural point deserves weight before relocating anyone. Albania is not part of EU social security coordination under Regulation 883/2004 and has no totalisation agreement with most EU member states. A professional arriving with twenty years of contributions elsewhere starts the Albanian record from zero, and the two never combine, the foreign contributions stay credited abroad. For a younger hire with a short record this matters little; for someone approaching an EU pension it can be significant.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Albanian entity somewhere between 12 and 18 employees. Model both before committing, see EOR vs Entity for the full comparison.

Employer contributions are 16.7% of gross. 15% social insurance plus 1.7% health insurance. The employee pays 11.2% on the same split, 9.5% and 1.7%, giving a combined 27.9%.

Only the social insurance element is capped, and that distinction drives everything at higher salaries. Social insurance is calculated within a floor of ALL 50,000 and a ceiling of ALL 186,416 a month. Health insurance at 1.7% each side is calculated on the whole of gross pay with no upper limit. Above the ceiling the total contribution therefore starts to fall as a percentage but never stops rising in absolute terms.

On a salary of ALL 250,000 a month, social insurance is computed only on ALL 186,416, the employer pays ALL 27,962, while health insurance runs on the full ALL 250,000 at ALL 4,250. The employer total is ALL 32,212 rather than the ALL 37,500 an uncapped calculation would produce.

Both thresholds moved on 1 January 2026. The minimum wage rose from ALL 40,000 to ALL 50,000 and the contribution ceiling from ALL 176,416 to ALL 186,416. The ceiling is indexed to the minimum wage, so the two move together.

Social insurance splits into five branches, two of which the employer funds alone. Pensions take the overwhelming share, on an ALL 80,000 salary, ALL 17,280 of the ALL 19,600 social insurance goes to pensions, with the balance covering maternity, sickness, workplace accidents and unemployment. Accidents and unemployment are employer-only, which is why declaring the real salary rather than the minimum has direct consequences for the employee later.

Gross monthly salaries in lek. The 15% social insurance element caps at ALL 186,416 a month; the 1.7% health element does not.

Benchmarks below are gross monthly salaries in lek. Add 16.7% for employer contributions, noting that the 15% social insurance element caps at ALL 186,416 a month while the 1.7% health element does not.

Payroll is monthly. Form E-SIG 025 is the official payroll declaration and, under Law 9920 of 19 May 2008, the single document that evidences contribution payment for each employee. It declares three obligations at once, social insurance, health insurance and income tax.

The filing window is the 1st to the 20th of the following month, and payment falls due within the same deadline through the DPT e-filing portal. March payroll is filed between 1 and 20 April. Late payment attracts daily interest plus administrative fines.

A separate filing must happen before the employee starts. Form E-SIG 027 declares the new hire and is due before their first day, not with the first payroll.

The tax administration now cross-checks electronically against ISSH records, so a single payroll error or an undeclared employee is identified quickly rather than at audit.

Income tax under Law 29/2023 is progressive: nil up to ALL 50,000 a month, a relief formula between ALL 50,001 and 60,000, then 13% on gross less ALL 30,000 up to ALL 200,000, and ALL 22,100 plus 23% on the excess above ALL 200,000. Sources differ on whether the base is gross or gross after employee contributions, and one calculator frames the bands annually at ALL 2,040,000, confirm the current basis with the DPT.

An employee with two jobs elects one employer to apply the tax-free threshold. The second employer calculates tax from the first lek with no exemption at all.

The monthly bands below apply under Law 29/2023. Note that most employees at or near the minimum wage pay no income tax, though social and health contributions are always deducted.

The Labour Code (Law 7961/1995), last amended by Law 91/2024, is the governing statute, supported by Law 7703/1993 on Social Insurance and Council of Ministers decisions on the minimum wage and contribution thresholds.

The minimum wage rose to ALL 50,000 a month on 1 January 2026, from ALL 40,000, a 25% increase, equivalent to ALL 287.3 an hour over 174 hours. Published guidance has not kept up consistently: one Albanian accounting firm publishes both ALL 40,000 and ALL 50,000 as the 2026 figure across different pages of its own site, and at least one salary calculator still applies the 2025 floor of ALL 40,000 and ceiling of ALL 176,416.

