Romania PEO & Employer of Record Services
Global PEO Services (GPS) helps companies hire employees in Romania without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Romania, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Romania labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Romania. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Romania - Country Overview
Romania ranks 21st among 44 European countries economic freedom. It is an upper-middle-income economy with a per capita GDP of $24,508. 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 include investments in healthcare, infrastructure, job creation, and education along with tax and pension reforms by 2020.
Semi-presidential, Representative Democratic Republic
Lași, Cluj-Napoca, Timişoara, Craiova
Employment Contracts in Romania
Individual labor agreements (ILA) should be in writing, and in 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
Fixed-term of employment contracts can be for a maximum of 36 months and the maximum permissible duration is allowed under special circumstances.
Working Hours in Romania
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 they should get a bonus equal at least 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 a 3-month period.
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 less than 18 years of age are forbidden to work overtime.
Employee Leave in Romania
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 such work.
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 5 days before the vacation begins. Vacation period can be split into segments but at least one segment must have a continuous period of a minimum 15 working days. Unused vacation can be carried over to the next year.
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 paid entirely by the National Security Fund.
Fathers are entitled to 5 days’ paternity leave on the days they request within 2 months of childbirth. If the father of a newborn child is completing a childcare course, an additional leave of 10 days is granted.
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 is provided to individuals who:
- Live in Romania
- Have earned taxable income in the 12 months before childbirth
- Have 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 funds the parental leave program entirely.
Employee Benefits in Romania
Pensions and Social Security
Male employees can retire at the age of 65 with at least 15 years of contributions while female employees can retire at 60 years with a full pension. The legal retirement age will increase to 65 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
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.
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 6 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.