The global employer of record (EOR) market is expected to reach $5.83 billion in 2024 and is expected to grow to $12.01 billion by 2030. In fact, 74% of companies cite local labor law compliance as a significant challenge in international expansion.
In particular, for Italian companies that want to hire in Albania, the employer of record – EOR – meaning takes on a fundamental importance. This solution allows to accelerate the hiring process up to 90% compared to opening a legal entity, also reducing the administrative costs of human resources of 30%.
In this guide, we will explore all the essential aspects of hiring Albanian employees: from the regulatory framework to tax aspects, from practical procedures to competitive advantages. Our goal is to provide Italian companies with the tools they need to successfully expand into the Albanian market, avoiding risks of non-compliance that could lead to significant penalties for each misclassified employee.
Albanian job market: opportunities for Italian companies
Albania represents one of the most promising economies in the Balkans, offering significant opportunities for Italian companies seeking international expansion. Let's look in detail at the main aspects that make this market particularly attractive.
Albania Economic Overview 2024
The Albanian economy shows remarkable solidity in the Balkan context, with a growth of 3.3% according to the International Monetary Fund [1], while the United Nations forecasts an even more robust expansion of 3.8% for 2024 [2]The state budget exceeded 7 billion euros for the first time [3], demonstrating the country's growing economic stability.
Inflation remained lower than in neighbouring countries, reaching 4.1% in 2023. [3] and forecast to drop to 3.5% in 2024 [2]. A particularly positive signal was the recent exit of Albania from the grey list of MoneyVal, the European Commission's committee for the evaluation of anti-money laundering measures. [3].
Growing sectors and available skills
The tourism It is confirmed as the driving sector of the Albanian economy, with over 10 million visitors registered last year [1]Projections indicate that this sector could contribute up to 10% of GDP by 2022, for approximately 1.8 billion euros [4].
Other sectors experiencing strong growth include:
- Energy: mostly renewable (hydroelectric, wind and solar) [4] [5]
- Manufacturing and textile: footwear exports increased by 20% in 2016, to a value of approximately 357 million euros [6]
- Agriculture and agri-food: represents approximately 20% of the GDP and employs 46% of the national workforce [6]
In terms of available skills, the Albanian labor market offers a young, highly qualified and multilingual workforce. In fact, many workers speak fluent Italian, English and Greek. [7]The average level of education is in line with the European average, with a percentage of graduates approaching 30% [8] [9].
Labor Costs and Competitive Advantages
Albania's main competitive advantage is undoubtedly the extremely low cost of labor.
The country also benefits from:
These factors make Albania particularly attractive for companies looking to optimize operating costs, especially those that are labor-intensive. Adopting an employer of record service can further simplify entry into this lucrative market.
Geographical and cultural proximity to Italy
Italy and Albania enjoy a privileged relationship, as demonstrated by the fact that Italy is the country's main trading partner, receiving 51% of Albanian exports. [6]. In addition, Italy is also the main supplier of imported goods to Albania, representing 30.8% of total imports [6].
The proximity is not only geographical – with just a few hours between the two countries [7] – but also cultural and linguistic. The widespread knowledge of the Italian language among the Albanian population [4] It greatly facilitates business communications and operations.
The recent social security agreement between Italy and Albania [12] [2] further strengthens this link by ensuring greater protections for workers in both countries, including the totalization of social security contributions.
This combination of favorable economic factors, competitive costs and cultural affinity makes Albania an ideal destination for Italian companies wishing to expand across the border while maintaining efficient control over operations.
Regulatory framework for hiring Albanian employees
Understanding the Albanian legal framework is essential for Italian companies looking to hire staff in Albania. Using an employer of record service can greatly simplify navigation of this legal system, ensuring full compliance with local regulations.
Albanian Labour Laws: Key Points
Labour law in Albania is mainly regulated by Law No. 7961 of 12 July 1995, known as the Labour Code. [1]. This body of legislation has been partially harmonised with the main Community directives and is integrated by other specific legislation such as Law no. 7995 of 20 September 1995 “For the incentive to work” and Law no. 9634 of 30 October 2006 “For the State Labour Inspectorate” [1].
An important recent development is the bilateral agreement on social security between Italy and Albania, signed in Rome and initialled by the Minister of Foreign Affairs Antonio Tajani and the Albanian Minister Igli Hasani [3]This agreement regulates pension, unemployment, sickness and maternity benefits for Italian and Albanian workers, ensuring equal treatment in both countries. [2].
Employment contracts and contractual types
According to the Albanian Labour Code, employment contracts must be formalised in writing. However, if for justified reasons this does not happen immediately, the employer is obliged to provide a written contract within 7 days from the date of commencement of the relationship [13].
