Definitive Guide to Hiring in Romania

Hiring in Romania

Hiring employees compliantly in Romania means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Romania so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Romania; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Romania

Employee Probation Period

• The trial/probationary period depends on the type of employment agreement:
• 90 calendar days for execution position
• 120 calendar days for management position

Annual Leave in Romania

• Employees in Romania are entitled to a minimum of 20 days off per year.

Holidays in Romania

Maternity Leave Romania

• Pregnant employees are entitled to at least 126 days of maternity leave at 85% of their average salary during the previous 6 months; leave is paid by the National Social Security fund.

Paternity Leave Romania

• Fathers are entitled to 5 days off for paternity leave within the first 8 weeks of the birth.
• This can be extended to up to 15 days if they participate in childcare courses.

Sick Leave in Romania

• Employees are entitled to pay for up to 5 days of sick leave with a compensation of 75% of salary.
• The maximum duration of sick leave is 183 days or up to 18 months for serious illnesses.
• Compensation is provided by the state for sick leave exceeding 5 days.

Working Hours in Romania

• In Romania, it is standard to work eight hours a day, which amounts to a 40-hour, five-day working week from Monday to Friday.
• Normal working hours are between 9am and 5pm.

Overtime in Romania

• Employees are not allowed to work for more than 48 hours a week including overtime.
• Overtime payment for work undertaken during the week is paid at 75% more than the normal rate or, alternatively, employees may be granted equivalent time off in lieu.
• Weekend overtime payments are 100% higher than usual weekly work rates.

Termination of Employment in Romania

A Romanian employment contract is terminated when:

• • The contract ends (for contracts with definite period
  • There is an agreement between the two parties
  • The employee chooses to terminate the contract
• When the employer chooses to terminate the contract (dismissal) in the following cases:
  • reasons related to the worker’s actions or non-actions (disciplinary dismissal)
  • reasons unrelated to worker’s performance
  • reasons related to the restructuring of the positions chart
  • reasons related to the mental or physical health of the employee (this state must be decided through medical expertise)
• The employment contract can be terminated by notice given by each party. The termination notice period depends on the position ‒ management or execution.
• The notice period in case of termination upon employee’s request is:
  • 45 working days for management position
  • 20 working days for execution position

Notice Period in Romania

• In the event of termination, employers must provide a notice period of at least 20 working days.
• This does not apply to the dismissal of a worker under a probationary period, a dismissal based on professional inadequacy, or a dismissal based on disciplinary grounds.
• Employees must provide 20 days’ notice upon resignation or 45 days’ notice for managerial positions.

Severance in Romania

• There is no legal obligation to make severance payments in Romania.

Romania Salary and Wages

13th / 14th Month Salary in Romania

• No
• There is no statutory requirement to pay the 13th or 14th month salary.
• Bonuses are common but are mainly discretionary and performance based.

• An employer is required to pay an employment insurance contribution of 2.25% of the employee’s total gross salary.
• In addition, in certain cases, the employer is required to pay a pension contribution at a rate of 4% or 8% of the gross salary.
• Contributions also are due by the employee, although the compliance procedure remains the responsibility of the employer.
• The mandatory employee contributions are a pension contribution of 25% and a health insurance contribution of 10%, which are deductible for income tax calculation purposes.
• All other types of taxable private income (e.g., income from freelance activities, investment, rental, and other sources) are subject to a health insurance contribution of 10% if the total amount of income derived from all these types of activity is at least 12 times the national minimum salary.
• A 25% pension contribution applies on income from independent activities where the net income represents at least 12 times the national minimum salary.
• The computation base for the pension contribution is the “insured income” (an amount chosen by the individual, to which the pension contribution rate is applied, which cannot be less than 12 times the national minimum salary).

Immigration Romania

• EU and EEA nationals can be seconded to Romania without obtaining a work authorization.
• The seconded individuals must apply directly for a registration certificate.
• In addition, companies based in Switzerland or EU or EEA member states can second non-EU/EEA nationals to Romania without obtaining a work authorization.
• The seconded individuals must apply directly for a residence permit and are required to present to the Romanian authorities the valid residence permit obtained from Switzerland or an EU/EEA member state.
• The secondment of non-EU nationals is limited to one year within a five-year period.
• An extension may be granted if a work authorization for local employment purposes is obtained.
• Foreigners assigned as heads of foreign company branches and foreign citizens named administrators of Romanian companies only need to apply for a residence permit.
• As of September 2016, the EU directive with respect to intracompany transfer (ICT) workers has been implemented in the Romanian immigration legislation.
• Therefore, employees of companies outside the EU, EEA and Switzerland who are subject to an ICT in a leadership position or as a specialist can be seconded to Romania for a period of three years under certain conditions.
• A new type of work authorization for secondment purposes — the ICT work authorization — has been introduced.
• The secondment can be extended after the initial period of three years if the ICT worker leaves Romania and fulfills the conditions for initiating a new secondment process.

EU Blue Card

• To live and work in Romania as a highly-qualified worker, your employer must first obtain a work authorization for highly-qualified workers on your behalf.
• You must hold a university or college diploma from an educational programme that lasted three years or more.
• Alternatively, you must be able to prove your qualifications by showing relevant professional experience.
• The gross annual salary resulting from the monthly or annual salary specified in the work contract or binding job offer must be equal to or higher than the relevant salary threshold defined by the Member State (at least 1.5 times the average gross annual salary in the Member State concerned).
• For 2015, Romania set the minimum salary threshold at: 25 828 EUR.

Value Added Tax (VAT) in Romania

• Companies are directly responsible for determining and charging the correct Romanian VAT rates.
• These are set by the government, although the EU set the broad rules for use of the standard, higher rate and reduced rates.
• The EU does insist that the standard rate is at least 15%.

Mandatory Benefits in Romania

• These are benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, notice period.
• Statutory benefits also include social security benefits

Payroll Accrual in Romania

Payroll Accruals Additional Information

Accrued Benefits in Romania

Why use Global Expansion to hire in Romania

Establishing a branch office or subsidiary in Romania can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Romania labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Romania law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Romania. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Romania Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.