How Boundless employs your workers in Romania

To employ your workers in a compliant way locally in Romania, Boundless holds a temporary agency licence. According to Romanian employment law, that is necessary because a company cannot hire people on behalf of another company unless it has the legal framework to do so, which comes with the license.

It's important to understand that while Boundless has a temporary agency license, we do not source talent. Instead, we take legal responsibility for the workers, calculating and paying social security and health insurance contributions, running their payroll, filing taxes, etc.

The mechanics involve a three-party arrangement between the worker, the temp agency and the business benefiting from the work performed. That arrangement comes with two separate agreements - an employment one between the worker and the temp agency and a customer one between the temp agency and the business.

The contract is for a maximum of 36 months. During that time, the employee has access to full statutory employment rights, including paid time off and other forms of paid leave, access to unemployment benefits, and a host of protections.

What Boundless does for you

As a temp agency, we establish and maintain the legal employment relationship with the worker. That starts with signing a fixed-term employment agreement, which takes about two weeks since there is an obligatory pre-employment medical check.

Every month we calculate the payroll, deduct all mandatory contributions such as the insurance premium, and provide the worker with a payslip. We file all necessary taxes and pay mandatory contributions to respective authorities.

What you do

You sign our standard commercial agreement that we use for most of the countries we are in, which you can end with one month's notice. You also sign a customer agreement for each employee you hire through us. The appendix of this agreement includes detailed employee information.

What the employee does

The employee signs an employment contract with Boundless before starting employment, explicitly stating that they will perform work for the user employer. The employment agreement can be signed with a qualified electronic signature before the start date.

The employee will need to do a medical examination before starting their job. If an employee wants to end their employment before the contract end date they will need to send us the resignation letter, stating their resignation and last working day according to the notice.

Independent Contractor Contract & Employment Guidelines in Romania

Contractor length allowance

A company can work with an independent contractor for as long as it wants. However, their relationship mustn’t be a disguised form of employment.

The total duration of fixed-term contracts between the same parties cannot exceed 36 months. One contract cannot last for more than 12 months, with a maximum of three successive contracts allowed.

What makes someone an employee

Workers can fall under two different categories: (1) permanent employees of a company and (2) independent contractors or self-employed. Employees sign employment contracts, while independent contractors sign commercial contracts. Distinguishing the two categories can be a legally difficult task, which often involves looking at the subtle details of the worker-company relationship.

As per the Romanian Tax Code provisions, an independent activity is any activity carried out by a person who fulfils at least four of the following criteria:

• Having the freedom to choose the place and the way of carrying out the activity, as well as the work schedule
• Having the freedom to carry out the activity for several clients
• Assuming the risks inherent in the activity while carrying it out
• Using one’s patrimony while carrying out the activity
• Performing the activity by using one’s intellectual capacity and/or physical performance, depending on the specifics of the activity
• Being part of a professional body/order with the role of representation, regulation, and supervision of the profession, according to the special normative acts that regulate the organization and exercise of the respective profession
• Having the freedom to carry out the activity directly, with employed staff or through collaboration with third parties in accordance with the law

If a person doesn’t meet at least four of the above conditions, the law may see the person as an employee and retroactively impose corresponding taxes and social contributions on such employee-employer relationship.

Employee vs contractor

When it comes to benefits entitlement, tax contributions, leaves, and protection against termination, the law treats employees and independent contractors differently. Only employees are entitled to all the statutory benefits and rights covered under the Labour Code, such as the right to trade unions, the minimum statutory annual leave, maximum weekly working hours, overtime, notice period before termination, and severance payment. Contractors can receive pension and social security benefits (such as sick and maternity leave) as long as they make voluntarily contributions.

Companies need to have a valid and fair reason to terminate an employee. As for contractors, companies don’t provide any increased protection (unless agreed otherwise), such as a notice period or severance pay, and can terminate a contract overnight for any cause, with most health and safety regulations and employer’s liability not extended to contractors.

Penalties for misclassification in Romania

In case the tax authorities re-qualify an independent contract as being a dependent activity, they can impose employment-related taxes and social contributions retroactively. If the authorities determine that an employer has used an independent contract to avoid paying taxes, they can classify the employer’s actions as tax fraud, which is a criminal offence.

Employee Termination Procedures & Guidelines in Romania

Termination procedure

The employer can terminate an employment agreement due to various circumstances.

De jure termination

• At the date of the employee’s death or the employing company’s dissolution
• At the date of the employee’s death declared by the court or the employee’s being banned from working by the court
• At the date the retiring conditions are met (standard retirement age and minimum contribution stage), at the date the retirement decision is communicated, or at the date the medical decision of work incapacity is communicated in case of disablement
• As a result of the contract being declared null
• As a result of accepting a reintegration request for an employee unlawfully dismissed (relevant for the employee who replaced the reintegrated individual)
• As a result of the employee’s criminal conviction
• At the date of the employee’s work authorization or permits being revoked by the authorities
• At the date of the employee’s professional activities being banned by the court
• At the date when the employment agreement concluded for a determined period expires
• As a result of the parent’s consent being withdrawn regarding employees between the ages of 15 and 16

During the probation period

Either party may terminate a contract during the probation period, without the requirement of observing the notice period and based on a written notification.

