Employer of Record (EOR) Romania
An Employer of Record (EOR) acts as the legal employer for workers in Romania, serving a pivotal role often referred to as a Global Professional Employer Organization (Global PEO). This role encompasses comprehensive oversight of various employment aspects, ensuring strict adherence to local labor laws and regulations. Key responsibilities involve the management of payroll, taxes, legally mandated benefits, and the creation of employment agreements.
Responsibilities of the Employer of Record (EOR) in Romania include:
- Ensuring strict compliance with local employment laws for all workers.
- Managing the intricacies of the local payroll process.
- Handling the filing of employment-related taxes and essential paperwork.
- Providing workers with accurate and timely payslips.
- Facilitating the seamless distribution of workers’ salary payments.
Optimize your global expansion with our Global PEO services – a streamlined solution without the need for entity setup. Our Employer of Record (EOR) in Romania guarantees legal presence, compliance, and Intellectual Property (IP) protection, allowing your business to concentrate on its core functions. Facilitate smooth global mobility and work visas while building a diverse and efficient global workforce. Choose Mercans, your trusted Employer of Record in Romania, for a compliant and efficient employment experience for your global workforce.
Things you need to know before hiring in Romania
Employment Contracts in Romania
In Romania, individual employment agreements typically follow an unlimited (open-ended) term, though fixed-term or part-time contracts are also permissible.
As per the Romanian Labour Code:
Contract Form and LanguageEmployment contracts must be in writing, in Romanian, and based on mutual consent. Employers register the contract with the electronic employee program (ReviSal) before the employment begins.
Informative ObligationsEmployers must inform candidates or employees about essential contract clauses before its conclusion or amendment. A preliminary check on the applicant’s abilities is mandatory, and information from a former employer is sought only after informing the applicant.
Medical Certificate RequirementA medical certificate is mandatory upon hiring to assess the applicant’s fitness for the job. Absence of the certificate renders the contract null and void.
Essential Provisions Contracts must include:
- Identity of parties
- Place of work
- Employer’s headquarters or domicile
- Position and job description
- Evaluation criteria, job-specific risks
- Start date, expiration date (if applicable)
- Annual paid holiday entitlement
- Notice period conditions
- Compensation details
- Working time specifications
- Reference to applicable collective labor agreement
- Probationary period duration
Negotiable ClausesParties may negotiate additional clauses, including professional training, non-compete, mobility, and confidentiality clauses.
Fixed-Term ContractsLimited to cases defined by the Labour Code, with specific details and duration mentioned. The same parties cannot sign more than three consecutive fixed-term contracts, and the cumulative duration, including extensions, cannot exceed 36 months.
Part-time ContractsMust specify working time, schedule, conditions for schedule amendments, and exceptions for overtime.
Assistance in NegotiationsBoth parties can seek assistance from third-party specialists, including lawyers, during contract negotiations.
Employment contracts, whether for a fixed or open-ended term, have the flexibility to include a probationary period clause.
To assess an employee’s skills, the parties can mutually agree on a probationary period outlined in the individual employment contract. For standard positions, this period may extend up to a maximum of 90 calendar days, while managerial roles may have a maximum probationary period of 120 calendar days. In the case of disabled persons, the probationary period is limited to a maximum of 30 calendar days.
Either the employer or employee can initiate the cessation of the individual employment contract during or before the probationary period ends. This can be accomplished through written notification, without the need for motivation or prior notice. The flexibility in probationary periods allows for a fair evaluation of both the employer and employee’s compatibility, fostering a more informed decision-making process.
Either the employer or the employee holds the right to terminate the individual employment contract. If the employer initiates the termination, except for dismissal on disciplinary grounds or if the employee is detained for over 30 days, the employee is entitled to a notice period lasting no less than 20 working days.
In the event of termination by the employee’s decision to resign, a notice period must be observed. This period should not exceed 20 working days for standard positions and 45 working days for managerial roles. However, the employer retains the prerogative to waive the notice period, agreeing to conclude the contract based on the employee’s will at any time before the notice period’s conclusion. This flexibility in notice periods allows for a smooth transition and clear communication between both parties involved.
The standard working day comprises 8 working hours, and the workweek consists of 5 working days, summing up to 40 hours weekly. It is mandated that the total working hours for a week, encompassing overtime, should not exceed 48 hours.
Employees vs Independent Contractors
Payroll in Romania
The current minimum wage in Romania is RON 3,300.00 per month, effective from October 1, 2023, and remains valid through December 2023. These figures are stated in Romanian New Leu and are presented before tax deductions.Minimum Wage Overview:
Per monthRON 3,300.00
Per hourRON 19.96
Please note that these rates are subject to change based on future regulations or adjustments.
In Romania, payroll is processed on a monthly basis, with compensation for work conducted between the first and last day of the month typically distributed on the last working day of that month.
Mercans’ Payroll Capabilities in Romania
Mercans excels in managing payroll intricacies in Romania, requiring meticulous attention and comprehensive solutions. Our Employer of Record services simplifies the payroll process, ensuring precision, compliance, and operational efficiency.
