Employment Guide 2011

1. General overview

   The right to employment is provided for in Article 49(1) of the Constitution which defines that "Everyone has the right to earn a means of living by lawful work that he/she has chosen or accepted himself. Each person is free to choose his profession and place of work as well as the manner of achieving professional or other qualifications or training". Employment in Albania is largely governed and regulated by the 1995 Labour Code, as amended by Law No. 8085 of 13.03.1996 and Law No. 9125 dated 29.07.2003, and which is based on the Albanian Constitution and is in accordance with all international conventions ratified by Albania.

   The Labour Code provides for the contractual regulation of the employment relationships between the employer and the employee by means of an individual or a collective labour agreement.

   The Labour Code sets out the main legislation regulating and applicable to employment matters, as well as the hierarchy of such legislation which is as follows:

   the Constitution of the Republic of Albania; international conventions ratified by the Republic of Albania; the Labour Code and its sub-legal acts; the collective contract of employment; the individual contract of employment; internal regulations of the employer; local and occupational customs. We are aware of steps to amend the Labour Code, such amendment being focused upon trade unions, termination provisions and health and safety at work.

2. Hiring

   2.1 General

   Based on Article 21 of Law No. 7995, dated 20.9.1995 "On promotion of employment", as amended, any employer is obliged to report to the respectiveLabourOfficeanynewemploymentpositionwithin7(seven) days from the date of the creation of this position. The employer may employ people directly or use the services of state recruitment offices or private employment agencies to recruit employees. An employer may only hire an employee(s) who meets the minimum employment age as required by the Albanian Legislation, which according to Article 98 of the Albanian Labour Code is 16 (sixteen) years old. The employer should notify the relevant tax authorities about the newly hired employee at least 48 (forty-eight) hours before commencement of the employment relationship. Furthermore, the employer is obliged to declare the newly hired employee at the relevant Labour Office the moment such employment relationship begins.

   2.2 Disabled persons

   According to Law No. 7995, dated 20.9.1995 "On promotion of employment", as amended, each employer is obliged to hire one disabled person for every 25 employees. An employer may hire an

   employee with a serious handicap instead of five employees with a mild handicap. In the event that the work position offered to a disabled employee requires special working conditions, the employer may request a subsidy from the respective Labour Office.

   An employer who does not employ the recommended number of disabled people is obliged to pay into a separate account of the Fund of the National Employment Service ('Fund') an amount equal to the monthly minimum salary that he would have paid to the disabled employee. The revenue of this Fund is used to create jobs for disabled people. According to the abovementioned law, the State Labour Inspectorate controls the fulfilment of the obligation for hiring the required number of disabled persons. We note that this obligation is in practice not fulfilled.

   2.3 Foreign employees

   Hiring of foreigner employees is governed by Law No. 9959, dated 17.07.2009 "On foreigners", as amended, and by several decisions of Council of Ministers in implementation of this law. According to Albanian legislation there are no restrictions on hiring foreign employees. However, foreign citizens who intend to work and live in Albania need to be provided with work and residence permits. Should the foreigner intend to work, he must acquire a work permit prior to commencement of work.

   The work permit is issued by:

   Relevant Labour Office corresponding to the business location of the employer and where the employee will perform his work, if the foreigner is residing in the Republic of Albania; General Directorate of the Employment National Service, if the employer which intends to employ the employee, carries out its business in more than one region, and if the foreigner is residing in the Republic of Albania; The corresponding Albanian Diplomatic mission of the Republic of Albania, in the Country of Origin, if the foreigner is residing in the Country of Origin. A residence permit is required when a foreigner is going to stay in Albania for more than 90 (ninety) days at any one time and/or will stay in Albania for more than 180 (a hundred and eighty) days (either at one time or through various visits) within one year. Such a residence permit is issued by the Regional Directorate of Border and Migration, if the applicant fulfils the conditions provided for in the legislation. We note that the procedure is administrative and, provided that the documentary requirements are fulfilled, there is in general no problem in acquiring the necessary residence and work permit.

   2.4 Secondments

   According to Article 137 of the Labour Code, the employer may not second an employee to another employer without the consent of the employee. In this event, the first contract between the employer and the employee remains in force. When an employer seconds his employee to another employer, then the first employer is obliged to grant the employee at least the same working conditions as those which the second employer has granted to the employee(s) of his enterprise carrying out the same work. The employer to whom the employee is seconded has the same obligations to the employee with regard to health protection, insurance and hygiene as to his other employees. In the event that the employer fails to fulfil his obligations to the seconded employee, then the second employer, through solidarity with the first employer, will be held liable for the fulfilment of the obligations to the employee.

3. Types of engagement

   3.1 Employment

   Employment contracts may be agreed orally or in writing. In the even that the employment contract is agreed orally, the employer is obliged to produce a written contract within 30 (thirty) days from the date of the oral agreement, bearing the signature of the employer and that of the employee and containing all mandatory legal elements 1.

   According to Article 23(3) of the Labour Code, the following mandatory elements must be included in all written employment contracts:

   (a) the identity of the parties;

   (b) the workplace;

   (c) a general job description;

   (d) the starting date of the job;

   (e) the duration of a fixed-term contract;

   (f ) the duration of paid vacations;

   (g) the notice period for termination of the contract;

   (h) the main aspects of the salary and the day of receipt of such salary;

   (i) the normal working hours in a week;

   (j) the related effective collective contract (if any).

   An employment contract may last for an indefinite or a fixed period of time, although the employer must provide justification if the term is fixed (i.e. the job is only of a temporary nature). Unless otherwise agreed in writing, the first 3 (three) months of the employment will be deemed to represent a probationary period, regardless of whether the contract is for a fixed or indefinite term. During the probationary period either party may terminate relations with five days' notice.

   3.2 Other types of engagement

   The Labour Code provides for the following types of engagement; the parties entering into such engagements are also subject to the conditions of the Albanian Labour Code:

   Part-time employment agreement (the employee agrees to work on an hourly basis, either half or complete working day for the normal duration of a week or month, which is shorter than that of full-time employees working under the same conditions); Home-based work agreement (the employee is obliged to carry out his job at his home or any other location chosen by him/ her on the basis of the alternatives offered by the employer); Commercial agent agreement; and Agreement for acquiring a specific profession (concluded between the teaching master and the person who is studying to acquire a specific profession). Furthermore, a service agreement is another type of engagement frequently used in practice in Albania. However, this type of agreement can only be entered into with physical person(s) registered for commercial purposes. The service agreement is a sui generis agreement, and such agreement is regulated by the Albanian Civil Code and not by the Labour Code.

   3.3 Engagement of managing directors

   Managing directors may be employed, or in the event that they are physical person(s) registered for commercial purposes they may enter into a service agreement. However, in the event that the managing director is a registered person for commercial purposes, the applicable tax regime shall be different and fall outside the scope of the Labour Law. In all other cases the compensation of the managing director shall be considered as a salary, and the rules defined in section 5 below shall apply upon this compensation.

4. Salary and other payments and benefits

   4.1 Salary

   According to Decision of Council of Ministers No. 566, dated 14.7.2010 "On defining the national minimum salary", the national minimum monthly salary payable to all employees, by any physical or legal person, local...