By mutual agreement

The contract can end (1) following the employee’s request to end the contract at a specific date (with no notice period observed) as a result of the employer’s consent or (2) following the mutual agreement signed between the parties (with no notice period observed).

Summary dismissal

The employer can dismiss the employee in various situations.

A. Reasons pertaining to the employee:

• if the employee commits a gross misconduct
• if the employee is pre-emptively arrested for a period exceeding 30 days
• if the authorized regulator deems the employee to be physically or mentally inadequate for the position
• if the employee is professionally inadequate

In the case of a gross misconduct, certain steps have to be followed before a disciplinary dismissal:

• The employer has to be notified of the employee’s misconduct.
• A disciplinary committee has to be formed.
• The employee has to receive a notification of the disciplinary hearing, with the following elements included:
• list of the committee members
• date, hours, place of the hearing
• the action that is the object of the hearing
• confirmation that the employee’s representative/lawyer can accompany the employee for the purpose of defence

After the hearing takes place, the committee makes a decision, weighing the accusation and the employee’s defence.

If the employee refuses to appear at the hearing, the committee can perform the hearing in the employee’s absence. If the committee decides to terminate the employment, they have to bring their decision to the employee’s attention within not more than five days.

To prove the employee’s professional inadequacy, a direct manager must first present a review of poor results with observations.

Then, the manager has to draw up an action plan, giving the employee a chance to get the performance back on track by a certain date.

If the result isn’t successful, the employer has to offer the employee another position in the company, more appropriate to the employee’s abilities.

Finally, if such position isn’t available, the employer can proceed with the dismissal.

B. Reasons not pertaining to the employee:

• The employer cancels the position (redundancy).
• The employer carries out a collective dismissal.

The employer must issue an objective reason regarding each dismissal cause mentioned above, with as many details as possible:

• no use for the position due to externalised services
• financial loss
• decrease in activity
• poor company performance and need to reduce its activity

Unfair Dismissal Guidelines in Romania

Employee termination protection

Certain employees find protection from being dismissed during certain periods of their lives, as follows:

• Illness, with medical proof
• Pregnancy and maternity leave
• Paternity leave
• Parental leave (The period during which the employee can’t be dismissed is extended by six months from the date the employee returns to work from parental leave.)
• Performance of a military exercise

In addition employees cannot be terminated for any reasons that may be deemed discriminatory such as their race, sex, language, political or union views, or religion.

They also are protected from termination when the employee is in receipt of reinsertion allowance and for exercising the rights to be informed on employment-related issues, trial periods, requesting a transition to a vacant position with more favourable conditions; participating in professional training courses provided by the employer.

Consequences if termination is deemed unlawful

Employees have the right to challenge termination decisions in court. Proceedings usually take around one year, depending on complexity. If the employee wins, the court declares the termination invalid. Then, the employer reinstates the employee, covering the employee’s court expenses and paying the employee’s salary and other salary rights for the period between termination and reinstatement. On rare occasions, the employee can also receive additional compensation for moral damages.

Resignation Procedure in Romania

Employees can resign after observing the notice period, or the employer can waver part or all of the notice period, with a maximum notice period being 20 working days (45 for management positions). In practice, if the employee doesn’t want to observe the notice period in full, the employer has no way to enforce it.

Redundancy Pay and Entitlement in Romania

Protection against unfair dismissals

Employers need to have a valid and recognised reason to terminate an employee. The Labour Code recognises the following as such reasons:

• Redundancy or layoff caused by organisational changes
• Company’s dissolution or relocation
• Employee’s being medically unfit to work
• Failure to fulfil the performance requirements or the work results, with no position more suitable being available in the company
• Breach of work-related obligation(s) and misconduct
• Probationary period.
• End of the fixed-term contract.

Notice of termination

Notice period duration in case of dismissal, should be no shorter than 20 working days.

Other End of Employment Guidelines in Romania

Severance

The employee can claim severance pay if the company ceases to exist or relocates, or if the employee’s role becomes redundant as a result of the company’s re-organization. Individual or collective agreements should contain the amount of severance pay, with a minimum of one month’s salary being the practice.

Notice period

Notice period in case of resignation, should be no longer than 20 working days for execution positions and 45 working days for management positions.

Holiday Leave in Romania

Holiday entitlement

By law, both full-time and part-time employees can receive 20 days of annual paid leave accrued progressively based on hours worked. However, employers commonly give more than this statutory minimum. Employees can receive pay for unused leave upon termination only.

Employees should use their accrued leave in the same year; however, they can also carry it forward for 18 months. They must take at least one part of their leave as a two-week block.

