Legal and tax toolbox

Employment agreements can be entered into for a fixed or indefinite term. Fixed term agreement should be justified by the nature of work as indefinite term agreements are agreements that should be used by the employer as a rule.

The employment contract must be in writing and should include, among other elements, the identity of the parties, the place of work, the general description of work, employment start date, terms of employment, the paid leaves, the salary composition elements and payment date, the weekly working time, the probationary period, termination notice terms, disciplinary measures, etc.

The daily duration of work is no longer than 8 hours. For employees under 18 years of age, the daily duration of work cannot be longer than 6 hours. Further, the normal weekly working time is 40 hours. An employee may perform overtime work but it must not exceed 200 hours per year. An employee cannot have more working hours in cases where he has already worked 48 hours in a week.

Type of employment contracts

The Albania Labor Code recognizes different types of employment contracts:

Full-time employment agreement: under this agreement the employee agrees to work for the employer for a maximum of 40 weekly hours of works, with a maximum of 8 hours per day. This is the most common employment agreement.

Part-time employment agreement: under this agreement the employee agrees to work for the employer for a certain number of hours or days, but in any case, less than the normal working time of full time employees with the employee enjoying the same rights and obligations as the full-time employee.

The temporary employment Agency: this is a novelty of the Labor Code amendments entering into force in 2016. According to this type of employment, the Agency hires an employee, who works, for a temporary period of up to two years for a hosting company. The written agreement between the Agency and the hosting company should contain terms on the duration of employment, workplace, job description and salary.

Work from home agreement: the employee agrees to work from home or from another place as agreed between employer and employee. The conditions must be not less favorable than the ones provided to other employees offering same or comparable services.

Commercial agent employment agreements: the commercial agent (employee) has the obligation to negotiate or conclude an agreement outside of the company premises on behalf and according to the instructions of the employer.

Professional training employment agreements: according to such agreements a master helps an apprentice to qualify according to professional rules and the employee compensates him by giving him his services.

Telework: Is a new form of remote employment that is performed through information technology from home or any other place as agreed between employer and employee. The work conditions must be not less favorable those of employees offering the same services.

Termination

Indefinite term contracts may be usually terminated by the employer in case of restructuring of the company’s organization or due to the employee’s skills and behavior, subject to strict termination procedure that consists in the following steps: (a) the employer invites the employee in writing for a meeting at least 72 hours before the meeting date to discuss termination of the employment relationship b) the employer and employee meet to discuss the termination and position of employee on termination – a written protocol of the meeting is kept during the meeting (c) if the employee does not agree with the termination, a written notice of termination is submitted to the employee within at least 48 hours to one week after the meeting has taken place which should set out the reasons of termination.

Depending on the length of employment, the following notice terms must be observed: (i) at least two weeks in advance during the first six months of employment, (ii) 1 month in advance if the employment has lasted between 6 months and 2 years, (iii) 2 months if the employment has lasted from 2 to 5 years, or (iv) 3 months in advance if the employment has lasted for more than 5 years.

The notice periods shall not apply in all serious circumstances in breach of the good faith principle, under which the employer cannot be expected to continue the employment relations. The following are set out in the Labor Code and considered to be reasons ‘with cause’ for the immediate termination (without a notice period), thus enabling the employer to avoid following the termination procedure noted above, and potentially any related potential damages for non-adherence to this procedure:

• When the employee carries out a serious breach of his/her contractual obligations;
• When the employee carries out a minor breach of his/her contractual obligations repeatedly, despite the employer have provided written warnings to the employee.

In case the termination procedure is not followed, the employee can claim damages with Albanian courts.

Should the employer fail to comply with the procedure, the employee must be indemnified with two monthly salaries. In addition, in case of termination without reasonable cause, the employee can be indemnified with up to one year of salary, the salary that the employee should have received during the notice period, plus the accrued annual leave, and the relevant seniority bonus (if applicable).

The Albanian Labor Code sets out a list of reasons that shall be determined to be ‘without cause’ thus resulting in potential increase in compensation for the employee (e.g. potential 12 months’ salary). The employer will be deemed to have terminated the contract without reasonable cause if made:

• As a reaction against employee’s complaints: Employer uses termination as a means of revenge against employee who claims a breach of his rights under contract and law;
• As a reaction against employee whilst fulfilling a legal obligation: This is the case when the employer terminates the contract because the employee has had to fulfil a mandatory legal obligation during the employment (e.g. appeared in court as witness thus unable to attend work);
• For discriminatory reasons: Employer terminates the contract due to employee’s personal features (inter alia race, colour, sex, age, civil status, family obligations, pregnancy, religious or political beliefs, nationality, social status);
• As a reaction against employee exercising constitutional rights: Employer terminate the contract due to reasons relating to the employee exercising constitution rights; and
• As a reaction against employee who is involved in labour organizations: Employer terminates the contract because employee’s trade unions activity.
• Without communicating in writing the reasons for termination to the employee: Employer does not set out in the notification for termination any of the statutory reasons for the purpose of termination such as: (i) capability of employee (ii) behavior of employee or (iii) operational needs of the employer.

In case of a fixed term employment, the agreement terminates at the end of its term, without a prior termination procedure unless immediate termination with cause is warranted. If at the end of term the employment relation continues in silence, the agreement is considered extended for an indefinite term.

Restrictive covenants: Non-Compete

The employee may be bound by a post-termination non-compete provision in the employment agreement that can be justified only if the employee has been in contact with business secrets of the employer the dissemination or use of which may seriously damage the employer.

The employment agreement must clearly state the non-compete provision, the place, time and type of activity, in order not to harm the economic future of the employee. The ban cannot exceed one year during which period the employee must be paid with at least 75% of the salary that he/she would have received if still employed by the same employer.