The types of contracts covered include:
- Fixed-term contracts (only for specific temporary needs)
- Permanent contracts (standard form)
- Part-time contracts
- Home working and teleworking contracts
- Contracts for commercial agents
- Professional training contracts
Every contract must contain key elements such as identification of the parties, place of work, description of the activity, start date, duration, holidays, notice period, details of remuneration, weekly hours, probationary period and disciplinary procedures [13].
Working hours, holidays and permits
The standard working week in Albania is 40 hours spread over five days, with a maximum permitted of 50 hours. [14]Overtime work is compensated with an increase of 25% of the regular pay during normal working days, while it increases to 50% during holidays or weekends. [4].
Employees are entitled to a minimum of 22 days of paid leave per year, which must be taken in increments of at least five consecutive days. [14]. In addition, workers are entitled to 14 days of paid sick leave, during which the employer must cover at least 80% of the salary [14].
As for maternity, female workers in Albania are entitled to a full year of leave, with at least 35 days before giving birth and 42 days after. During this period, they receive an allowance equal to 80% of their regular salary for the first 180 days [14].
Layoffs and worker protections
The Albanian Labor Code provides a specific procedure for dismissal. After the probationary period (usually three months), the employer who intends to dismiss an employee must follow these steps [1]:
- Notify the worker in writing at least 72 hours before a meeting
- During the meeting, explain the reasons for the decision and give the worker the opportunity to express himself
- Communicate the dismissal in writing within 48 hours up to one week after the meeting
The notice period varies according to length of service: one month for the first year, two months for 2-5 years, three months for over 5 years. [1]. After three years of service, workers are entitled to a severance pay equal to 15 days' salary [14].
Albanian law also protects workers against dismissal without "justified reasons", providing in such cases the right to appeal to the court within 180 days and the possibility of obtaining compensation of up to one year's salary. [1].
Employer of record meaning and usage for hiring in Albania
For Italian companies looking to expand into Albania without facing the complexity of setting up a local legal entity, the Employer of Record (EOR) represents a key strategic solution.
What is an Employer of Record and How Does It Work?
An Employer of Record is an organization that acts as the legal employer for another company's employees. In practice, the EOR legally hires workers on behalf of the client company, taking care of all administrative, legal and tax aspects of the employment relationship. The client company, however, retains day-to-day operational control over the employee.
The operation is simple: the Italian company selects the Albanian candidate, the EOR formally hires him and manages payroll, contributions, taxes and regulatory compliance. The employee works following the directives of the Italian company, while the EOR takes care of the administrative aspects.
Benefits of using an EOR for Italian companies
Adopting an EOR to hire in Albania offers numerous benefits:
- Speed to market: possibility to hire employees in Albania in a few days instead of months, eliminating the need to set up a local legal entity
- Reducing legal risks: EOR ensures compliance with Albanian labor laws, reducing exposure to sanctions and litigation
- Administrative simplification: complete management of payroll, social security contributions, taxes and benefits according to local regulations
- Eliminating the language barrier: support in communications with local authorities and employees
Costs and practical considerations
The costs of an EOR service in Albania generally include a monthly fee, usually structured as a percentage of the employee's salary (typically between 10% and 20%) or as a fixed amount ranging from €300 to €1000 per employee per month. [5]. Additionally, there may be a one-time fee for initial setup.
Before choosing an EOR provider, it is important to consider their specific experience in the Albanian market, understanding of local laws and the quality of customer support. Some providers also offer additional services such as recruitment and selection or work visa management.
Major EOR Service Providers for Albanian Market
Among the EOR service providers operating in Albania we find:
- HR Alba: local provider with knowledge of the Albanian market that guarantees continuous assistance to partner companies, employees and customersRiverMate: offers EOR solutions with an HR management platformPapaya Global: specializing in payroll management in over 160 countries, including Albania
- Beep: provides global EOR services.
In conclusion, using an EOR represents the most practical solution for Italian companies to quickly hire in Albania, ensuring regulatory compliance and optimizing operating costs.
Tax and social security aspects of hiring in Albania
Understanding the Albanian tax regime is crucial to optimizing operating costs when hiring in this country. Using an employer of record can greatly simplify the management of tax and social security obligations.
Albanian Tax System: Overview
The Albanian tax system is structured to attract foreign investment with competitive tax rates.
As far as hiring is concerned, the strong point is the low tax wedge.
Social security and insurance contributions
Social security and health contributions in Albania are divided between the employer (16.7%) and the employee (11.2%) [11]. Although the Albanian social security system is less expensive than the Italian one, it is important to note that, until recently, there was no bilateral agreement on social security between the two countries. [21].
However, an important social security agreement has recently been ratified, regulating pension, disability, sickness and maternity benefits. [22]This agreement introduces the principle of totalisation of contribution periods, allowing workers to add together the contributions paid in the two countries for pension purposes. [23].
