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Kosovo – Employer of Record

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Introduction – Kosovo

Capital – Pristina
Currency – Euro (EUR)
GDP – 9.43 billion USD (2021)
People/Nationality – Kosovar
Language – Albanian and Serbian
Major Religion – Islam
Population – 1,771,342 as of (April 4, 2024)

Kosovo’s economy is classified as a developing economy, and it has experienced significant changes since declaring independence in 2008. Historically, Kosovo’s economy was heavily reliant on agriculture, mining, and other traditional sectors. However, since the late 1990s and early 2000s, Kosovo has been undergoing a process of economic transition and development, with efforts focused on diversifying the economy and attracting foreign investment.

The services sector is the largest contributor to Kosovo’s GDP, with areas such as trade, transport, communications, and tourism playing significant roles. Pristina, the capital city, is the main economic hub. Kosovo has some industrial activity, including mining (particularly lignite coal), construction, manufacturing, and energy production.

The energy sector, including the development of renewable energy sources, has been a focus of investment and development. Agriculture remains an important sector, particularly for rural livelihoods. Kosovo has fertile land suitable for agriculture, and crops such as wheat, corn, potatoes, and fruits are cultivated.

Remittances from Kosovar diaspora communities, particularly in Western Europe and North America, play a significant role in Kosovo’s economy, providing a substantial source of income for many households. Kosovo receives significant international aid and assistance, which supports various development projects, infrastructure improvements, and economic initiatives.

Kosovo has a rich cultural heritage influenced by its diverse population, which includes Albanians, Serbs, Bosniaks, Turks, and other ethnic groups. The country is home to historical sites, religious monuments, and traditional customs that reflect its multicultural identity.

The cost of living in Kosovo is relatively low compared to many European countries. Housing, food, transportation, and entertainment expenses are generally affordable, making it an attractive destination for expatriates and travelers.

Kosovo boasts stunning natural landscapes, including mountains, lakes, and forests. Outdoor enthusiasts can enjoy activities such as hiking, skiing, and camping in locations like the Accursed Mountains (Bjeshkët e Namuna) and the Sharr Mountains.

Kosovo is generally considered safe for residents and visitors, with low rates of violent crime. Overall, living in Kosovo can be a rewarding experience for those who appreciate cultural diversity, outdoor activities, and opportunities for personal and professional growth.

Contract of Employment

Employment contracts must be in writing. The Law on Labor identifies only three types of employment contracts:

– Employment contracts for a fixed period
– Employment contracts for an indefinite period
– Employment contracts for specific tasks and duties.

Probation Period

Three to six months.

Termination

In Kosovo, termination can vary depending on several factors such as the duration of employment, the terms outlined in the employment contract, and applicable labor laws.

Probationary Period: During the probationary period, which typically lasts between three to six months, either the employer or the employee can terminate the employment contract with a shorter notice period than what would be required for permanent employees. This notice period is usually shorter and may be outlined in the employment contract.

Permanent Employment: For permanent employees, notice periods are usually longer and may range from one to three months, depending on various factors such as the length of service, seniority, and provisions specified in the employment contract.

Working Hours

8 hours per day and 40 hours per week.

Overtime

Overtime rates may be specified in labor laws or collective agreements and typically range from 125% to 200% of the regular hourly wage, depending on factors such as the number of overtime hours worked and whether the work is performed on weekends or public holidays.

13^th Month Pay

In Kosovo, the concept of a 13th-month, also known as a year-end bonus or holiday bonus, is not mandated by law. However, some employers may choose to offer additional compensation or bonuses to employees at the end of the year.

Annual Leave

Employees are normally entitled to 20 days of annual holiday leave each year.

Sick leave

Employees in Kosovo are generally entitled to a certain number of days of paid sick leave each year. The specific entitlement may vary depending on factors such as the length of service, job classification, and any collective agreements in place.

Maternity and Paternity Leave

‍Pregnant employees in Kosovo are entitled to 270 days of paid maternity leave, of which at least 45 days need to be taken before the birth. The father of the child is entitled to two days of paid leave following the birth or adoption of the child, as well as two weeks of unpaid leave that can be taken at any time before the child turns three years old.

