Expand your organization into Romania, even without an Romanian entity
The Eastern European nation of Romania is a fast-growing and exciting place to operate a business. After decades of economic instability, Romania has developed significantly in recent years, experiencing some of the highest economic growth in Europe.
There are many opportunities for foreign businesses in Romania, but if you are contemplating an expansion project you should be prepared to experience unexpected delays. The country has a complex framework of employment and business regulations, and is also influenced by EU regulations. The legal navigation, along with the language barrier, can result in slow progress and potentially lead to lost revenue and increased costs.
At New Horizons, we specialize in helping organizations expand internationally, including into Romania. Our professional employer organization (Romania PEO), employer of record, and payroll outsourcing services provide everything necessary to expand your business into Romania, whether or not you have registered an entity there already.
Our in-house recruitment team can also find, recruit, and onboard your local employees, as well as handle any ongoing HR admin. Our dedicated team will provide you with everything you need to expand into Romania in a matter of days, not weeks or months, and can potentially save you thousands in expansion costs.
Why choose New Horizons for your Romania expansion?
New Horizons enables your business to expand its operations into Romania, without needing to set up a legal subsidiary.
Employment & Labor Laws in Romania
Employment contracts in Romania
Employers in Romania are legally required to provide employees with a formal contract of employment, including all relevant details of employment such as salary and benefits. It should also be written in the Romanian language and use the Romanian leu currency. Employers should also register each employment contract with the General Register of Employees.
By partnering with our Romania PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Romania
The normal working hours for most employees in Romania are 40 hours per week and eight hours per day. Legally, employers must pay overtime for hours worked beyond 48 hours per week. This can be given either as time off, or paid at a rate of at least 175% of normal pay.
Public holidays in Romania
Employees in Romania are entitled to several national holidays annually, many of which they receive as leave from work:
New Year’s Day
Day after New Year’s Day
Orthodox Good Friday
Orthodox Easter Day
Orthodox Easter Monday
International Children’s Day
Descent of the Holy Spirit
St Mary’s Day
Feast of St. Andrew
Second day of Christmas
Romania vacation leave
Employers in Romania are legally required to provide their workers with at least 20 days of vacation leave annually. They can also take special leave for certain events such as marriage.
Romania sick leave
Workers in Romania are legally entitled to take up to five days of paid sick leave (at 75% pay), which is covered by their employer. Workers can take a maximum of 18 months in some cases, but the government covers compensation beyond the initial five days.
Parental leave in Romania
Female employees can take a minimum of 126 days of paid parental leave (at 85% of average pay over the preceding six months), which is covered by the government.
Male employees are entitled to take five days of leave in the first eight weeks after their child’s birth. If they take certain childcare training courses, then this leave can rise to 15 days.
Employees must have contributed to Romania’s social insurance system for at least six of the previous 12 months in order to qualify for the compensation.
Terminations and severance in Romania
When terminating employees in Romania, employers must give at least 20 working days of notice. This period does not apply to employees who are in a probation period, or who have been dismissed with proper cause.
Employers in Romania are not required to pay severance upon termination.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Romania PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Romania
Employees and employers in Romania must both contribute a percentage of salaries to different social funds:
- Social security fund: Employers contribute 20.8%, employees contribute between 31.3% and 41.3%.
- Health insurance: Employers contribute 5.2%, employees contribute 5.5%.
- Medical leave/compensation fund: Employers contribute 0.85%, employees contribute between 0.15% and 0.85%.
- Unemployment fund: Employers contribute 0.5%, employees contribute 0.5%
Health coverage in Romania
Romania does have universal healthcare, but the standards can be significantly lower than countries in neighboring Western Europe. For this reason, many employers choose to offer private medical insurance as part of their benefits packages.
Romania compensations & benefits
Compensation laws in Romania
As of Jan 2020, the minimum wage in Romania is 2,230 RON per month, which is based on a working month of 167.33 hours.
Benefit management in Romania
Setting up a benefits system for your employees in Romania can be confusing if you are not familiar with the nation’s complex labor laws, language, and cultural differences, so it is common to experience delays.
New Horizons can help you bypass this complicated part of your Romanian expansion by offering benefits outsourcing services. Our expert team will advise you on the best practices and handle all of your benefit setup and management, enabling you to focus on the rest of your expansion.