Payroll Cycle in RomaniaThe Romanian payroll operates on a monthly basis, involving stages such as setup, salary calculations, and reporting. Mercans’ Employer Of Record services expertly handle these tasks with precision.
Local Currency PaymentsMaking payments in the local currency enhances convenience and minimizes currency exchange complexities. Mercans facilitates this with multi-country payment solutions.
Payroll Setup, Processing, AdministrationFrom configuring software to processing salaries and managing leave balances, Mercans’ EOR services adeptly handle every aspect of payroll efficiently in Romania.
Statutory Filings and PaymentsCompliance with local regulations is paramount. Mercans provides seamless support for statutory filings, ensuring adherence to Romanian laws.
Trusted Payroll Partner in RomaniaOur expertise in Employer Of Record services extends to multi-country payroll management, delivering accurate and streamlined payroll operations across various locations.
Social Security in Romania
Social Security Contributions
Social contributions for income from dependent activities in Romania are calculated based on a specific computation base, subject to potential modifications by the Social Security State Budget Law, the State Budget Law, or direct amendments to the Fiscal Code. These contributions adhere to EU social security coordination rules and Romania’s social security agreements.
General social contribution rates are outlined as follows:
Social Insurance Contribution25%
Health Insurance Contribution: 10%Monthly assessment base: Gross income from dependent activities.
Social Insurance Contribution4% for particular working conditions or 8% for special working conditions; no contribution for normal working conditions.
Labour Insurance Contribution: 2.25%Monthly assessment base: Gross salary income derived from employment contracts, service relationships, or special statuses, with specific exceptions for certain sectors.
Employers compute and withhold social contributions during salary payments, declaring and remitting them to state budgets by the 25th day of the following month.
For benefits received based on employment contracts or contractual relationships, the obligation to compute and withhold social contributions depends on the payer’s tax residence.
Social contributions also apply to various income types, including:
Independent/Freelancing Activities and IP Rights:
Social Insurance Contribution25%
Other Sources of Income (e.g., IP rights, investment income, rental income):
Health Insurance Contribution10%
Value-Added Tax (VAT)Standard rate of 19%.
Net Wealth/Worth Taxesone in Romania.
Property TaxesBuilding Tax:
- Residential Buildings: Tax rate between 0.08% and 0.2%.
- Non-Residential Buildings: Tax rate between 0.2% and 1.3% (0.4% for agricultural use).
- New rules effective from 2025.
- Fixed amount per square meter, varying by land rank and use.
- Paid annually, with a 10% reduction for full advance payment by March 31.
Employee Hiring Cost in Romania
Let’s consider a hypothetical scenario where the gross annual salary for an employee in Romania is RON 9,999.96. In addition to the salary, the employer incurs various costs, resulting in a total annual employer cost of RON 6,609.00. This includes specific components such as a labor insurance contribution of RON 225.00, a teleworking indemnity of RON 4,800.00, and a disability cost of RON 1,584.00. When combining the gross salary with these associated employer costs, the total annual cost to employ this individual amounts to RON 16,608.96. This breakdown provides insight into the overall financial commitment associated with employing someone in Romania, encompassing salary and various additional expenses.
Personal Income Tax
Tax Residency for Romanian Citizens:
Taxation for Non-Domiciled Romanian Citizens and Foreign Individuals:
Personal Income Tax Rates:
Local Income Taxes:
Employee Benefits in Romania
The employer is obligated to recompense overtime in either of two ways: (1) by providing paid time off within the following 90 days or (2) by making an additional payment, the sum of which must not be less than 75% of the base salary for the overtime worked. In the event that overtime work is performed on public holidays, the employer must choose between (1) compensating the employee with paid time off within the subsequent 30 days or (2) making an additional payment equivalent to at least 100% of the base salary. Although the law designates paid time off as the primary mode of compensation, most employees express a preference for overtime payment.
Termination, Severance Pay and Notice Period
In the realm of employment contracts, Romanian law draws a line between managerial and operational positions, each subject to specific considerations during the termination process.
Termination of employment may occur at the contract or probation period’s conclusion, at the employee’s request, or upon the employer’s request.
If the termination is initiated by the employer before the employment contract concludes, it must be based on valid reasons such as physical or mental incapacity, professional inadequacy, or redundancy. The employer is obligated to furnish written reasons for dismissal.
Constraints on TerminationCertain restrictions limit terminations; employees cannot be dismissed during leaves, temporary disability, quarantine, or pregnancy if the employer was aware of the pregnancy.
Notice PeriodEmployees are entitled to a minimum notice period of 20 days before termination. Executives are expected to provide a 20-day notice for resignation, while managerial positions necessitate a 45-day notice.
Severance PayNotably, Romanian law does not mandate severance pay as a requirement.
Work Permit in Romania
Securing a work permit is mandatory for non-EU/EEA/Swiss individuals employed in Romania, and this authorization is granted upon the employer’s request by Romanian immigration authorities. The work permit serves as a crucial document for obtaining a long-stay visa or residence permit, ensuring that foreigners cannot engage in work in Romania without obtaining this essential permit.
