Freelancer or employee in Albania? How the line is drawn

Albanian law decides the question on facts, not on wording. Where the nature of a working relationship is unclear, Article 12 of the Kodi i Punës (Labour Code) gives the competent court the job of establishing what it really is, by examining how the work is organised and how it is paid. Calling the arrangement a consultancy, a service contract or a project fee changes nothing if the day-to-day reality looks like employment.

A second rule closes the obvious escape route. Under Article 11(4), employee rights cannot be waived. A clause in which the worker confirms that they are independent and gives up any claim to leave, notice or seniority pay has no effect if a court later finds an employment relationship. The worker can still claim everything the Code would have given them.

This matters for foreign firms in particular. Many start in Albania with one or two developers or analysts on monthly invoices, because it feels quick. Two years later those people work fixed hours, attend every stand-up, use company laptops and have no other clients. On paper nothing has changed. In substance, the firm has staff.

The Code also gives the court a wide view of the evidence. Emails setting working hours, calendar invitations, holiday requests sent to a manager, an internal job title on a messaging profile: all of it shows how the relationship worked in practice. Firms sometimes assume that only the signed agreement counts. In an Albanian dispute it is often the least persuasive document on the table.

No single factor settles it, but the pattern below points strongly towards employment. The more of these that apply, the weaker the freelance label becomes.

• You set the working hours and expect the person to be available during them.
• You decide the method as well as the result, and you review the output as a line manager would.
• The person works only for you, or almost only for you, month after month.
• Pay is a fixed monthly amount rather than a price per deliverable or per project.
• You supply the laptop, the software subscriptions, the email address and the tools.
• The person appears in your organisation chart, uses an internal job title and joins team rituals.
• Substitution is off the table: the work must be done by this individual and nobody else.
• Holiday is requested and approved through you, rather than simply planned around deadlines.

Set against those, genuine independence usually shows up as several clients, the freedom to refuse work, prices quoted per job, the person’s own equipment and business registration, and real commercial risk if a project overruns. A contractor who invoices three firms and can say no to your next brief is in a very different position from one who receives the same sum every month for the same eight hours a day.

Alongside the court-led test, Law No. 29/2023 on Income Tax, in force since 1 January 2024, contains a purely arithmetical one. Article 12(ç) treats self-employed income as employment income when 80% or more of it comes from a single client, or 90% or more comes from fewer than three clients.

When that happens, the freelancer no longer pays business tax on the income. It is taxed instead under the progressive employment scale of 13% and 23%. A DPT instruction issued in March 2026 expanded the procedure for applying the rule, so this is not a dormant provision: the tax administration has been building the machinery to use it.

The test bites hardest on exactly the profile that foreign firms tend to create: one Albanian developer, one foreign client, monthly invoices. If your company is the source of all or nearly all of that person’s income, the arrangement already sits inside the 80% rule. The tax consequence lands first on the worker, but it also signals to anyone looking at the file that the relationship resembles employment.

For comparison, a genuinely self-employed person in 2026 pays social insurance of 23% on a base of ALL 50,000 a month and health insurance of 3.4% on ALL 100,000. An employee’s contributions are split, 16.7% falling on the employer and 11.2% on the worker, both on actual gross pay. The two systems produce very different totals, which is one reason the authorities care which one applies.

Note what the tax test does not do. It does not by itself make your company an employer in the eyes of the Labour Code; that remains a question for the courts on the facts. But the two tests point in the same direction, and a contractor who fails the tax test will often show the employment signals listed above as well. Treat a failed income test as a prompt to review the whole arrangement.

Two bodies look at this from different angles. ISHPSHSH, Albania’s State Labour and Social Services Inspectorate, carries out workplace visits and enforces the Labour Code; the General Directorate of Taxes (DPT) checks for undeclared work and under-declared wages. Either can open the question of whether a supposed contractor is really an employee.

Labour Code fines are tied to the minimum wage. Under Article 202, breaches of the rules on written contracts, working time, leave and pay can cost up to 30 times the monthly minimum wage, which is ALL 1,500,000 in 2026. Other listed breaches carry fines of up to 50 times, or ALL 2,500,000. Where breaches are repeated or several workers are affected, the total can reach five times the maximum fine.

Those inspection fines are only one layer. If a relationship is recast as employment, the employer side of contributions and the withholding obligations come into play, along with whatever back pay the worker can claim for leave, holiday premiums and notice. A worker whose relationship ends can also bring an unfair-dismissal claim; for how that plays out, see our guide to notice and severance in Albania.

The Labour Inspectorate publishes its decisions and guidance at inspektoriatipunes.gov.al, which is worth checking if you receive an inspection notice.

Once a relationship is treated as employment, the worker gains every protection the Code attaches to it, usually backdated to the start. That bundle is larger than many firms expect.

• Paid annual leave of at least 22 working days for each year worked, plus public holidays.
• Premiums for overtime, evening, night and rest-day work, where the hours were worked.
• Sick pay of at least 80% for the first 14 days of certified illness.
• A notice period on termination, from two weeks to three months depending on length of service.
• If the relationship lasted three years and you ended it, a seniority payment: 15 days’ wages or more for each whole year.
• Compensation of up to one year’s pay if the termination is found to lack a reasonable cause, on top of notice pay.

The claim window is not long but it is real: a dismissed worker has 180 days to go to court. Since it falls to the employer to prove why the person was dismissed, a firm that never ran a dismissal procedure, since it did not believe it had an employee, starts any such case at a disadvantage.

Working from home does not make someone a freelancer. Remote employees fall under telepunë (telework), which Article 15 of the Labour Code treats as a way of doing a job, not a different legal status: the person uses IT to work from their home or a spot agreed with the employer, and the contract fixes the conditions. A teleworker is still an employee. Some working-time rules are relaxed for them, but the employer must provide and maintain the IT equipment unless the person uses their own, and their conditions may not be worse than those of office staff.

Short hours do not make someone a freelancer either. Part-time employees have the same rights as full-time colleagues, scaled to their hours (Article 14). A developer who works twenty hours a week for you under your direction is a part-time employee, not a contractor with a light workload.

Project-based work is where genuine freelancing most often survives. A designer engaged to deliver a defined brand system, priced as a whole, with their own tools and other clients, looks independent. The risk appears when the project never ends: the brief rolls into another, the invoice becomes monthly and the person joins the team chat. If a role is really ongoing, a fixed-term employment contract is not automatically the answer either, because Albanian law expects a fixed term to be justified by the temporary nature of the task. Our guide to Labour Code contracts explains the rules.

The answer depends on what the work really is. If the person genuinely runs an independent business, the fix may be on your side: stop treating them like staff. Pay per deliverable, let them set their own hours, stop requiring attendance at internal meetings, and accept that they may work for others. New paperwork without a change in practice will not hold up.

If the role is in fact a job, the cleaner route is to employ the person. You can found your own Albanian company, an SHPK, register with the National Business Centre (QKB) and run payroll yourself; the article on choosing between an EOR and an SHPK sets out what that involves.

Or you can hire through Employer of Record Albania. The person you picked goes onto our payroll with us as their legal employer. We issue an Albanian employment contract under the Labour Code, register them with DPT before their first day and run the monthly listëpagesa. You keep directing the work. If the arrangement itself is new to you, start with how an EOR works in Albania, and use our checklist for choosing a provider before you sign with anyone.

Whichever route you take, the move itself does not erase the past. If a long freelance period looks like employment, take Albanian legal advice on the earlier months before you change anything.