By the end of each year, employers have the obligation to make a schedule of leaves during the following year, indicating either precise dates or periods of up to three months when employees should take their leaves.

Bank holiday

Romania has 15 public holidays observed on the days on which they fall:

Those celebrating other religions receive two paid days off for each three annual holidays.

If the employer requires the employee to work on a holiday, the employee can either receive double pay for that day or get a different day off to be used by the third calendar month following the holiday.

Types of Leave in Romania

Sick leave

Employees can take a paid sick leave based on a medical certificate issued by a medic/family doctor/specialist, etc., with most common leaves taken for the following reasons:

• Normal work incapacity (75% coverage)
• Surgical emergencies (100% coverage)
• COVID-related sick leave (100% coverage)
• Maternity leave (85% coverage)
• Caring for a sick child (85% coverage)

In order to benefit from the payment during sick leave, the employee must have paid social contributions for at least 6 months over the last 12. During the leave, employees receive payments according to the Indemnity Code, calculated based on (1) the nature of the specific illness (covered 75%–100%) and (2) the average income from the previous 6 months.

The employer financially covers sick leaves, based on the corresponding percentage. However, the National Health Insurance Fund reimburses eligible amounts as follows:

• COVID-related leaves, maternity leaves, and caring-for-a-sick-child leaves, starting with the first day
• Other leaves, starting with the sixth day

The downside is that payments are slow due to the high number of requests and lack of funds, taking employers up to a few years to receive the amounts.

Maternity leave

The pregnant employee can receive maternity leave based on the certificate issued by the medic who determines the leave start date. The leave can last for 126 calendar days, begin before the birth of the child, and end after. However, the employee must take at least 42 days of the leave, following the birth date.

Paternity leave

Male employees can receive up to ten working days of paternity leave plus five days if the father has an infant care certificate. The paternity leave must start within eight weeks of the birth date. The employer covers 100% of the employee’s regular salary.

Parental leave

Employees can take child care leave up until the time the child turns two years old (three years old in disability cases). Either parent can take it; however, commonly, mothers do, usually starting on the day following the end of maternity leave. During this leave, the employer suspends the employee’s contract and no longer pays, while the employee receives an indemnity payment from the local social services.

By law, the father has to take at least one month of parental leave as well, while the mother returns to work. They can’t both take the leave simultaneously, since only one parent at a time can receive the state indemnity.

The mother can return from the child care leave sooner, based on the request to return from leave. Most mothers choose to return to work two months earlier, since thus they receive the state’s insertion bonus given until the child turns three years old.

Without her salary being affected, the pregnant employee can benefit from the shift reduction — from eight hours a day to six hours a day — based on the certificate issued by the doctor.

If returning sooner after child care leave, the mother can benefit from two hours’ shift reduction for breastfeeding, until the child turns one year old.

By law, the employer can’t dismiss an employee for six months following the return from child care leave or during the time she benefits from the insertion bonus.

Adoption leave

Adopting parents can take a paid leave of up to one year as accommodation leave, which is the corresponding child care leave. Prior to this, the employer has to grant the adopting parent 40 hours per year (as paid time off) to carry out the required assessments and certifications and to assess the practical fit.

Special events leave

Employers also grant additional paid leaves for special occasions:

• Marriage* – five days
• Marriage of a child* – two days
• Birth of a child – ten days (paternity leave) with five additional days granted if the father successfully completes a childcare course, taken in the first eight weeks following the birth date
• Death of a husband/wife, child, parent, in-laws* – three days
• Death of grandparents, siblings* – one day
• Blood donation – one day
• COVID vaccination – one day (no time limit clearly set)

* The above number-of-days guideline represents the common practice based on the National Collective Labour Agreement used until 2011. Since then, employers have used either this guideline or the internal regulations as a reference.

Unpaid leave

Employees can request unpaid leave for personal reasons, during which the employer suspends their contract and pays no salary. The maximum period during which the employee can benefit from unpaid leave is subject to the employer’s discretion and the internal regulations, with common practice being one month per year.

Standard hours in Romania

Typical weekly working hours (40) are Monday through Friday, 9 a.m. to 6 p.m., with an unpaid one-hour lunch break. The employer (1) must pay the employee overtime for any extra hours worked, (2) must receive the employee’s consent to work overtime, and (3) can’t have part-time workers and minor (under the age of 18) employees work overtime.

Maximum Working Hours & Overtime Laws in Romania

The total number of standard working hours can’t exceed 48 hours per week unless within a four-month reference period the total number of working hours doesn’t exceed the limit of 48 hours per week.

Opt-out option

The Romanian Labour Code doesn’t allow (1) to opt out of the established maximum of working hours and (2) to state that remuneration for overtime is already included in the salary.

Overtime compensation

The employer must compensate overtime with (1) paid time off within the next 90 days or (2) an additional payment that can’t be less than 75% of the base salary for the time worked.

