How an EOR works in Albania, explained in plain English

Once an EOR is involved, the name in the employer box of your hire’s Albanian contract is the EOR’s. You still decide who gets the job and what they work on each day. The employment contract, the monthly payroll list and every payment to the tax authority carry the EOR’s name. The work plan, the code reviews and the quarterly targets carry yours.

Put another way, there are two agreements. The first ties your company to the EOR: it fixes the fee and divides the tasks. The second is an Albanian employment contract (kontratë pune) between the EOR and your new team member, governed by Law 7961/1995, the Albanian Labour Code, in its amended form. Your hire signs only the second one, and that contract is the document an Albanian court or inspector would read if a question ever came up.

At Employer of Record Albania, the contract your hire signs is with us and the payroll each month is ours to run, so a company with no Albanian subsidiary can still put someone in Tirana, Durrës or Shkodër on a proper payroll. Your hire’s colleagues, manager and daily routine all stay inside your business; the paperwork with Albanian institutions sits with us.

Before anyone logs in for the first time, three things have to be in place: a signed written contract, a declaration of the new hire to the General Directorate of Taxes, and a bank account to receive pay. All three are legal requirements rather than house preferences.

Article 21 of the Labour Code lists what the contract must cover as a minimum. That includes the place of work, a description of the job, the start date, the length of the contract if it is fixed-term, paid leave, the notice period, each element of pay and the date it is paid, the normal weekly hours, a collective agreement if one covers the job, the probation period and the disciplinary procedure. If the contract is not signed when work begins, the employer has seven days to sign it.

The tax authority, known as DPT (Drejtoria e Përgjithshme e Tatimeve), must hear about each new employee electronically at least a day before the first working day. Salaries are paid only through the banking system under Article 118, normally in lek, so the employee’s bank account details are collected during onboarding rather than after the first month.

The order of these steps, and how a start date is picked so that nothing is rushed, is set out in our walk-through of EOR onboarding from offer to first payslip.

Each month the EOR calculates gross pay, withholds income tax and employee contributions, transfers net pay to the employee’s bank and reports the whole thing to DPT on the listëpagesa (monthly payroll list). For March pay, say, both the filing and the transfer to DPT must be done by 20 April.

In 2026 the employer side adds 15% social insurance and 1.7% health insurance on top of gross pay, 16.7% in total. The employee side is 9.5% plus 1.7%, or 11.2%, taken from gross pay. Social insurance is charged on monthly pay between ALL 50,000 and ALL 186,416 (about €543.60 and €2,026.70), so for higher earners the social part stops growing at the cap. Health insurance has no ceiling.

Income tax is withheld on a monthly table derived from Law No. 29/2023 on Income Tax. Monthly pay up to ALL 50,000 is taxed at zero, which means a minimum-wage salary carries no income tax at all. Pay between ALL 60,001 and ALL 200,000 is taxed at 13% of the amount above ALL 30,000, and anything over ALL 200,000 a month is taxed at 23% on the excess.

DPT collects all of it, but the money then flows to different bodies. Pensions, sickness pay and maternity pay come out of the Social Insurance Institute (ISSH); the public health scheme is FSDKSH’s job, the Compulsory Health Care Insurance Fund. The employee sees one payslip; the institutions see one combined filing.

Take Jonida, a data analyst whose Tirana salary is ALL 120,000 gross monthly (about €1,304.63). Her figures show what the EOR actually computes, files and pays each month under the 2026 rules.

On the employer side, 15% social insurance comes to ALL 18,000 and 1.7% health insurance to ALL 2,040, so the statutory cost of employing her is ALL 140,040 a month, roughly €1,522.50. Her salary is below the ALL 186,416 cap, so nothing is trimmed from the social insurance base.

On her side, 9.5% and 1.7% come off gross pay, ALL 13,440 together. Income tax is 13% of the part of her salary above ALL 30,000, which is ALL 11,700. Her net pay lands at ALL 94,860, close to €1,031.31. Note that contributions are not deducted before tax is worked out: Albanian income tax is calculated on gross pay.

