Employer of Record in Romania

Romania is a dynamic, fast-developing location for business. Romania has made enormous strides over the years, enjoying one of the best economic growth rates in Europe after decades of political and economic unrest.

Romania offers several opportunities for foreign companies. However, the nation has a complex collection of business and labour laws that are influenced by EU regulations. The language barrier and legal disputes may impede progress, costing more money and causing lost income.

Therefore, collaborating with a centralised, automated, global HR platform enables you to rapidly and legally handle payroll, benefits, and other employment-related tasks for your remote employees. With the assistance of our global network, EOR can assist you in hastening the process of your company’s global expansion.  You may expand your company into Romania without needing to create a new corporation according to the Romania EOR (Employer Of Record) advice.

Overview of Romania

• Population: 19.1 million
• Currency: Romanian Leu/Lei (RON)
• Capital city: Bucharest
• Languages spoken: Romanian, Hungarian, German
• GDP: 6% (2021 expected)

Employment Landscape in Romania

The Romanian Constitution, main and secondary Romanian laws, as well as pertinent European and international laws (such as those of the International Labor Organization, the Council of Europe, and the EU) are the sources of employment law.

The Romanian Labor Code (Law No. 53/2003, hereafter referred to as the “Labor Code”) and the Romanian Law on Social Dialogue (Law No. 62/2011, hereafter referred to as the “Social Dialogue Law”) are the main domestic laws governing employment relationships. Employment interactions covered by specific law are subject to the Labor Code.

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. New Year’s Day Day After New Year’s Day Unification Day Orthodox Good Friday Labor Day Children’s Day Orthodox Easter Monday Orthodox Pentecost Monday Feast of the Dormition (St. Mary’s Day) St. Andrew’s Day National Day Christmas Day Second Day of Christmas
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. safety and workplace health the framework for educating and consulting employees employee posting employee protection tangible advantages, such as coupons the general record of employees the general record of Romanian citizens working abroad Equal pay for women and men at employment

Contractors vs. Full-Time Employees

There are various unstated benefits to hiring and paying foreign workers in Romania as opposed to independent contractors.

Compared to internal hiring and payment procedures, using a worldwide Professional Employer Organization (PEO) solution can reduce the cost of acquiring and paying foreign talent by 30%. In fact, as compared to conventional hiring practices within your own firm, considerable savings of up to 50% might be made.

By hiring people as formal employees, you may keep top-tier knowledge workers for longer by increasing employee loyalty by 47%. Additionally, choosing to hire people from outside officially eliminates 95% of legal, financial, and economic worries. You gain flexibility by using this service, which enables you to take on new tasks of various lengths. In Romania, you have the freedom to launch your firm with a small workforce and quickly expand your operations as it expands.

With complete compliance and official PEO employment of foreign nationals in Romania, you may reduce business risks, protect your clientele and intellectual property, and improve on-site customer service. Additionally, this method encourages a complete comprehension of the regional business culture, obviating the demand for time-consuming teams of specialists who are geographically distributed to be recruited, evaluated, and onboarded. This results in a faster learning curve and lower learning expenses.

Embracing the benefits of hiring and managing international workers via a PEO solution in Romania will enable you to reap rewards like cost savings, improved employee loyalty, better flexibility, and less business risks.

Recruitment in Romania

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	Bestjobs Ejobs Carieranoua Hipo

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.

Probation & Termination

A probationary term may be included in the employment contract and may extend up to 90 days for management jobs and 30 days for operational functions. Employers are obligated to give a minimum of 20 working days’ notice before ending an employment contract. This notice period, however, does not apply when a probationary employee is let go, when a worker is let go due to professional shortcomings, or when a worker is let go for disciplinary reasons.

On the other hand, upon leaving their jobs, employees are required to offer a notice period of 20 days for non-managing positions and 45 days for managerial ones. It is important to note that providing severance pay is not required by law in Romania.

An employee may be given another probationary period inside the same organisation and under the same restrictions under certain circumstances. These situations include those in which the position is new (held for the first time in the relevant organisation), in which a new profession is involved, or in which the tasks must be completed under hazardous, difficult, or dangerous working conditions.

For employment contracts in Romania, these rules on probationary periods, notice periods, and resignations serve as a framework, providing justice and clarity for both employers and workers.

EOR Solution

We design and validate local employment contracts as your dependable employer of record in Romania, easing the onboarding procedure for both you and your staff. You only need to give us the essential details, look through, and accept the employment agreement.

Here is how our extensive services function:

• Welcome Call: We arrange a welcome call to answer any questions or address any concerns you may have as we walk you through Romanian HR and employment information.
• Customised Employment Contract: We draft an employment contract that is tailored to your needs in both English and Romanian (or another local language).
• The employment contract and information on the employee’s perks are given to the new hire for perusal and signature.
• Payroll Setup: To ensure a seamless entry into the Romanian employment system, we manage payroll setup and gather the employee’s tax and banking information.
• Each employee has a local point of contact who can answer any queries they may have about their position, regional HR policies, or payroll procedures.
• Effective Onboarding: With our shortened onboarding procedure, your employees may begin their tasks as soon as two weeks have passed.