A government compensation scheme covering 16.7% was made available to businesses affected by the minimum wage increase, subject to conditions and an application deadline. Confirm whether it remains open.

The employer deducts income tax and mandatory contributions from salary as of right, but may only deduct union dues with the employee’s written authorisation, which is revocable at any time.

Written contracts are required and should record pay, hours, leave, notice and termination terms.

File Form E-SIG 027 before the employee’s first day. This is a pre-employment declaration, distinct from the monthly E-SIG 025 payroll return, and missing it is one of the deadlines employers most often overlook when taking on their first staff.

Ensure no employee is recorded below the ALL 50,000 minimum wage, since contributions cannot be calculated on a lower base regardless of actual pay.

The standard week is 40 hours. Overtime, night work, weekly rest and public holiday work attract premium rates under the Labour Code, and in some cases may be compensated with time off instead of pay.

Gross salary for contribution purposes includes base pay plus permanent additions, seniority, night work, overtime, hazard and position allowances, so these increase the contribution base as well as the wage.

Employees are entitled to statutory rest periods and paid public holidays.

Albania observes 14 public holidays in 2026, reflecting Catholic, Orthodox and Muslim communities alongside national days. Islamic observances follow the lunar calendar and are confirmed close to the date.

Albania observes 14 paid public holidays in 2026, spanning Catholic, Orthodox and Muslim observances alongside national days. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

The employer funds the first 14 days of sick leave; from day 15 the ISSH pays a benefit calculated as a percentage of average salary. That initial period is a direct employer cost rather than a fund-borne one.

Maternity, sickness, workplace accident and unemployment benefits all flow from the five branches of social insurance, with accidents and unemployment funded by the employer alone.

The ISSH operates a pay-as-you-go state pension with no mandatory funded second pillar. Albania is reforming its pension system under EU accession requirements, so the framework should be expected to change.

Termination follows the Labour Code, with notice periods and procedural requirements scaling by length of service. Dismissal must rest on a valid reason and follow the prescribed procedure.

Final pay including accrued leave is due on separation, and the departure must be declared through the E-SIG system alongside the final payroll.

The State Labour Inspectorate enforces the Labour Code under the Labour Inspection Act as amended by Law 57/2017.

Because contributions cannot be calculated below the minimum wage, a part-month final payroll still attracts contributions on the statutory floor where the pro-rated figure falls below it.

Foreign nationals need a work permit and residence permit, both employer-sponsored.

Albania sits outside EU social security coordination. It is not covered by Regulation 883/2004 and has no totalisation agreement with most EU member states, so contribution records do not combine. An employee moving from an EU country begins the Albanian record at zero while their existing entitlement stays credited in their home system.

Foreign employees contribute on the same basis as nationals, within the same floor and ceiling.

Using the 2025 minimum wage or ceiling is the most immediate error. Both rose on 1 January 2026, the minimum to ALL 50,000 and the ceiling to ALL 186,416. One accounting firm publishes both the old and the new minimum across its own pages, and at least one calculator still uses the 2025 figures throughout.

Capping health insurance at the social insurance ceiling under-contributes. The 1.7% each side applies to the whole of gross pay with no upper limit, unlike the 15% and 9.5% social insurance elements.

Form E-SIG 027 is due before the employee starts, not with the first payroll. It is a separate obligation from the monthly E-SIG 025 declaration.

Note also that contributions cannot be calculated below the ALL 50,000 floor whatever the actual pay, that the DPT now cross-checks payroll against ISSH data electronically, and that an employee concluding contracts locally can create a taxable presence for a foreign entity.

Work backwards from the start date. For a local hire through an EOR, two to three weeks is realistic once the contract is signed and the pre-employment declaration is filed.

File Form E-SIG 027 before the first day, and check that no employee is recorded below the ALL 50,000 minimum wage in force since January 2026.

Configure payroll so the 15% social insurance element caps at ALL 186,416 while the 1.7% health element runs on full gross, set the monthly E-SIG 025 filing for the 1st to 20th window, and confirm the current income tax basis with the DPT before the first run.