Hire in Romania with Confidence

Employment Laws

In Romania, employment relations are regulated by various national legal acts, collective bargaining agreements, the European Union legislation, and local labor courts. The following legal acts are primary when determining the nature of an employment relationship:

• Romanian Labor Code (Law 53/2003)
• Law no. 16/2017 regarding secondment of the employees
• The Order of the Ministry of employment no. 64/2003 regarding the type-form of the labor contract
• Romanian Fiscal Code, 2016
• Government Decision No. 300/2006

 

Local labor courts supervise and authorize re-characterization of civil/collaboration contracts as employment contracts. They also override any choice of law made by the parties which deprives a worker of mandatory protection afforded by Romanian employment law.

 

There are three types of employment agreement in Romania:

• Permanent (Contract individual de muncă pe durată nedeterminată)
• Part-time (Contract individual de muncă cu timp partial)
• Fixed-term (Contract individual de muncă pe durată determinata)

 

Collective bargaining agreements (CBAs) may apply.

 

Employment contracts must be concluded in writing and in Romanian. They must be registered in the electronic records of a local labor office before the employment can actually begin.

Hiring Practice

Candidates are recruited externally through job boards and advertising. An applicant must submit their CV to the employer.

 

Selected applicants receive an offer letter, and a written contract, if concluded, must be provided the day before the employment start date. In Romania, any employment contract that does not specify the duration of the agreement is considered to be indefinite by default.

 

The following aspects must be collected and included in the contract, in addition to special clauses, if applicable:

• Names of the parties
• List of duties
• Employment start date
• Duration of the contract for fixed-term agreements
• Probation period (if applicable)
• Total number of holidays
• Job risks
• Workplace
• Work performance evaluation criteria
• Employee benefits
• Information on CBAs
• Salary and payment frequency
• Working hours
• Notice period

 

Employers reserve the right to perform background checks during the hiring process, but they must not request any information that is not related to the nature of the work. This process can be delegated to third parties, provided they comply with the European Union privacy regulations. Medical checks are required, and a person can only be hired if they have a medical certificate proving they are physically fit to work. Pregnancy tests are not allowed, and any information pertaining to it cannot be requested. Testing for drugs and alcohol can only be conducted with the employee’s consent.

 

Probation period must not exceed 3 months.

Tax Documents

The tax year runs from 1 January to 31 December. 

 

Employers withhold taxes and social security contributions on the payment of salaries. Employers registered in Romania file personal income tax (impozitul pe venitul personal) reports on an annual basis by 25th May each year for the previous fiscal year using the form D402. Non-Romanian employers’ reports must be declared in form D224, due on the 25th of the month following the one for which the payroll is processed.

 

Companies are obliged to pay for mandatory health insurance, make work and pension fund contributions, as well as withhold personal income tax in addition to other corporate taxes, such as the overall VAT. 

Withholdings and contributions can be submitted and paid online.

Payer's Tax Withholding & Reporting Requirements

Employers must withhold the following deductions and make the following flat-rate payments each year for each employee:

• Pension insurance – 25%
• Health insurance – 10%
• Personal income tax – 10%
• Labor insurance – 2.25%
• VAT – 19%

Remuneration

Employers are expected to pay their staff via automatic payroll deposits to their bank accounts. Currencies other than the Romanian leu (RON) are allowed.

Workers’ Rights

In Romania, employees enjoy the following rights:

• Paid annual leave – 20 days; 23 days for employees working under special conditions
• Sick leave – 183 days; first 5 days are paid by the employer, the rest is covered by health insurance. Paid at 75-100% salary rate depending on the illness 
• Maternity leave – 126 days (split equally between the periods before and after birth)
• Paternity leave – 5-10 days
• Parental leave – 2 years; can be taken only by one of the parents; paid by the Social Security at 85% salary rate
• Premium payment rate for overtime work – 175%
• Termination notice – 20 business days for regular employees, 45 business days for managerial ones
• Severance pay – determined by the contract or CBA, granted only to those who were dismissed because they lost the physical or mental ability to perform their job
• Minimum wage – RON 3,000 (EUR 600)

Benefits

All employees must have health, pension and labor insurance, which are funded by regular withholdings from salaries. 

 

Employees may be granted additional internal benefits not otherwise governed by labor laws.

When Paid

Once a month on the payment date stated in the contract, usually at the end or at the beginning of the month.

Employment Laws

Independent contractors can render services as sole proprietors under two professional categories:

• Individual contractors (antreprenori individuali)
• Liberal professionals (profesioniști liberali)

 

Independent contractor engagements are regulated by specific provisions of the agreement, as well as the Romanian Civil and Fiscal codes. Employment re-characterization is handled by labor courts. If a contractor believes that his relationship with the company falls into a scope of employment relationship, a court proceeding may determine it as such.

Hiring Practice

Through professional employer organizations or directly.

 

Contractors can be hired directly or via a third party, such as a staffing agency. Contractors may be found via word-of-mouth, job boards, social networks, industry bodies, or other forums. Although hiring practices vary, the contractor may be asked to provide a CV, portfolio, and references and possibly sign an NDA.

 

An independent contractor agreement must clearly stipulate an independent nature of the work for it to be considered valid and not regarded as an employment contract. A contract may include negotiated clauses without restrictions except for those prohibited byt the civil legislation. 

 

The following aspects must be stipulated:

• Pay rates and arrangements
• Scope of services
• Contract duration
• Termination terms

 

Independent contractors cannot work in ports operations. They also cannot be hired for public services (lawyers are an exception).

Tax Documents

Some contractors file annual personal income tax reports and VAT, and pay social security contributions on their own.

 

Independent contractors must pay:

• Pension insurance – 25%
• Health insurance – 10%
• Personal income tax – 10%
• VAT – 19%

 

Liberal professionals may be subject to different pension contributions as they often have their own pension funds.

Payer's Tax Withholding & Reporting Requirements

Earnings of independent contractors are subject to personal income tax, social security contributions, and VAT, which they pay and file on their own without any involvement of a hiring organization.

 

Payer’s Withholding / Reporting Requirements for Independent Contractors

 

Companies hiring independent contractors are subject to social security contributions if any of the following conditions  are met:

• A company is registered in Romania and pays contractors directly
• A company is registered in Romania and pays contractors through a third-party payment processor registered in Romania
• A company is not registered in Romania, but is subject to an applicable EU social security legislation, and pays contractors directly

Remuneration

There is no obligation to pay independent contractors monthly. Employers are responsible for providing consistent compensation. There are no standard payment terms. Remuneration frequency is to be agreed upon between the contractor and the employer. Payments become due after the contractor issues an invoice. Currencies other than the Romanian leu are allowed.

Workers’ Rights

Independent contractors are not entitled to any employer-granted rights, unless otherwise stipulated in the contract. There is also no minimum wage.

Benefits

Sick leave, maternity, paternity, parental allowances, and pension benefits are granted by the state. 

 

There is no protection from a sudden termination of the contract. 

 

Third-party benefits granted by professional employer organizations may apply when an independent contractor is hired through such an organization (i.e. umbrella company) and is considered its employee.

When Paid

Typical contractor invoices are issued monthly on net 30-day terms. Each invoice usually includes the following details:

• Invoice number and date
• The client’s name and address
• The contractor’s bank details
• Agreed payment terms and due date