If the employee performs overtime work during public holidays, the employer must (1) compensate the employee with paid time off within the next 30 days or (2) make an additional payment of at least 100% of the base salary.

Most employees prefer overtime payment instead of paid time off, although the law lists paid time off as the primary form of compensation.

Break rights

Employees must get a lunch break if they have to work for more than six hours. Minor employees must get at least a 30-minute break if they have to work for more than four and a half hours.

Employees must get (1) at least a 12-hour break between consecutives working days and (2) a weekly 48-hour break — usually on weekends. If the employer can’t grant the weekly weekend break, the employer can grant other rest days but must pay the employee extra for working on weekends.

Night workers

Work performed between 10 p.m. and 6 a.m. is night work. Employees working (1) at least three hours of their shift or (2) at least 30% of their monthly working hours within this time frame are night workers.

When performing at least three hours of night work, employees can benefit from (1) having a shift that is one hour shorter or (2) receiving an additional payment of at least 25% of the base salary for the hours worked during the night.

Minor employees can’t perform night work.

Time Tracking Obligations in Romania

Companies must keep track of every employee’s worked hours, including overtime, night work, and work emergencies. These records must contain the exact start and end time of each shift.

Penalties

Companies found guilty of not tracking or not keeping records of employees’ worked hours can face the fine of up to RON 10,000. Companies found guilty of not observing overtime rules can face the fine of RON 3,000 per each overtime-working employee.

General Employee Pay Regulations in Romania

Minimum wage

The national gross monthly minimum wage is RON 3,300. 

Frequency

Most employers pay monthly. Some pay biweekly but still calculate the amount for the whole month and consider the first two weeks’ pay as an advance on the monthly salary.

Payday

Usually, employers pay salaries the following month, with the payday date ranging between the current month’s last working day and the 15th of the following month.

Payment requirements

Employers must use Romanian currency to pay employees. Using a local bank account is the preferred option. Romanian authorities don’t recommend using a foreign account, since tracking due to any tax issues can be problematic.

Working from Home Policy in Romania

All the Labour Code regulations apply to teleworkers and remote workers as well as to other employees.

The parties’ teleworking (working from home) agreement specifying the working conditions must be in writing.

Work from home

A teleworker is an employee working from any location other than the designated workplace for at least one day per month.

The employment contract has (1) to specify whether the employee works in teleworking conditions and (2) to contain specific teleworking clauses if that’s the case, such as the following:

• Place/places from which the employee performs the teleworking activity (not mandatory but beneficial from the work health and safety perspective)
• Number of days the employee works from home and/or number of days the employee works from the designated workplace due to listed reasons
• Employer’s ability to check the employee’s work routine and progress
• Employer’s ability to inspect the teleworking space
• Employee’s ability to track worked hours, etc.

Both parties have to approve the teleworking activity and conditions. The employee’s refusal to perform an activity from the workplace cannot be a reason for dismissal or a disciplinary action.

A teleworker has the same rights and obligations as any other employee.

Working conditions

Employers have the obligation (1) to secure (at their own expense and by means of technical and organizational measures), adjust, and establish particular working conditions, workplaces, and sheltered working sites and (2) to train or instruct such employees in order to increase their professional qualifications.

Workspace guidelines in Romania

Employment conditions in Romania

Non-compete

A contract can contain a non-compete clause compelling the employee not to perform in anyone’s interest any activity competing with the employee’s duties performed while working for the employer. For this clause to be compliant with the local rules, the employee has to receive indemnity for the duration of the non-compete clause period. This clause can be effective only if the contract contains the following clearly set elements:

• Specific forbidden activities
• Amount of the monthly non-compete indemnity — negotiable but not lower than 50% of the average gross salary from the last six months prior to the termination date
• Other parties that the employee can’t perform activities for
• Geographic area where the employee can’t perform activities due to the potential competition with the employer

The non-compete clause applies for a maximum of two years, beginning on the termination date. Not complying with this clause can lead to court action or payment of damages. However, the contract can’t contain any specific penalty amount, and the employer has to prove financial loss while seeking damages via legal action.

Business transfer

The EU TUPE rules don’t apply. During a business transfer, employees are transferred automatically to the new employer, cannot be dismissed before or after the transfer, and retain the same rights and obligations as covered under the previous employment relationship. This means that the new employer inherits the same responsibilities and must uphold the same employment conditions as stipulated in the employee’s employment agreement with the transferor, while the transfer has no legal consequence for the employee.

Employers must inform and consult with all employees being transferred at least 30 days before the transfer takes place. However, if trade unions or work councils represent such employees, the employer must inform and consult with them instead. The employer must discuss the legal, economic, and social consequences of the transfer, as well as the reasons, transfer date, and the likely effect of the transfer on the workforce.

Intellectual property

Intellectual property rights over the creations made during employment usually belong to employees unless the contract contains different provisions. However, exceptions exist. The employer keeps the intellectual property rights over computer programs unless the contract states otherwise.