Due to the strict employment laws in Romania, it is essential to make sure that your hiring procedures and contract agreements adhere to all laws and regulations. In Romania, we serve as both your primary employer and Professional Employer Organization (PEO), and we ensure that each contract for each employee complies with all applicable laws. Additionally, we provide advice on cultural norms, recruiting best practices, and keep you updated on any changes to the law governing employment.

By working with us, you will be able to focus on your primary business goals while comfortably navigating the complexities of employment in Romania. Throughout your job experience in Romania, you will be completely informed of and in accordance with local laws thanks to our knowledge, compliance, and advising services.

Work Permits And Visas

A person is referred to as a “non-EU national” if they do not possess Swiss Confederation, EU/EEA, or Romanian citizenship. In general, non-EU nationals are only permitted to work in Romania as secondees or local workers provided they have already secured a work licence for employment. On the basis of an official request made by a Romanian firm, acting either as the employer or the service beneficiary, the appropriate Romanian immigration authorities provide work permission.

Permanent employees, highly qualified workers, temporary employees, trainee employees, cross-border employees, and au pair workers are only a few of the kinds of workers that are eligible for work permission.

On the basis of a service agreement between their employer and the Romanian beneficiary of their services, or under an intra-corporate transfer (ICT) plan, secondees engaged in operations within Romania are given work permission for secondment.

Non-EU nationals who are working in Romania or have the right to live there as family members of Romanian citizens may, under extraordinary circumstances and subject to certain requirements, engage in work activities without first acquiring work authorization for employment or secondment. To ensure compliance with the rules governing the residency rights of non-EU nationals who are relatives of Romanian residents or employed there, certain particular requirements must be completed.

Work Authorization for Permanent Workers

Some of the most significant particular requirements for obtaining such work permission are the ones listed below:

• An employment contract for full-time labour with a set or ambiguous length will be signed by the Romanian employer.
• The Romanian employer states that no EU/EEA/Swiss citizen, non-EU national, or non-holder of a Romanian permanent residence permit is qualified to fill the open position.
• The applicant is qualified to fill the position in question in accordance with all legal criteria, including but not limited to the educational qualification.

Payroll & taxes in Romania

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:

• Payroll management internally: Larger businesses with a strong commitment to Romania may decide to do so through a subsidiary. To manage HR and payroll tasks, more people will need to be hired. It could, however, be the most expensive and time-consuming choice.
• Remote Payroll: You may integrate your Romanian employees into your internal payroll system if you already handle payroll at your parent firm. It’s significant to understand that between the parent firm and the Romanian labour, different employment compliance rules may apply.
• Payroll Processing Company in Romania: Another choice is to outsource your payroll processing to a specialist Romanian company. The choice of a trustworthy service provider must be made with care because any mistakes or discrepancies will still be blamed on your business.

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.

Taxes

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.

Before you embark on the journey of opening a Romanian subsidiary on your own, it’s important to consider various factors that can influence your decision. Conducting thorough research on existing business contacts and the industry you plan to enter is crucial, as it can help determine the ideal location for your Romanian headquarters.

When establishing a company, it’s important 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 various laws and regulations. It is advisable to choose a location for your Romanian subsidiary that offers minimal formation expenses and a welcoming environment for international companies. Seeking guidance from advisors or local experts can help you identify the perfect headquarters location.

One of the most common subsidiary structures in Romania is a limited liability corporation, known as an SRL. The following steps outline the process of establishing an SRL:

• Obtain a minimum share capital of 40 EUR.
• Obtain a certificate from the parent company confirming its good standing.
• Provide the complete Memorandum and Articles of Association of the parent company.
• Register a physical office for the subsidiary.
• Appoint an administrator as the signatory for the subsidiary.
• Submit the necessary paperwork to the Trade Register for formal registration.
• Subsidiary regulations in Romania 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 does not necessarily reside in Romania or the European Union.

Limited liability companies must file financial accounts and tax filings with the Romanian tax office annually. If your subsidiary has more than 15 shareholders or meets certain criteria such as an annual turnover of over 7.3 million Euros, assets worth over 3.6 million Euros, or a workforce with more than 50 employees, an audit is mandatory.

Establishing a subsidiary is the first significant hurdle in conducting business in Romania. Once incorporated, you can legally operate your subsidiary in the country, hire employees, set up payroll, and design a suitable salary and benefits plan for your company.

Both the subsidiary and the parent company benefit from the structure of an SRL. The parent company is shielded from any losses or lawsuits against the subsidiary due to limited liability, while the subsidiary has the freedom to operate under its own structure, aligning with Romania’s cultural norms.

Before venturing into the process of establishing a Romanian subsidiary on your own, it’s worth considering alternative options.