Romania stands as a vibrant, rapidly advancing business destination. The country has experienced remarkable growth, boasting one of the most impressive economic expansion rates in Europe, even after enduring decades of political and economic turbulence.
While Romania presents numerous opportunities for foreign businesses, it’s essential to navigate a complex landscape of business and labor laws, often influenced by EU regulations. Challenges such as language barriers and legal disputes can hinder progress, potentially incurring additional costs and revenue loss.
In light of these complexities, harnessing the power of a centralized, automated, global HR platform can expedite and ensure the lawful management of payroll, benefits, and other employment-related responsibilities for your remote workforce. Partnering with our extensive EOR network facilitates the acceleration of your company’s global expansion process. What’s more, you can expand your operations into Romania without the need to establish a new corporate entity, thanks to Marzuna, your trusted Romania EOR (Employer of Record) advisor.
Employment law in Romania originates from the Romanian Constitution, primary and secondary Romanian legislation, and relevant European and international laws (e.g., EU, Council of Europe, International Labor Organization).
The principal domestic laws governing employment relationships in Romania are the Romanian Law on Social Dialogue (Law No. 62/2011, henceforth referred to as the “Social Dialogue Law”) and the Romanian Labor Code (Law No. 53/2003, hereinafter referred to as the “Labor Code”). The Labor Code applies to employment relations that are governed by certain laws.
| Entitlement | Explanation |
|---|---|
| Standard Working Hours | While the maximum average working time is 40 hours per week and eight hours per day, the maximum weekly allowable working time is 48 hours, including overtime hours. By way of exception, if the average weekly working hours calculated over four months do not exceed 48 hours, the maximum allowable working time, including overtime, may be increased beyond 48 hours each week. |
| Overtime Eligibility | Employees who put in additional time at work are entitled to paid time off within 60 days to make up for it, or, if that’s not feasible, they can be paid for it at 175% of their regular hourly rate.
If an employee works on a weekend, a holiday, or during compensatory time off, they get paid an additional 200% of their usual hourly rate. One hour of paid time off or 125% of their regular hourly wage is given to workers who put in at least three hours each day between 10 p.m. and 6 a.m. or who complete 30% of their monthly hours. |
| Paid Public Holidays | Employees are legally entitled to have these days as holidays in Romania, including the following.
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| Holiday Pay | In Romania, workers are guaranteed at least 20 days of paid vacation per year. Annual vacation may be taken in instalments if the employee so desires, but it must be taken in a single, continuous period that lasts at least 15 working days. |
| Sick Leave | Up to five days of paid sick time, at a rate of 75% of salary, are allowed for employees. For serious illnesses, sick leave may continue up to 18 months or 183 days. The state pays for extended sick leave of more than five days. |
| Maternity and Paternity Leave | Pregnant workers are entitled to at least 126 days of paid maternity leave, calculated at 85% of their annualised average salary. The National Social Security Fund is responsible for funding the leave.
Fathers are entitled to five days of paternity leave within the first eight weeks after the birth of their kid. This can be increased to a maximum of 15 days if they sign up for childcare classes. |
| Health Insurance | Although all citizens in Romania have access to free healthcare, several procedures need upfront payments and reimbursements. Due to the fact that the grade of treatment provided by government institutions is not always up to par with Western norms, employees may also decide to get private health insurance. |
| Employee Protection and Anti-Discrimination Rights | The following regulatory areas are covered by Romanian labour law. However, they are not exhaustive.
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Choosing to hire and remunerate foreign workers in Romania, as opposed to engaging independent contractors, offers a range of unspoken advantages.
Utilizing a global Professional Employer Organization (PEO) solution can substantially reduce the costs associated with acquiring and compensating foreign talent, potentially resulting in a 30% reduction compared to internal hiring and payment processes. In fact, this alternative approach to employment can yield significant savings of up to 50% in comparison to traditional in-house hiring practices.
By formally employing individuals, you have the potential to enhance employee loyalty by 47%, leading to the retention of top-tier knowledge workers for more extended periods. Opting for this approach effectively eliminates approximately 95% of the legal, financial, and economic concerns that often accompany hiring foreign workers. This flexibility allows you to seamlessly take on new projects of varying durations. In Romania, you have the autonomy to initiate your business with a compact workforce and rapidly scale your operations as your enterprise grows.