If the employee invents something during an inventive mission or as part of their employment relationship in general, the employer gets patent rights. Where the employer doesn’t claim patent rights, the inventor gets them.

General Employee Rights in Romania

Employment contract

Prior to the start date of employment, the employer and the employee conclude and sign the employment contract in Romanian, with bilingual versions also allowed. Employers must then submit all new contracts and changes to existing contracts via an online platform (ReGES/Revisal) at least one day prior the Revisal effective date of the change.

Only salary changes can be reported 20 days following the effective date. Contract terminations can be reported on the termination date (first day unworked).

All parties have to conclude, sign, and note all the changes in an addendum prior to the effective date.

The employment contract must contain the following information:

• Identification of both parties
• Place of work (e.g., the employer’s registered office, the employee’s residence if teleworking, various workplaces if no fixed workplace is available)
• Contract start date
• Contract duration (e.g., indefinite or definite)
• The employee’s position as per Classification of Occupations in Romania (COR), with the following included in the contract:
  • job description (contract position or internal position)
  • evaluation criteria
  • teleworking clauses
• Annual leave days subject to internal regulations (must be at least 20 working days, excluding legal/bank holidays)
• Probation period
  • For indefinite contracts, it cannot exceed 90 calendar days for executive positions and 120 calendar days for management positions.
  • For fixed-term contracts, the probation period varies depending on the contract’s duration:
    • 5 working days for up-to-three-months’ contracts
    • 15 working days for three-to-six months’ contracts
    • 30 working days for longer-than-six-months’ contracts
    • 45 working days for longer-than-six-months’ contracts for management positions

A contract can contain only one probation period. A new contract can contain an additional probation period to evaluate the employee’s performance in a new role.

• Notice period duration (in case of dismissal, not shorter than 20 working days; in case of resignation, not longer than 20 working days for execution positions and 45 working days for management positions)
• Monthly base salary (for reporting, calculating, and submitting tax statements to the local authorities), salary payment date, other details (e.g., bonuses and meal tickets)
• Type of employment
  • Full time (8 hours per day (a maximum of 6 hours for minors), 40 hours per week
  • Part time (mandatory requirement to specify the exact time slot the employee will be working; no allowed overtime)

Omitting any of the above information invalidates the contract. The parties must note all the changes to their employment agreement (e.g., base salary, working hours, workplace, position) in an addendum.

Payslip

The employee has the right to receive the payslip monthly (most commonly, electronically).

The payslip has to show the monthly base salary, hours worked and corresponding salary, vacation days and corresponding salary, any medical leave days, any bonuses, deductions and benefits (meal tickets), social taxes withheld and remaining net salary.

Health and safety

The employer is obligated to have work, health, and safety services provider (SSM) responsible for the following:

• Instructing and training employees on health and safety rules
• Performing regular internal health and safety inspections

The employer has to draw up and implement a risk prevention policy detailing ways that employees can identify, evaluate, and minimize the risks – especially, in a home-office environment.

Most often, you can find the health and safety regulations in the employment contract’s annexes.

Medical examination

A specialised labour medical services provider/clinic must examine the employee prior to the start date. The employee must have this type of medical exam yearly (or twice a year for food industry workers and in other special situations set in industry-specific rules). Failing to have the medical checkup will invalidate their contract.

Employee Protections in Romania

Protection from termination

Certain employees find protection from being dismissed during certain periods of their lives, as follows:

• Illness, with medical proof
• Pregnancy and maternity leave
• Paternity leave
• Parental leave (The period during which the employee can’t be dismissed is extended by six months from the date the employee returns to work from parental leave.)
• Performance of a military exercise

Protection from discrimination

Employees have the right to be protected from discrimination at work and during all stages of the employment cycle, from interviews to termination, based on the following:

• gender
• racial or ethnic origin
• nationality
• age
• sexual orientation
• union membership
• religious and political beliefs
• physical or mental disability

If an employee brings the discrimination concern to the court, the employer usually bears the burden of proof.

Equal treatment

All employees have the right to be treated equally at work with respect to the working conditions regardless of gender, disability, or any other ground for discrimination. Employers must (1) give the same benefits, training, and promotion opportunities to all employees and (2) pay the same remuneration for work of the same value and conditions.

Reasonable accommodation

Employees with disability have a right to reasonable accommodation of their workplace. Employers have the obligation (1) to secure (at their own expense and by means of technical and organisational measures), adjust, and establish particular working conditions, workplaces, and sheltered working sites and (2) to train or instruct such employees in order to increase their professional qualifications.

Whistleblower protection

No special regulations protect whistleblowers. However, the employer (1) mustn’t put the employee at a disadvantage merely because the employee lawfully claims rights arising from the employment relationship and (2) cannot dismiss or subject to any detriment the employee who submits a genuinely held complaint in good faith.

