Employer of Record in Romania

Hiring employees in Romania requires careful consideration of local labor laws, tax regulations, and administrative processes. For companies looking to expand their global talent pool, understanding the available employment pathways is crucial to ensure compliance and operational efficiency. Romania offers a dynamic market, but navigating its specific legal frameworks is key to a successful entry.

When considering hiring employees in Romania, you generally have a few primary options:

• Establishing a local legal entity: This involves setting up a subsidiary or branch office, which can be a complex and time-consuming process, requiring significant investment in legal, accounting, and administrative resources.
• Utilizing an Employer of Record (EOR): Services like Rivermate allow you to hire employees in Romania without establishing your own entity, shifting the legal and HR burden to a third-party expert.
• Engaging independent contractors: While offering flexibility, this option carries risks if the working relationship is later reclassified as employment, leading to significant penalties for misclassification.

How an EOR Works in Romania

An Employer of Record in Romania acts as the legal employer for your team members, handling all local employment responsibilities on your behalf, while you retain full control over their day-to-day work and management. This includes:

• Payroll processing and tax filings: Managing salary payments, withholding, and submitting social security contributions, income tax, and other mandatory levies in compliance with Romanian law.
• Employment contracts and HR compliance: Drafting legally compliant employment contracts, ensuring adherence to local labor codes regarding working hours, leave, and workplace safety.
• Benefits administration: Registering employees for mandatory social security, health insurance, and other statutory benefits, as well as managing voluntary benefits if offered.
• Termination compliance: Navigating the complex process of employee termination, ensuring all legal requirements for severance, notice periods, and documentation are met.

Benefits of Using an EOR in Romania

For companies aiming to hire in Romania without the commitment of establishing a local entity, an EOR offers distinct advantages:

• Accelerated Market Entry: Hire employees in Romania quickly, often within days, bypassing the lengthy process of entity registration.
• Reduced Compliance Risk: Transfer the burden of understanding and adhering to complex Romanian labor laws, tax regulations, and HR requirements to a local expert.
• Cost Efficiency: Avoid the significant upfront and ongoing costs associated with setting up and maintaining a legal entity in a foreign country.
• Access to Top Talent: Expand your hiring pool by accessing skilled professionals in Romania without geographical limitations or administrative hurdles.
• Scalability and Flexibility: Easily onboard and offboard employees as your business needs evolve, without the administrative overhead.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Romania includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Romania.

Romania's tax obligations for employers include social security contributions, income tax withholding, and compliance with reporting deadlines. Employers must contribute 25% of gross salary to social security (CAS), 10% to health insurance (CASS), and between 0.15%-0.85% for work accident insurance based on risk level, plus 0.5% for unemployment. They are responsible for withholding 10% income tax from employees' taxable income, which is calculated after social contributions.

Employees benefit from deductions such as personal allowances, which vary by income level, and dependents, with additional deductions for voluntary pension contributions up to 400 EUR annually. Employers must file monthly tax returns (Form 112) by the 25th of the following month and settle all dues by the same date. An annual reconciliation is also required by February.

Foreign workers and companies face specific considerations, including determining tax residency (over 183 days in Romania), adherence to double taxation treaties, and rules for seconded employees. Foreign companies with a permanent establishment in Romania may be liable for corporate income tax on profits attributable to that entity.

| Income Tax Rate | 10% | Taxable Income | |

| Personal Allowance (Monthly) | Up to 2,000 RON: 510 RON; 2,001-4,000 RON: 420 RON; Over 4,000 RON: 0 RON |

| Reporting Deadlines | Monthly returns (Form 112): 25th of following month; Annual reconciliation: February |

Romania's salary landscape in 2025 reflects economic growth, labor shortages, and EU integration, necessitating competitive compensation strategies for employers. Salary ranges vary significantly by industry and role, with IT positions like Software Developers earning between 120,000 and 250,000 RON annually (24,000–50,000 EUR), while roles such as Customer Service Agents earn 40,000–80,000 RON (8,000–16,000 EUR). Minimum gross wages are set at 3,700 RON (740 EUR) nationally, with higher rates for construction at 4,582 RON (916 EUR). Employers must comply with these legal minimums to avoid penalties.

Additional benefits like holiday bonuses, performance incentives, meal vouchers, transportation allowances, and the 13th salary are common, varying by company and industry. Salaries are typically paid monthly via bank transfer, with payslips detailing earnings and deductions. Trends indicate upward salary movement driven by economic growth, sector-specific labor shortages, inflation, and EU integration, making attractive packages essential for talent retention.

Romania's employment laws guarantee employees paid time off for various needs, with specific regulations for annual leave, public holidays, sick leave, and parental leave. All employees are entitled to a minimum of 20 working days of paid annual leave per year, which should be granted within 12 months after the year-end. Unused leave must be compensated financially upon employment termination.

Public holidays are observed nationwide, with employees generally receiving paid time off; work on these days may entitle employees to additional pay or compensatory leave. Key public holidays in 2025 include New Year's Day, Unification Day, Orthodox Easter, Labor Day, and Christmas.

Sick leave benefits depend on insurance contributions, with employees receiving 75% of their average gross earnings for ordinary illnesses and up to 100% for certain contagious diseases or work accidents. Maternity leave lasts 126 days, with an 85% benefit, and parental leave can extend until the child turns 2 or 3 (disabilities). Fathers are entitled to 5 days of paternity leave, extendable to 15 days with additional training. Adoption leave offers up to one year of paid leave.