All of those numbers go onto that month’s listëpagesa. The ALL 94,860 reaches Jonida’s bank account at the end of the month she worked, and the ALL 45,180 owed to DPT (employer contributions, her contributions and her tax) has its own date: the money for her October salary, for instance, must reach DPT by 20 November. Your company sees a single invoice from the EOR covering her gross salary, the employer contributions and the service fee.

You run the work itself. That covers who the person reports to, which projects they join, how performance is reviewed and what tools they use, because the EOR has no view on whether your new analyst should be on the pricing team or the data team.

Some choices you make still end up written into the contract, so they need to be settled early:

• Salary in lek and any bonus rules, since Albanian law does not add a bonus by default and anything extra has to be agreed.
• Where the job is done: an office, or telework (telepunë), which Article 15 of the Labour Code defines by the use of IT away from the employer’s premises, at home or at a location both sides agree.
• Who supplies the laptop. Articles 125 and 126 put tools and work expenses on the employer unless agreed differently, and the Code voids any clause treating salary as covering expenses.
• How inventions and software written on the job are handled. For software, Article 136 limits the employer’s rights to what the contract’s purpose covers. Spell out ownership of code in writing rather than relying on that.

One more practical point: Albanian contracts are usually drafted in Albanian, and where an English version sits alongside it, both texts should say the same thing about pay, hours and notice. If your hire is a foreign national without the right to work in Albania, plan around a unique permit (leje unike), a combined residence and work permit applied for on e-Albania. The application needs a Labour Code contract in place first; the card itself is issued up to 30 days later. Changing them later is possible, but a pay rise or a switch to remote work becomes a contract amendment rather than a quick message on a chat channel.

Paid annual leave (pushime vjetore të paguara) cannot drop under 22 working days a year, and Albania’s public holidays come on top, 15 dates in the 2026 calendar. The 22-day rule replaced the old four-calendar-week wording in August 2024, and public holidays that fall during someone’s leave extend it.

Leave dates are set by the employer with the employee’s wishes in mind and 30 days’ notice. Days left unused roll forward, but only until 31 March of the following year, and there is no payment in place of leave except when the job ends. In practice that means your managers approve leave as normal, while the EOR keeps the balance and makes sure the payslip reflects it.

When illness keeps someone at home, a medical certificate (raport mjekësor) triggers employer-paid sick pay of no less than 80% of salary, and that employer-funded stretch lasts 14 days. After those two weeks the cost moves to ISSH, whose benefit is set at 70% of the person’s average daily net base for anyone insured up to ten years and 80% beyond that.

Ending the job follows the Labour Code too. After probation, notice runs from two weeks for staff with up to six months of service to three months for those with more than five years. Dismissal needs a written invitation to a meeting, a hearing and a written decision giving reasons. Anyone the employer lets go after three or more years also collects a seniority payment, worked out as no less than 15 days of wages for every complete year. The EOR runs these steps with you, because it is the party that signs the termination letter.

An EOR suits companies that want one to ten people in Albania, are still deciding whether Albania becomes a long-term base, or need someone started before a company could be registered and banked. It suits less well once the Albanian team is large enough to justify its own payroll function or when you plan to sell to Albanian customers and need local invoicing.

The alternative is your own SHPK (shoqëri me përgjegjësi të kufizuar, the Albanian limited liability form) registered with the National Business Centre (QKB) through the e-Albania portal. The minimum capital is a symbolic ALL 100, but the company then carries its own corporate tax returns, financial statements filed with QKB by 31 July, e-invoicing duties and payroll filings. Every employer duty described above lands on your own desk instead of the EOR’s.

Cost is the other half of the decision. Our own charge runs from €599 per employee per month for an Albanian hire. Gross pay and the 16.7% employer contributions appear on the invoice as their own lines, unmarked up, so you can see which euro goes to the employee, which to DPT and which to us. Before you sign with anyone, it helps to run through a checklist for comparing EOR providers in Albania, and to read exactly what our Albania EOR services cover so you can line the two up.