Data protection (GDPR)

The EU General Data Protection Regulation (GDPR) rules apply in Romania, granting the right to privacy and the right to determine who is to receive personal data. The employer may process personal data for the purposes of (1) establishing the employment relationship, (2) terminating the employment relationship, or (3) complying with information duties regarding employee representatives under statutory law, a collective bargaining agreement, or a works agreement. Any further use of personal data requires the employee’s direct consent.

Employers controlling data have the duty to keep records of their data-processing activities, particularly with respect to (1) personal data processed systematically and (2) all employees’ personal data. Companies must also inform employees about the processing taking place and secure the processed data by implementing appropriate technical and organisational measures, depending on the type of data processed and the extent of such processing.

Companies are free to transfer personal data among the members of the European Union and the European Economic Area that adhere to the GDPR rules. For data to be transferred outside these parameters, the recipient of the data must ensure an adequate level of protection.

Required Employee Benefits in Romania

Unemployment allowance

If Romanian citizens fall under one of the following categories, they become eligible for unemployment indemnity paid by the Local Workforce Occupation Authority:

• The employment contract is terminated by dismissal through no fault of the employee.

This means the contract can’t be terminated by resignation, mutual agreement, or dismissal due to gross misconduct.

Here are the factors making a person eligible for unemployment indemnity in the case of dismissal:

• The person must have paid social security contributions for at least 12 months in the two years prior to the unemployment application.
• The person’s obtained income doesn’t place the person above the reference social indicator.
• The person cannot apply for pension due to reaching the age limit.
• The person has to be registered at the Local Workforce Occupation Authority, looking for a new job.
• The term of office for which the person was appointed or elected has ended, if the person hadn’t been previously employed, or if the resumption of the activity is no longer possible, since the employer no longer operates.
• The period for which the soldiers were employed on a contract basis has expired, or their contract has been terminated for reasons beyond their control.
• The person is no longer employed as a cooperative member for reasons beyond the person’s control.
• The person has concluded an unemployment insurance contract and (1) doesn’t generate income or (2) doesn’t generate income from activities authorized by law, which places the person below the reference social indicator.
• The person stopped working due to disability and, subsequently, regained the ability to work but hasn’t managed to find another job.
• The employer liquidated the person’s position or their service relationship while the person was off work for reasons not attributable to the person.
• The person aged at least 16 and a graduate of an educational institution for people with disabilities hasn’t been able to find professional work within 60 days following graduation.
• The person can no longer reintegrate into work (as ordered by a final court decision), since the units where the person was previously employed either took over the person’s assets or no longer operate.

Time off

Employees are entitled to time off paid by either the employer or the social security authorities in the following circumstances:

• illness, with medical proof
• maternity leave – 126 days
• paternity leave – 10 or 15 working days
• parental leave until the child turns two
• adoption leave
• special events (marriage, death of a relative, blood donation)
• compensation for overtime or work during legal holidays
• professional training if not employer provided

For more details, see the Leave section.

Mandatory Benefits in Romania

The only mandatory benefits are those covered under the social security insurance and funded by contributions made during employment by employers and employees.

Retirement pension

Employees must contribute into the compulsory pension benefit administered by the Romanian National Pensions House. Employees contribute 25% of their gross remuneration (withheld and paid by the employer monthly).

To be eligible for retirement pension, a person must have (1) contributed to the fund for at least 16 years and (2) reached the minimum retirement age. The standard retirement age is 65 years for men and 61 years and six months for women, increasing gradually to 63 years by 2030. The full contribution period is 65 years for men and 31 years and six months for women, increasing gradually to 35 years by 2030.

The actual amount received as pension is determined based on a system of points calculated each month, with the gross wage or insured income of the applicant being divided by the gross average wage earned at national level and reported by the National Institute for Statistics.

The state transfers part of the pension contribution paid by the employee to a privately managed pension fund chosen by the employee, known as Pillar II. The amount is currently 3.75% and is scheduled to increase gradually.

Unemployment indemnity

If Romanian citizens fall under specific categories, they will be eligible for unemployment indemnity paid by the Local Workforce Occupation Authority.

For more details, see the End of Employment section.

Employer Contributions in Romania

Work insurance contribution

Employers in Romania pay a 2.25% work insurance contribution based on the employee’s total taxable monthly income.

Employee Contributions in Romania

Social insurance

Employees in Romania must make mandatory contributions to the social security insurance monthly. The social security system finances old-age pension, sickness, and unemployment benefits. Employees contribute at a rate of 25% of their gross salary, including taxable benefits and allowances.

Health insurance

Employees in Romania make mandatory contributions to health insurance monthly. Employees contribute at a rate of 10% of their gross salary, including taxable benefits and allowances.

Income tax

Employees pay a 10% net income tax which is based on the gross salary minus pension, health, and personal deductions.

Employers must withhold each employee’s income tax contribution monthly and remit it to the tax authorities. Thus, employees don’t have to do any individual tax filing related to their salary income.