The procedures for employing workers in Romania are listed below.
| Background Checks | Employers are required to check application information in accordance with the basic principles regulating the processing of personal data and the legality of the data processing, as well as in accordance with one of the conditions outlined in Regulation (EU) 2016/679, Article 6 (Lawfulness of Processing). Additionally, the employer is responsible for ensuring that the processing complies with Regulation (EU) 2016/679. |
| Medical Checks | A medical certificate stating that the person is physically capable of working is required by national legislative standards before an individual may be recruited.
The use of pregnancy tests is prohibited by law. In this instance, since disclosing the state of pregnancy might pose a barrier to work, the occupational health physician’s medical certificate cannot include it. It is not necessary, while it is not prohibited, to test for drugs and alcohol. As a result, such tests are permitted, but only with the employee’s consent. |
| Recruitment Process | According to the law, individual employment agreements (IEAs) must be in writing. Additionally, the employer is required to uphold the minimum rights guaranteed by Romanian legislation (such as the national minimum gross wage, the minimum amount of paid time off, the maximum probationary period, and the minimum amount of notice in the event of termination), as well as the IEA standard as certified by the Ministry of Labor and Social Justice.
An IEA with a teleworking component has to meet a few prerequisites in addition to the fundamental components. The length of a fixed-term contract is often constrained by the Labor Code. As a result, the (first) fixed-term contract may only be completed for a total of 36 months and may only be renewed twice, each for a maximum of 12 months (i.e., the maximum permitted period of fixed-term employment is 60 months). A business is likewise limited to three consecutive fixed-term agreements. |
| Websites for hiring in Romania |
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Lack of familiarity with Romania’s employment regulations and legislation might provide a number of difficulties for businesses wanting to enter the market there and cost you valuable time.
In the realm of employment contracts in Romania, certain key provisions govern probationary terms, notice periods, and resignations, offering a structured framework that promotes fairness and transparency for both employers and employees.
A probationary period, which can last up to 90 days for managerial roles and 30 days for operational positions, can be integrated into the employment agreement. Employers are obligated to provide a minimum of 20 working days’ notice when terminating an employment contract. Notably, this notice requirement does not apply when dismissing a probationary employee, addressing professional inadequacies, or dealing with disciplinary matters.
On the flip side, employees are required to furnish a notice period of 20 days for non-managerial roles and 45 days for managerial positions when departing from their positions. Importantly, it should be noted that Romanian law does not mandate the provision of severance pay.
In specific scenarios, an employee may be subjected to another probationary period within the same organization and under the same stipulations. Such situations may encompass roles that are new within the organization, those involving a new profession, or positions that demand work under challenging, hazardous, or perilous conditions. These regulations collectively contribute to a comprehensive framework that bolsters fairness and transparency in employment contracts throughout Romania.
As your reliable Employer of Record in Romania, we take the hassle out of the onboarding process by designing and validating local employment contracts. All you need to do is provide us with the essential details, review the contract, and give your approval.
Here’s a breakdown of how our comprehensive services operate:
Given the stringent employment laws in Romania, it’s imperative to ensure that your hiring procedures and contract agreements are fully compliant with all relevant laws and regulations. As your primary employer and Professional Employer Organization (PEO) in Romania, we guarantee that each employee’s contract adheres to all applicable laws. We also offer insights into cultural norms, best recruiting practices, and keep you updated on any changes in employment legislation.
By partnering with us, you can focus on your core business objectives while confidently navigating the intricacies of employment in Romania. Our knowledge, compliance expertise, and advisory services will keep you fully informed and aligned with local laws throughout your journey in the Romanian job market.
A “non-EU national” refers to an individual who lacks citizenship in the Swiss Confederation, the EU/EEA, or Romania. Typically, non-EU nationals are granted the opportunity to work in Romania as either secondees or local employees, contingent on their acquisition of a work permit. Work authorization is conferred by the Romanian immigration authorities in response to an official request submitted by a Romanian company, acting as either the employer or the beneficiary of services.
Work permits are accessible to a variety of worker categories, including permanent employees, highly skilled professionals, temporary workers, trainees, cross-border workers, and au pair employees.
