Romania

Overview

Romania’s economy is 16th largest by total nominal GDP and 13th largest by purchasing power parity in the European Union. It is an upper-middle income economy with a per capita GDP of $20,787. Electronics manufacturing and research are the main driving factors of economic growth. Romania is also the largest electronics manufacturer in Central and Eastern Europe. Other major exports include machinery, vehicles, food products, chemical goods, transport equipment, and pharmaceuticals. The Romanian government’s priorities for 2017-2020 include investments in healthcare, infrastructure, job creation, and education along with tax and pension reforms.

Currency: Romanian Leu

Principal language: Romanian

Government: Semi-presidential, Representative Democratic Republic

Capital City: Bucharest

Major Cities: Ia?i , Cluj-Napoca, Timi?oara, Craiova

Employment Contracts

Individual labor agreements (ILA) should be in writing and Romanian. Employers are required to register with the general registry of employees and provide a copy to employees at least a day before they commence work. The general registry of employees should be updated in no more than 20 days of an amendment to the ILA. An ILA must contain:

  • the identity of the employer and employee
  • the work commencement date
  • the duration of the contract - definite or indefinite
  • the type of work
  • the workplace
  • criteria applicable to the professional evaluation of the employee
  • the required length of a termination notice
  • job responsibilities and job-associated risks
  • working conditions, and
  • employer and employee rights and obligations
  • salary and vacation rights

Employment contracts can be fixed-term only for a maximum 36 months and under special circumstances.

Work/Time Regulations

Regular work schedule in Romania is 8 hours per day and 40 hours per week. Employees are entitled to at least a 12-hour rest period between 2 working days. Work performed between 10 p.m. and 6 a.m. is considered night shift. Employees are considered to be working night shifts if they:

  • Perform a minimum of 3 hours of work each day, or
  • Work at night for at least 30% of monthly work hours

Employees who work at least 3 hours of night shift every day should undergo a medical checkup at the employer’s expense when the assignment begins. Their standard work hours should be reduced by 1 hour without any salary deduction or be given a bonus of at least equal to 25% of basic salary when they perform a minimum of 3 hours of night work. The duration of a night shift cannot exceed 8 hours over any 3-month period.

Overtime
Work done more than 8 hours per day or 40 hours per week is considered overtime. Employees cannot work for more than 8 hours of overtime in a day. Overtime should be compensated with at least 75% premium over the base salary or with paid time off in no more than 60 days of being performed. Overtime can be done only with employees’ consent. People below 18 years are forbidden to work overtime.

Leave

Holidays
12 national holidays are observed in Romania:

  • Jan. 1 and 2: New Year
  • The first and second days of Easter
  • May 1: Labor Day
  • The first and second days of Pentecost
  • Aug. 15: The Assumption
  • Nov. 30: Saint Andrew's Day
  • Dec. 1: National Day
  • The first and second days of Christmas

Employees who work on a national holiday can take a day off within 30 days of performing work.

Annual Leave
Employees are entitled to at least 20 days’ paid annual leave every year. Vacation pay should be at least equal to the basic salary and must include bonuses and permanent benefits specified in the ILA. The vacation pay must be given at least five days before the vacation begins. Vacation period can be split into segments but at least one segment must have a continuous period of at least 15 working days. Unused vacation can be carried over to the next year.

Maternity Leave
Women employees who have made the minimum contribution to the health insurance for at least one month over the last 12 months qualify for maternity leave of 126 days. Out of the total leave, 63 days can be taken before the childbirth and 63 days afterward. During maternity leave, employees are entitled to 85% of their average wages over the last 12 months. The maternity leave compensation is entirely paid by the National Security Fund.

Paternity Leave
Fathers are entitled to five days’ of paternity leave on the days they request within two months’ of childbirth. In case fathers of newborn children complete a childcare course, they receive an additional leave of 10 days.

Sick Leave
Employees who are covered by the pension and social insurance programs and have made necessary contributions are entitled to a maximum of 183 days of sick leave in a year. Sick leave can be extended by 90 days if required. Sick leave benefit is equal to 75% of the average monthly wages during the last 6 months. Employers pay for medical leave for the first 5 days while the remainder is paid for by the Social Security Fund.

Parental Leave
Parental leave is provided to individuals:

  • Who live in Romania
  • Having earned taxable income in the 12 months before childbirth
  • Contributed to the social insurance program

The parental leave benefit is 600 leu/month until the child reaches the age of 2 years or 3 years if the child is disabled. Each parent must take leave for at least one month. The government entirely funds the parental leave program.

Benefits

Pensions and Social Security
Male employees can retire at the age of 65 while female employees can retire at 60 years with a full pension. The legal retirement age will increase to 63 by 2030. Employers are required to make the following contributions:

  • social contributions varying between 15.8% and 25.8% of monthly gross wages
  • medical leave contributions of 0.85% of total payroll
  • health contributions of 5.2% of total payroll
  • unemployment contributions of 0.5% of monthly gross wages
  • salary guarantee fund tax of 0.25% of payroll
  • labor accident fund contributions varying between 0.15% and 0.85% of monthly gross wages

Employees need to make the following contributions:

  • social security tax of 10.5% of monthly gross wages
  • unemployment contribution of 0.5% of monthly gross salary
  • health contribution of 5.5% of monthly gross wages

Health Insurance
Total health contribution is 13.5% of taxable gross salary, out of which employee contributes 6.5 % whereas employer’s contribution is 7.0%. There is no maximum limit to it.

Workers' Compensation
Employees with at least a 50% loss in working capacity due to an occupational disease or work injury are eligible for workers’ compensation benefits. Temporary disability benefits are equal to 80% of employees’ wages in the six months before the disability began and are provided from the first day of disability for a maximum of 180 days in a year. Employers pay for the temporary disability coverage until the employee receives a certificate confirming permanent disability or recovers.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Romania and hire their employees without having to establish a branch office or subsidiary in Romania.

  • Your candidate is hired via our Romania PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Romania laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.