Benefits-in-kind taxation

Benefits in kind received as a result of employment are taxable income, except for a few minor exceptions, and are valued in principle at open-market values. A few exceptions include:

• Meal tickets: subject to income tax only, with the corresponding tax deducted from the net salary
• Gift tickets: granted for special occasions and non-taxable up to RON 300
• Private pension and private health insurance: tax-free up to EUR 400 per year; once above the limit, taxed as a salary benefit
• Vacation/tourism tickets: subject only to income tax if the cost is less than six minimum gross salaries; used for internal destinations/services
• Travel allowance: granted to employees and family members within the limit of a medium gross salary (RON 6,095), based on an expense report
• Cultural tickets: subject to income tax when up to RON 170 per month or RON 350 infrequently
• Mobility indemnity: RON 1,000 net non-taxable, for employees not carrying out their activities from a specific workplace (e.g., sales agents), with no additional travel allowance permitted

Teleworking allowance used to be a non-taxable benefit but will be starting from 2024. All amounts granted will be taxed with social contributions (public pension 25%, public health fund 10%) and income tax (10%).

The reimbursement of travel expenses in excess of fairly low statutory limits is also a taxable benefit for employees. Certain non-monetary educational and health benefits aren’t taxable under certain conditions.

Temporary accommodation provided by an employer as a non-monetary benefit is generally taxable with very few exceptions. A cash accommodation allowance is taxable.

On January 1, 2023, a new fiscal rule came into force, changing the benefit taxation. The limit for non-taxable benefits is 33% of the base salary. It means that if the total amount of monthly benefits received by the employee exceeds the 33% limit, the amount will be taxed as a salary benefit (pension, health, income tax).

The following benefits are exempt from the new regulation:

• meal tickets, holiday tickets, gift tickets, cultural tickets, daycare tickets
• burial assistance, serious and incurable disease assistance, medical devices, birth/adoption assistance, assistance granted for losses resulting from natural calamities
• employee’s transportation costs (to and from work)
• meal allowances if under the applicable regulations no food is permitted in the workspace
• delegation and detachment indemnities, indemnities received by mobile workers
• phone subscription costs
• employer-supported professional development expenses
• stock options plan benefits

As a general rule, all benefits are subject to the employer’s decision to grant them and should be detailed in the internal regulations.

Deductions

Romania doesn’t have a system of tax credits, but it does have a limited system of deductions for income tax calculations.

Employees with gross salaries under RON 3,600 benefit from a personal income tax deduction, depending on salary thresholds and the number of dependents.

Employees suffering from certain degrees of handicap (serious or pronounced) are exempt from paying income tax. They also benefit from three additional vacation days.

Private pension contributions

Employees making personal monthly contributions to a private pension fund are eligible for a corresponding income tax deduction of up to EUR 400 per year; however, they must provide their employers with proof of such contributions.

Employment expenses

Employees receive no deductions for expenditures incurred in connection with taxable income from employment. However, sums received by way of reimbursement for travel expenses, based on supporting documents and travel allowance, are exempt from tax as long as they don’t exceed statutory limits.

Employees working from home (teleworkers) are allowed to receive up to RON 400 per month tax-free to cover related utilities expenses, with no receipts or other supporting documents required.

Hiring in Romania at a glance

CURRENCY

Romanian Leu (RON)

WORKING HOURS

40 Hours

PUBLIC/BANK HOLIDAYS

15 days of national holidays, with at least 2 on Sundays

CAPITAL

Bucharest

LANGUAGE

Romanian

REMOTE WORKERS

MINIMUM MONTHLY SALARY

RON 3,300 gross

TAX YEAR

January 1 to December 31

DATE FORMAT

Day/Month/Year

MISCLASSIFICATION PENALTIES

Retroactive health insurance and social security contributions, including a duty of payment of overhead surcharges, related interests, and sanctions

FUN FACT

Romania is home to the world's heaviest building: the Palace of the Parliament in Bucharest. It contains 1.5 billion pounds of steel and bronze, and is the second-largest administrative building in the world, after the Pentagon.

Taxes

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Employer tax: 

2.5%

Work insurance contribution: 2.25%

Employee tax: 

45%

Social insurance: 25%

Health insurance: 10%

Income tax: 10% flat

Romania Employment Cost Calculator

Use our handy calculator to understand what are all the employment costs you have to consider in the Romania.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in Romania

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Usually, an Employer of Record is the legal employer in a country where the company isn't registered as an employer. However, in Romania, the employment model requires a temp agency licence. The temp agency handles all Bulgarian compliance aspects of employment, including local laws, payroll, taxes, statutory benefits, employment contracts and more.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws

Processing local payroll

Filing employment related taxes and returns

Issuing payslips to the employee

Distributing salary payments

How the employment model works

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

Signs an employment contract with Boundless and fulfils all of their obligations as a worker for the company.

