Work insurance contribution: 2.25%

Social insurance: 25%

Health insurance: 10%

Income tax: 10% flat

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.

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.

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.

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.

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.

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

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.

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.

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.

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. 

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.