Romania PEO & Employer of Record

WeHG affords an International PEO and global Employer of Record service in Romania to companies willing to enter the Romanian market or hire local/expat employees in this country.

The traditional approach requires establishing a subsidiary in Romania.  Although our solution allows you to start the operations in Romania within days, therefore, save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Romania fast facts

Population, million: 19
Land area: 238,397 km²
Capital: Bucharest
Local currency: Romanian leu (RON)

GDP per capita:$ 12,813
GDP in currency:$ 248,624 billions

Romania is a state in South-Eastern Europe. Partially located in the northeastern part of the Balkan Peninsula. In the southeast, it is washed by the Black Sea. The country shares borders with Ukraine in the north, Moldova in the east, Hungary in the north-west, Serbia in the west, and Bulgaria in the south.

Federal labor and employment law applies to:

• banking;
• interprovincial and international transportation;
• broadcasting;
• telecommunications;
• aeronautics; and
• a few other limited areas.

Hiring, Negotiating and Doing Business in Romania 

Necessity of written employment contract

It’s claimed by the Romanian Labor Law to sign the employment contract only in writing and it has to be translated to the Romanian language (if you’re a foreigner). The contract should consist of minimum provisions, provided by the Law: 

• A place of employment, 
• Position/job description, 
• Possible risks of the job, 
• Holidays, 
• Information about the salary and additional bonuses, 
• Working hours and shifts description,  
• Professional duties of the position,  
• Parties description (identity information), 
• Information about the company/employer (headquarters or domicile),
• Important dates (when the contract becomes binding; type of contract: fixed-term or indefinite; trial period)

Additionally, the contract may also consist of non-competition, mobility, confidentiality, and so on.

Different forms of engagement: employment, contracting, work with private entrepreneur

There are such categories of workers legislated by the Romanian Law: 

• Employees (the main type of co-work is subordination for receiving the salary). 
• Self-employed persons (independent professional activity and specific qualification). 
• Independent contractors (employed temporarily) 

To distinguish the categories these differences should be observed:

• Independence degree
• Contractual split between the parties
• Liability of produced work
• Place of the work and positions description

Romania Employment Contract

Types of employment agreements

The Romanian Law distinguishes two types of employment contracts:

• Fix-term contract
• Indefinite contract

As a measure of employee protection, in Romania, the employment contract can be concluded for an unlimited duration. In the case of a temporary or fix-term contract for a project-basis work, the maximum duration should be not more than 36 months and the maximum number of fix-term contracts – 3 continuous ones.

Romania working hours

Regarding the Labor Code, the duration of working time is claimed to be: 

• shift’s duration – 8 hours
• working week duration – 40 hours
• working week with overtime – 48 hours  

If there are specific work activities, set by the individual or collective negotiation, the working shift can be up to 12 hours; a necessary condition in such case of the mandatory daily rest time of 24 hours. 

Talking about students and workers under 18 years, a working shift may not exceed 6 hours and 30 hours per week, without overtime.  

Night shifts may not exceed 8 hours. Also, there are some groups of workers who can’t work at night: workers under 18, pregnant women (from 5 months); nursing women and those who recently gave birth.

Overtime

Overtime payment has to be paid with a minimum of 75% increase to the salary. The increase can be negotiated within the company, through its collective labor agreement, or through the individual labor agreement and cannot be less than 75% from the employee’s normal salary.

Vacation leave in Romania

Romanian Labor Code entitles workers to 20 paid annual leave (as a minimum). A worker receives the same payment (holidays bonuses) and his/her usual salary for the vacation period.

Romania Maternity Leave

The duration of maternity leave is 126 days in case a female worker has worked for at least one month during the preceding 12 months. This period can be divided into 63 days before and 63 after the birth, with an allowance equal to 85% of their average salary during the previous six months. The National Social Security Fund is a governmental authority that fully incurred all maternity allowance.

Also, the Romanian Law provides pregnant women and female workers who recently gave birth with additional rights:

• Paid time off for prenatal consultations.
• Maternity risk leave (up to 120 days).
• Nursing breaks

Romanian Severance Laws

Notice periods must be observed:

In case of resignation, the notice period lasts from 20 to 45 working days (20  for employees in non-management positions and 45 for employees in management positions). If the worker failed to fulfill the demands of the employment contract, the employee can resign him/her without notice.

Talking about a dismissal, the duration of notice lasts 20 working days, meanwhile, in some cases, the notice period can be longer if it’s provided by the obligations of applicable collective contracts.

Severance payments

Regarding the Labor Law in Romania, there’s no provision for severance payments for positions in private business (except for the minimum notice period that applies). Severance payments are applicable to collective labor agreements.

Romania Tax

The income tax rate is 16% of gross salary, which is withheld by the employer.

Social security contributions

There are several mandatory social contributions that must be paid by employees, by the self-employed and by independent contractors. These contributions are generally payable by both the employer and the employee and are withheld by the employer. They include:

• Social security contribution. 20.8% of the employer’s general salary fund and 10.5% of the employee’s monthly gross salary.
• Public health insurance. 5.2% of the employer’s general salary fund and 5.5% of the employee’s monthly gross salary.
• Medical leave and compensation fund. 0.85 % of the employer’s general salary fund.

Unemployment contribution. 0.5% of the employer’s general salary fund and 0.5% of the employee’s monthly gross salary.

Health Insurance Benefits in Romania

The sick leave is paid by the employer on the first 5 days of such leave, the rest days are paid by the National Social Security Fund (although payment continues to be affected by the employer).

Additional Benefits in Romania

Except for vacations/leaves payments, the Labow Law in Romania provides employees with additional entitles regarding adoption and parental: 

• Adopters and biological parents have the same rights and receive the same bonuses
• Both parents have the right to receive childcare leave of between one to two years (or three years for disabled children) if they have worked for 12 months before the birth of a child. The childcare leave is also paid with an allowance equal to 85% of the employee’s average salary during the 12 months before the leave is taken.
• With every childbirth, adoption, placement, custody or guardianship the employee can take childcare leave. The state budget fully covers the payment for the childcare leave. 
• As a bonus for parental leave, fathers can use 5 working days during the first 8 weeks after the child’s birth and this period can be extended to 15 working days in case the worker takes part in childcare courses.

General market practice benefits/additional allowances

Romanian market provides foreign businesses with such benefits: 

• The country has low risks of investing (FDI-Foreign Direct Investment)
• Romania received the highest EU allocation (€31bn of structural funds) which will be invested in the country’s infrastructure development and creating new employment positions (European Union Funding). 
• Nowadays, one of the most important business sectors in Romania is tourism (tourist arrivals).
• Introduced in 2005 16% flat rate of taxation makes the Romanian market one of the most attractive for investing (taxation rates).
• Law price for land (from 3 to 7 times lower than in other EU countries).

Romania Holidays

In addition to annual leave, Romanians celebrate 8 public holidays throughout the year: New Year’s Day, Day after New Year’s Day, Unification of the Romanian Principalities/Small Union, Orthodox Good Friday, Orthodox Easter Sunday, Orthodox Easter Monday, Labour Day, Children’s Day.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.