Statutory Benefits in Romania

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Medical examination

Many employees are subject to preliminary medical examination, which take place when they are first hired and then in a certain cadence depending on age

Unemployment indemnity

Certain categories of Romanian employees are eligble for unemployment indemnity paid out by the Local Occupation Authority.

Common non-mandatory Benefits in Romania

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Working from home allowance

Supplementary health insurance

Stock options

Meal tickets

Private pension

Private health insurance

Gift tickets

Cultural tickets

Travel allowance

Employee Rights and Protections in Romania

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Employment agreement

Protection of personal information

Union membership

Safe place of work

Whistleblower protection

Reasonable accommodation

Equal treatment

Protection from discrimination

Redundancy payment

Leave

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Paid time off: 20 days + bank holidays

Paternity: 10-15 days

Sick leave: unlimited

Parental: number of days/weeks not detirmend. Can be taken up to the child turning 2

Maternity: 126 days

Probationary period

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When working under indefinite-term agreement, the maximum probationary period that can be set for employees is 120 days for managerial positions, 90 days for all other jobs and 30 days for employees with disabilities.

Payment Frequency

Most employers pay monthly. Some pay biweekly but still calculate the amount for the whole month and consider the first two weeks’ pay as an advance on the monthly salary.

End of Employment

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The employer can terminate an employment agreement due to various circumstances, however a valid and justified reason for dismissal is required. Valid circumstances include de jure termination, during the probation period, by mutual agreement, in the case of a gross misconduct. 

Certain employees are protected from dismissal during given periods, which include illness leave, pregnancy, parental leave and performance of military exercise. In addition employees cannot be terminated for any reasons that may be deemed discriminatory such as their race, sex, language, political or union views, or religion. 

Employees have the right to challenge termination decisions in court. Proceedings usually take around one year, depending on complexity. If the employee wins, the court declares the termination invalid. Then, the employer reinstates the employee, covering the employee’s court expenses and paying the employee’s salary and other salary rights for the period between termination and reinstatement. On rare occasions, the employee can also receive additional compensation for moral damages.

Frequently Asked Questions

What are my options if I want to hire a worker in Romania?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in Romania, outlining the potential cons.

 

HQ country employment & payroll

While the person is in Romania, they are employed and payrolled directly by the company’s HQ entity.

Cons: This may appear attractive, but it generally isn't legal in the long term. Paying the employee's salary won't be possible if the person is not a tax resident in the HQ country

 

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Romania and invoice for their work. There is no direct employment relationship.

Cons: In Romania, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

 

Direct local employer setup

 

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.

Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

 

Partnering with a temp agency licence holder in Romania

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The temp agency licence holder helps to hire and pay employees.

Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work. In Romania, there are limitations to the length that this model is allowed.

How long does it take to set up a company in Romania?

Setting up a local company in Romania is relatively straightforward. However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in Romania?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in Romania, treating them as an independent contractor is a likely breach of Romanian employment laws and of those in your country.

 

Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.

 

Read more on why hiring remote people as independent contractors is a bad idea.

What does HR compliance mean in Romania, and why does it matter?

When you hire employees in Romania, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with Romanian labour law is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, and working hours regulations.

How much does it cost to employ someone in Romania?

As with every other country, there are certain costs associated with employing a worker in Romania that come on top of the gross salary you are offering. A Romanian employer must make a work insurance contribution. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

What does Employer of Record mean in Romania?

In Romania, an employer of record is not possible as a model and instead a temp agency licence is required from the employing company. With such a licence, Boundless is the legal employer of the individual, as far as the Romanian government, tax, and employment authorities are concerned. We are responsible for:

• informing you about any pre-employment requirements
• ensuring their employment is compliant with Romanian employment law
• informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
• providing a locally compliant employment contract
• processing local payroll
• filing employment-related tax returns
• issuing payslips to the employee
• distributing salary payments
• payments to the local tax authorities

Customers that work with a temp agency in Romania are responsible for:

• sourcing and recruiting their own workers
• managing the employee’s day-to-day work load
• contributing to the personal / professional development of the employee through their work
• following any guidance we give on employment and HR best practices or legal obligations in Romania, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
• ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in Romania if employing through a temp agency?

Boundless as the legal employer through our temp agency licence files all pertinent taxes and social security contributions as they relate to the compliant employment of an individual in Romania.

How does Boundless ensure HR compliance in Romania?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Romania. They ensure the Romanian employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Romania, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use the services of a temp agency like Boundless in Romania?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.

 

Boundless ensures compliance with Romania-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through a temp agency in Romania?

Any new employee that is locally employed through a temp agency licence holder such as Boundless gets full employment rights and benefits as specified in Romanian labour law. They get a locally compliant employment contract, statutory maternity leave, annual leave, sick leave entitlements, any relevant tax credit, and many more. 

What taxes do I need to pay in Romania?

Both Romania employers and Romania employees have to pay taxes. For employers, it's making work insurance contributions. Employees make contributions for social insurance and health insurance, and pay income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in Romania

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