It’s important to note that a work permit doesn’t confer general permission for employment in Romania; rather, it is specific to a single company (as requested by the employer) and a particular position. Should a foreign individual transition from one company to another, obtaining a new work permit is mandatory, even if the existing one is still valid.
Recent enhancements have streamlined conditions for job changes within the same employer or changing employers, provided the single permit or EU Blue card remains valid. In such cases, individuals are exempted from providing proof of selection or payment of obligations to the state budget, as long as they can present a clean criminal record statement issued by Romanian authorities.
Various types of work permits cater to distinct employment scenarios:
Work Permit for Local Hires:
Work Permit for Highly-Skilled Employees:
Work Permit for Assignees:
Work Permit for ICT Worker:
Top Cities with Remote Talent in Romania
Romania has emerged as a promising destination for digital nomads and remote workers, bolstered by its recent introduction of a special digital nomad visa. Positioned to become Europe’s new hotspot, Romania boasts key features that appeal to remote professionals, including reliable and fast internet connections, accessible housing, stunning natural landscapes, and a low cost of living.
OverviewAs Romania’s largest city and the EU’s 5th largest, Bucharest serves as the main economic hub and offers a bustling big-city life. Recognized as the world’s best city for remote work, it hosts a thriving IT industry and startup scene.
AttractionsCharming old town, historical sites, and extensive flight connectivity.
Co-working OptionsTech Hub, Commons Romania, Impact Hub, Hotspot Workhub.
OverviewWith a population of around 250,000, Brasov stands out as a mid-sized town surrounded by picturesque landscapes. Ideal for nature enthusiasts and winter sports lovers, it is situated at the foot of the Carpathian mountains
AttractionsCobblestone streets, proximity to skiing options, and historical landmarks.
Co-working OptionsKoolWerk, Hubba Hubba, Hub 1317.
OverviewConstanta, a port city on the Black Sea coast, offers a base for exploring the region. With around 300,000 inhabitants, it boasts affordability and good connectivity to Bucharest.
AttractionsBlack Sea coast exploration, historical sites.
Co-working OptionsTomis Hub Constanta, B.House.
OverviewAs Romania’s third-largest city and a major tech hub, Timișoara features a pedestrian old town, parks, and a vibrant outdoor cafe culture. Well-connected to Hungary and Serbia, it’s an excellent base for exploration.
AttractionsHistoric charm, outdoor culture, proximity to neighboring countries.
Co-working OptionsWorkify Workify, Cowork Timisoara – The Garden.
OverviewRomania’s second-largest city, Cluj-Napoca, has evolved into an IT stronghold with a youthful population. It offers a mix of historical landmarks, universities, and a lively nightlife.
AttractionsEducational institutions, nightlife, cultural events.
Co-working OptionsCluj Cowork, ClujHub, Silicon Forest.
Things to Consider Before Choosing Romania:
Schengen StatusRomania is an EU member but not part of Schengen. Visa considerations should align with this distinction.
Permanent StayFor those considering permanent residence, setting up a local company involves costs and time.
ExpectationsRomania is a wonderful country, but it remains a conservative society.
International ImageWhile corruption and crime are concerns, they are unlikely to affect visitors directly.
Road SafetyRomania faces road safety challenges, and caution is advised for drivers.
EOR Solutions in Romania
- EOR for Prospective Employees: Mercans offers seamless Employer of Record (EOR) solutions for businesses that have already identified their ideal candidates in Romania. Our services encompass every aspect of the employee lifecycle, ensuring compliance with Romanian labor laws and regulations.
- EOR + Recruitment: For those seeking assistance in talent acquisition, our EOR and recruitment services provide a holistic solution. We tap into our extensive network and expertise to help you find, onboard, and retain top talent, streamlining your expansion into the Romanian market.
- Visa Sponsorship and Global Mobility: Navigating the intricacies of expatriate employment is simplified through our visa sponsorship and global mobility services. We facilitate the relocation of your international workforce, ensuring compliance with Romania immigration and employment laws.
- AOR for Contractor Payments: Businesses grappling with contractor payments can leverage our Assistance on Record (AOR) services. We handle the complexities of contractor payments, guaranteeing accuracy and compliance.
- Converting Freelancers to Employees: Mercans supports the transition from independent contractors to permanent employees in Romania. Our expertise ensures smooth conversions while adhering to legal requirements.
- HCM Integration: Integrate Mercans’ EOR services seamlessly with your HCM system in Romania for real-time data exchange, enhanced compliance, and cost-efficiency. Trust our expertise for a unified, compliant, and efficient approach, elevating your workforce management and payroll operations.
Embark on a confident entry into the Romanian market with Mercans’ effective Employer of Record (EOR) solution, guaranteeing strict compliance with the nation’s labor regulations. Effortlessly navigate the complexities of business expansion, cultivating a successful global footprint. Rely on Mercans’ local experts in Romania for comprehensive guidance on every aspect of expanding your business in the country.