Tax agreements between Italy and Albania
Since 21 December 1999, a convention has been in force between Italy and Albania to avoid double taxation [24] [25]. Thanks to this agreement, it is possible to avoid that the same income is taxed in both countries.
The main mechanism is that:
- If an Italian resident has taxable income in Albania, Italy may include such income in the tax base.
- However, Italy must deduct the tax paid in Albania, with a proportional limit [26]
Tax Optimization for Italian Companies
Italian companies can benefit from several strategies to optimize their tax burden when operating in Albania. In particular, using an employer of record allows them to fully exploit the advantages offered by the Albanian tax system without the need to set up a local legal entity.
Therefore, the combination of competitive tax rates and bilateral agreements makes Albania a tax-advantaged destination for Italian companies interested in hiring staff in this country.
Practical procedures for hiring Albanian employees
Hiring staff in Albania requires a systematic approach and a thorough understanding of local procedures. Using an employer of record can greatly simplify this process, reducing time and bureaucratic complexity.
Personnel search and selection in Albania
For the search and selection of personnel in Albania, platforms such as Duapune.com, with over 140,000 registered users and 700 active listings, are ideal for finding talent in sectors such as IT, sales and services. Nojfotime.com offers local ads, while LinkedIn is widely used for professional and international profiles.
For specific positions in the public sector, the Italian Agency for Development Cooperation regularly publishes selection notices for personnel in Albania [30].
Necessary documentation and work visas
For Italian citizens, Albanian law provides a simplified procedure: instead of a full work permit, it is sufficient to obtain a certificate from the Labour Office. [31]. Required documents include:
- Written request with personal data
- Bilingual employment contract (Italian and Albanian)
- Certified copy of passport
- Authorization from the employer
- 5 photos
- Copy of diploma or school certificate
- Employee declaration at the Labour Office
- Original company excerpt from the National Business Center
Opening bank accounts and cross-border payments
Albania will join the SEPA (Single Euro Payments Area) system by the end of 2025, significantly simplifying financial transactions [32]. This will bring numerous benefits, including:
- Reduction of costs and times of transactions in euros [33]
- Facilitation of trade with EU countries [33]
- Greater attractiveness for foreign investors [33]
Daily management of remote employees
HR Alba offers complete employer of record solutions in Albania, hiring professional staff based on the partner company's guidelines [34]. Services include:
- Contract preparation and management
- Provision of office spaces in Tirana, Durres or other cities
- Support for smart working in Albania
- Monthly management of all administrative aspects
- Taking on legal responsibility, freeing the Italian company from bureaucratic burdens
Through these systematic procedures and with the support of specialized services, Italian companies can effectively establish and manage a business presence in Albania.
Conclusion
This comprehensive guide clearly demonstrates why Albania represents a strategic opportunity for Italian companies. The Albanian economy, with a forecasted growth of 3.8% in 2024, offers significant advantages through competitive costs and a skilled workforce.
Using employer of record services greatly simplifies the expansion process, eliminating red tape and ensuring regulatory compliance. In fact, this solution allows savings of up to 30% on administrative costs, while accelerating the 90% hiring timeline.
Recent bilateral agreements between Italy and Albania, especially in the field of social security, further strengthen the opportunities for collaboration between the two countries. Certainly, the geographical and cultural proximity, combined with an advantageous tax framework, makes the Albanian market particularly attractive for Italian companies.
Companies that choose to expand in Albania can count on a structured regulatory system, clear procedures and professional support through reliable EOR providers. This combination of factors creates the ideal conditions for successful business expansion in the Albanian market.
FAQs
Q1. What are the advantages of hiring Albanian employees for Italian companies? The main advantages include competitive labor costs, a young and qualified workforce, geographic and cultural proximity to Italy, and a favorable tax framework. Additionally, using an employer of record can greatly simplify the hiring process.
Q2. How are social security contributions handled for Albanian employees? In Albania, social security and health contributions are split between the employer (16.7%) and the employee (11.2%). A social security agreement was recently ratified between Italy and Albania that regulates pension benefits and introduces the principle of totalization of contribution periods, allowing workers to add together the contributions paid in the two countries for pension purposes.
Q3. What are the main requirements for hiring an Albanian employee? To hire an Albanian employee, you need to draw up a written employment contract, register the employee with the relevant authorities, and properly manage social security contributions and taxes. Using an employer of record can greatly simplify these procedures, ensuring compliance with local regulations.
Q4. What is meant by “employer of record” and what advantages does it offer? An employer of record (EOR) is an organization that legally hires employees on behalf of another company, managing all administrative, legal and fiscal aspects of the employment relationship. The main advantages include rapid entry into the Albanian market, reduction of legal risks and administrative simplification.