Romania's employee benefits are governed by legal mandates and market practices, with mandatory benefits including at least 20 days of paid annual leave, public holidays, paid sick leave, parental leave, and contributions to social security, health insurance, and unemployment funds. Employers must also provide severance pay in certain cases. Beyond legal requirements, many companies offer optional benefits such as private health insurance, meal vouchers, supplementary pension plans, life insurance, professional development, wellness programs, company cars, and flexible work arrangements to attract and retain talent.

Health coverage is a key aspect, with public healthcare funded through contributions, but private insurance is highly valued for faster access and broader services, often partially covered by employers. The Romanian pension system comprises three pillars: state pension (mandatory), private mandatory, and voluntary private plans, with employer contributions often extending to these voluntary schemes. Benefit offerings vary by industry, company size, and employee expectations, with larger firms typically providing more comprehensive packages.

Employers must comply with Romanian labor law, accurately remit social security and health contributions, adhere to tax regulations on benefits, and maintain proper records. Collective bargaining agreements may also specify additional employee entitlements.

Employment agreements in Romania are essential for defining employer-employee rights, responsibilities, and terms. They include two main types: fixed-term contracts, which have a set duration and can be extended within legal limits, and indefinite-term contracts, offering ongoing employment until termination. Employers must specify key clauses such as job responsibilities, compensation, working conditions, confidentiality, and non-compete provisions to ensure clarity and legal compliance.

Key data points for employers:

Mandatory clauses include job description, salary, working hours, confidentiality, and termination conditions. Properly structured employment agreements are vital for legal compliance and fostering a productive work environment in Romania.

Romania's remote work landscape has expanded significantly, driven by digital adoption and evolving workplace trends. The legal framework, primarily governed by Law no. 81/2018, mandates written telework agreements detailing job duties, location, hours, equipment, health and safety, and data protection. Employers are responsible for providing necessary equipment, ensuring safety, and respecting employees' right to disconnect, aligning with GDPR compliance for data privacy.

Flexible work options such as flextime, compressed workweeks, job sharing, and part-time arrangements are common, requiring clear policies, effective communication, and managerial training. Key data points include:

Remote work success depends on robust infrastructure, including high-speed internet, VPNs, collaboration tools, and cloud storage. Data security measures—such as encryption, access controls, and employee training—are critical, especially under GDPR. Employers typically provide or reimburse for equipment, internet, and utilities, with policies requiring transparency and documentation. Regular assessments and technological support are vital for maintaining productivity and security in Romania’s remote work environment.

In Romania, employee termination must strictly follow the Labor Code to prevent legal disputes. Notice periods vary by employee role and tenure, with a minimum of 20 working days for employer-initiated layoffs and up to 45 days for executive resignations. The following table summarizes notice requirements:

Severance pay is generally required only in cases of collective dismissal or as specified in employment contracts or collective agreements, often based on tenure and salary. Grounds for termination include misconduct, poor performance, business restructuring, redundancy, or incapacity. Disciplinary dismissals require thorough investigation, written notices, and employee defense rights, while layoffs demand justification, proper notice, consultation, and potential offer of alternative positions.

Employees are protected against wrongful dismissal, with rights to appeal within 45 days, potential reinstatement, and damages for unlawful termination or discrimination. Termination during protected leaves such as sick or maternity leave is also prohibited, emphasizing the importance of compliance with procedural and substantive legal standards for employers operating in Romania.

Romania has experienced a notable rise in freelancing and independent contracting, driven by the demand for work flexibility and specialized skills. For companies engaging with independent contractors in Romania, understanding the legal distinctions between employees and contractors is crucial to avoid misclassification and potential penalties. Romanian law differentiates employment from contracting based on criteria like subordination, working hours, and integration into the company. Misclassification can result in back taxes, fines, and reclassification by authorities.

Independent contractors typically operate under structures like Persoană Fizică Autorizată (PFA), Societate cu Răspundere Limitată (SRL), or through civil contracts. Each structure has specific tax implications, with PFAs and SRLs responsible for their own tax and social contributions. Key contractual elements include scope of work, payment terms, confidentiality, and intellectual property rights, which must be clearly defined to ensure compliance and protect both parties. Intellectual property rights usually remain with the contractor unless explicitly transferred in the contract.

Independent contractors are prevalent in sectors like IT, marketing, consulting, and creative arts, offering companies access to specialized skills and workforce flexibility. However, companies must ensure proper classification and contractual arrangements to maintain compliance and foster effective collaborations.

Romania's work permit system for foreign nationals includes several visa types tailored to different employment needs. The most common are the Type D Long-Stay Visa, EU Blue Card for highly skilled workers, ICT Permit for intra-company transfers, and the Single Permit, which combines residence and work authorization. These visas serve as the basis for obtaining work permits and facilitate legal employment in Romania.

Employers must sponsor foreign workers and ensure compliance with application procedures and ongoing regulatory obligations. Key requirements vary by visa type but generally include proof of employment, qualifications, and salary thresholds, especially for the EU Blue Card. The application process involves multiple steps, with pathways available for obtaining permanent residency.

Employers should stay informed about these categories to ensure compliance and facilitate smooth hiring processes for foreign employees.