Secondees engaged in activities within Romania are granted work permits for secondment based on a service agreement between their employer and the Romanian recipient of their services or through an intra-corporate transfer (ICT) program.
In certain exceptional circumstances, non-EU nationals who are either employed in Romania or have family ties with Romanian citizens may participate in employment activities without prior work authorization for employment or secondment. However, specific requirements must be met to ensure compliance with the regulations governing the residency rights of non-EU nationals who are family members of Romanian residents or employees.
Some of the most significant particular requirements for obtaining such work permission are the ones listed below:
The applicant is qualified to fill the position in question in accordance with all legal criteria, including but not limited to the educational qualification.
Employers in Romania have a variety of alternatives for setting up their payroll, so it’s crucial to thoroughly evaluate each one to choose the one that works best for your business or sector. Some of the choices are as follows:
The monthly paycheck must be printed, stamped, and saved in Romania. A breakdown of all employer and employee contributions as well as income tax computations should be included. All salary-related taxes must be paid by the 25th of the following month. The relevant authorities must also receive a tax declaration to the consolidated state by the 25th of the following month.
Each year, by the 28th of February, residents of other EU nations who received salaries and compensation in Romania during the previous tax year are expected to submit an informative statement to the tax authorities outlining their earnings.
You can make sure that payroll operations for your business run smoothly and in compliance by carefully weighing these alternatives and comprehending the related payroll requirements and deadlines.
According to the Romanian Tax Code, individuals are subject to a 10% tax on their take-home pay. The personal deduction is 510 Ron for salaries up to 1,950 Ron. The personal deduction is degressive for taxpayers making between 1,951 and 3,600 Ron per month. A boost in remuneration has the effect of reducing personal deductions. The employee may be qualified for additional deductions if they have dependents. No personal deduction is permitted for monthly gross salaries that exceed 3,600 Ron.
Employer Taxation
| Tax | Explanation |
|---|---|
| Corporate Tax | 16% |
| Labor Insurance | 2.25% |
Employee Taxation
| Tax | Explanation |
|---|---|
| Income Tax | 10% |
| Social Security System | 25% |
| National Health Fund | 10% |
Tax and social security contributions must be taken out of employees’ paychecks and sent to the national tax authorities. In Romania, residence status has an impact on income tax collection; citizens must pay tax on all overseas income, while non-residents must only pay tax on income obtained domestically.
Prior to embarking on the journey of independently establishing a Romanian subsidiary, it’s essential to take into account a range of factors that can significantly impact your decision. Conducting comprehensive research into existing business networks and the industry you intend to enter is paramount, as it can help you determine the optimal location for your Romanian headquarters.
When setting up a company, it’s crucial to identify the predominant language spoken in the region and hire staff or translators fluent in that language. Different regions or cities within a country may be subject to varying laws and regulations. Selecting a location for your Romanian subsidiary that offers minimal formation costs and a welcoming atmosphere for international businesses is advisable. Seeking advice from consultants or local experts can assist you in identifying the perfect headquarters location.
One of the most common subsidiary structures in Romania is a limited liability company, known as an SRL. The following steps outline the process of establishing an SRL:
Subsidiary regulations in Romania may vary depending on the type of company you establish. For an SRL, you are required to have at least one shareholder and a director who is not necessarily a resident of Romania or the European Union.
Limited liability companies are obligated to file financial accounts and tax returns with the Romanian tax office on an annual basis. If your subsidiary has over 15 shareholders or meets specific criteria, such as an annual turnover exceeding 7.3 million Euros, assets valued at over 3.6 million Euros, or a workforce with more than 50 employees, an audit is mandatory.
Establishing a subsidiary marks the initial significant step in conducting business in Romania. Once incorporated, you can legally operate your subsidiary in the country, hire employees, set up payroll, and design an appropriate salary and benefits plan for your company.
The subsidiary and the parent company both benefit from the structure of an SRL. The parent company is safeguarded against any losses or legal actions directed at the subsidiary due to limited liability, while the subsidiary has the flexibility to operate under its own framework, aligning with Romania’s cultural norms.
Before delving into the process of independently establishing a Romanian subsidiary, it’s worth exploring alternative options.