VAT / GST

There are basically 2 VAT rates in Kosovo: Standard VAT rate is 18% and the Reduced VAT rate is 8%.

Income Tax

The personal income tax rate in Kosovo is a flat rate of 10%.

Employer / Employee Contributions

In Kosovo, both employers and employees are typically required to make contributions to various social security funds and schemes, which provide benefits such as pensions, healthcare, disability insurance, and unemployment benefits. These contributions are mandatory and are usually calculated based on the employee’s earnings.

Pension Contributions: Both employers and employees contribute to the pension fund, which provides retirement benefits to eligible individuals. The contribution rates may vary depending on factors such as the employee’s age and salary.

Healthcare Contributions: Contributions to the healthcare fund help finance the country’s healthcare system, including medical services and facilities. Employers and employees typically share the responsibility for these contributions, with rates determined by law or collective agreements.

Unemployment Insurance Contributions: Employers and employees may also contribute to the unemployment insurance fund, which provides financial support to individuals who lose their jobs involuntarily. These contributions help fund unemployment benefits and job training programs.

Other Social Security Contributions: Depending on the specific social security programs in place, employers and employees may be required to make contributions to other funds or schemes, such as disability insurance or maternity benefits.

Public Holidays

Here is a list of the main public holidays observed in Kosovo:

January 1 – New Year’s Day
January 7 – Orthodox Christmas Day
February 17 – Independence Day
March 8 – International Women’s Day
Eid al-Fitr (End of Ramadan) – Date varies according to the Islamic lunar calendar
Orthodox Good Friday – Date varies according to the Orthodox Christian calendar
Orthodox Easter Monday – Date varies according to the Orthodox Christian calendar
May 1 – Labor Day
Eid al-Adha (Feast of Sacrifice) – Date varies according to the Islamic lunar calendar
December 25 – Christmas Day

The dates for Islamic and Orthodox holidays vary each year based on lunar and Orthodox calendars, respectively.

Severance Pay

Individual dismissals do not entitle employees to severance pay. However, in cases of collective dismissal, employers are required to provide severance payments to employees with indefinite contracts. The amount of severance pay varies based on the employee’s length of service:

– For employees with 2 to 4 years of service, one month’s salary is provided.
– Employees with 5 to 9 years of service receive two months’ salary.
– Those with 10 to 19 years of service are entitled to three months’ salary.
– Employees with 20 to 29 years of service receive six months’ salary.
– Those with 30 or more years of service receive seven months’ salary.

Work and Residence Permits (Expatriates)

In Kosovo, expatriates who wish to work and reside in the country typically need to obtain both a work permit and a residence permit. These permits are issued by the relevant authorities and are subject to specific eligibility criteria and procedures.

Work Permit: A work permit is required for expatriates who intend to work in Kosovo. To obtain a work permit, the employer must first obtain approval from the Ministry of Labor and Social Welfare. The employer must demonstrate that the position cannot be filled by a local resident and that the employment of an expatriate will not negatively impact the local labor market. Once the employer’s application is approved, the expatriate can apply for a work permit at the Directorate for Citizenship, Asylum, and Migration.

Residence Permit: Expatriates who plan to reside in Kosovo for an extended period, such as for the duration of their employment contract, may need to obtain a residence permit. The specific requirements and procedures for obtaining a residence permit may vary depending on factors such as the expatriate’s nationality, the purpose of stay, and the duration of intended residence. Generally, expatriates need to provide documentation such as a valid passport, proof of employment or business activities, proof of accommodation, and proof of sufficient financial means to support themselves during their stay.

Renewal and Extension: Work and residence permits in Kosovo are typically issued for a specific duration, often corresponding to the length of the employment contract or the intended duration of stay. Expatriates who wish to extend their stay or continue working in Kosovo beyond the validity period of their permits may need to apply for permit renewal or extension. The renewal process usually involves submitting updated documentation and paying any applicable fees.

Family Members: Expatriates who hold valid work and residence permits in Kosovo may be eligible to bring their family members, such as spouses and dependent children, to reside with them in Kosovo. Family members typically need to apply for dependent residence permits, and the sponsoring expatriate may need to provide proof of sufficient financial support and accommodation for their family members.