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Hiring in Romania? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Romania.
Employment Norms in Romania
Romania is a beautiful country in southeast Europe with an amazing landscape. It is a part of the European Union. People here are formal and reserved with a strong work ethic who make great employees.
General Information:
- The Romanian currency is Romanian Leu (RON).
- Bucharest is the capital of Romania.
- Romanian, Hungarian, and German are the official languages of Romanian. Documentation can be drafted in Romanian to be considered legally valid.
- As of 2021, the GDP of Romania was reported to be 284.09 billion USD.
Labor laws in Romania are very well-defined. It provides employees with mandatory rights. It is crucial to have a basic understanding of these before hiring in Romania.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working hours and overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking hours and overtimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements
- In Romania, it is crucial to have written and registered employment contracts.
- This registration is of the general register.
- The salary and compensation details should be mentioned only in Romanian Leu and the use of foreign languages is not acceptable.
- A contract should include the start date, salary, compensation, identification of both parties and termination guidelines.
- The rules are different for EU and non-EU citizens. It is less complicated to hire an EU citizen.
Labor laws in Romania are very well-defined. It provides employees with mandatory rights. It is crucial to have a basic understanding of these before hiring in Romania.
Onboarding Process
- The labor laws are very strict in Romania.
- Private companies are not allowed to perform background checks on their employees.
- An employee shall be informed about the job profile, location, compensation, and other details.
- Employers should add the employee to the general employer register during the time of onboarding. This shall be treated as a legal official document which is mandatory.
- Employers should collect passports, work permits or visas, and other identification-related documents.
Visa
Romania has 6 types of work permits/visas:
Like agreements, the rules of visas are also different for EU and Non-EU citizens. EU citizens do not need any visa and are allowed to work freely in Romania while Non-EU citizens have to get either a visa or a work permit. Citizens of EEA countries also do not require work permits.
- Work permits are of 7 types- seasonal, trainee, athlete, permanent, cross-border, and nominal.
- A foreigner can get a work permit only if a Romanian or EU citizen is not eligible for the concerned position.
- You need both a work permit and a long-term visa to work in Romania.
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Minimum Wage
The minimum wage in Romania is 3000 RON/ month effective from 1st Jan 2023. Also, the hourly rate has increased from 15 RON/hour to 18 RON/ hour.
Payroll Cycle
In Romania, you need to pay your employees monthly. There is no provision for weekly or bi-monthly payments.
Annual Bonus
Most companies in Romania provide a 13th-month salary as a bonus. But there are no legal provisions for this. It is an established trade practice.
Health Benefits
- Romania doesn't offer any specific health benefits for employees.
- But, there are certain social security welfare schemes providing healthcare benefits like medical services, emergency services, dental services, and intensive care.
- Other than these, some MNCs do provide their employees with health insurance.
Working hours and overtime
- Work hours: In general, Romania has an 8-hour working day from 9 am to 5 pm and a total of the 40-hour work week.
- Break: It is customary to provide 30 mins to 1-hour of lunch break.
- Overtime: Over time shall be paid either in 60 days with paid off-hours or a bonus is added to the employee's salary. Employees can only do 8 hours/ week overtime at maximum. The overtime cannot be less than 75% of the original salary.
Leaves
Sick leaves
- You need to provide your employees with paid sick leave for up to 5 days.
- After that, wages are compensated by the social security fund.
- Sick leaves can be for a maximum of 183 days or 18 months for severe, life-threatening ailments.
- These are not completely paid by the employer but an allowance is given by social security funds.
Parental leaves
- Employees get up to 24 months or 3 years of parental leave.
- They are paid 85% of their salary during this duration provided by the National Health Fund.
- Maternity leave is for 126 leaves.
- Paternal leaves are for 5 days in the first eight weeks after the birth of a child only guaranteed for the first child.
Annual Leaves
- Romanians are entitled to paid leaves of 20 days annually.
- There is a provision to pay employees at least 5 days of salary equivalent in advance before leave begins.
- Romania has a use it or lose it leave policy. No rollovers are allowed for the next calendar year.
Public Holidays (for the Calendar year 2023)
- New Year's Day (1st January)
- Day after New Year's Day (2nd January)
- Unification Day (24th January)
- Orthodox Good Friday (30th April)
- Labour Day (1st May)
- Orthodox Easter Day (April 16)
- Orthodox Easter Monday (17 April)
- International Children's Day (1st June)
- Orthodox Pentecost (28 May)
- Descent of the Holy Spirit (June 5)
- St. Mary's Day (15 August)
- Feast of St. Andrew (30th November)
- National Day (1st December)
- Christmas Day (25th December)
- The second day (26th December)
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Taxes for Employers
Romania has a very proficient system of taxation.
- 2.25% of the total payroll should be given to unemployment insurance.
- 4% of the total payroll is contributed as a social security fund or pension.
- Corporate income tax is 16%. All foreign companies need to pay taxes on the amount generated by Romanian taxpayers.
- Social Security Tax - Both employees and employers are required to pay social security taxes. Employers should contribute 25% to social contribution taxes and 10% to health insurance.
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Taxes for Employees
Employees need to pay income tax as well as various additional taxes.
- Income tax in Romania is capitalized at 10%.
- PIT or public income tax is levied at a 10% interest rate, but employees can claim several deductions.
- Social Security Tax: Employeesyes also need to pay social security tax at a rate of 15.5%
- They also pay 10% for health insurance.
- In Romania, it is mandatory to pay all the taxes because the implementation is very strict.
Probation
Probation is generally for 30 days but the in case of operational or managerial roles, it can go up to 90 days. If you're terminating an employee who is currently on probation, you do not need to provide early notice.
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Termination
- Termination can be done only on serious grounds.
- The Romanian government only allows two valid reasons for terminating an employee - Economic and objective
- In case of termination related to economic causes, the employee needs to be compensated.
Severance Pay
Romania has no legal provisions specifically for severance pay. But employees can claim severance if they have both a pre-made contract between the employer and the employee.
Employees or Contractors
- Employers can be exempted from paying social security taxes if they classify employees as independent contractors but it can lead to legal punishments of severe degrees.
- Employees can get unemployment compensation while contractors are not eligible for this benefit.
- Employees are obliged to contribute to the national public pension system.
Final Words
Romania offers an enhanced ecosystem of doing business with a very skilled workforce. Do invest in an EOR system to hire in Romania.
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