Romania

Employer of Record in Romania 

Romania, a country in Eastern Europe, is a rapidly emerging, exciting environment to do business in. Following decades of economic and political turmoil, Romania has made significant progress over the years, boasting one of the highest economic growth rates in Europe.

There are several prospects for international firms in Romania. However, the country has a complicated set of labor and commercial legislation impacted by EU directives. The legal wrangling, along with the language barrier, can hamper development, resulting in lost revenue and higher costs.

Hence, partnering with a unified and automated global HR platform allows you to enroll your remote workforce quickly and compliantly handle payroll, benefits, and other aspects of employment. With the support of Skuad’s worldwide network, Skuad’s EOR can help you speed up the process of your business’s worldwide growth. Skuad's one-stop Romania EOR (Employer Of Record) guide enables you to extend your business into Romania without having to set up a separate entity.

Romania at a Glance

Population: 19.6 million

Currency: Romanian Leu/Lei (RON)

Capital city: Bucharest

Languages spoken: Romanian, Hungarian, German

GDP: USD 300.69 billion

Employment in Romania

Employment law is derived from the Romanian Constitution, primary and secondary Romanian legislation, as well as European and international legal requirements relevant to this sector (e.g., International Labor Organization, Council of Europe, EU legal instruments).

The primary pieces of domestic law dealing with work relations are the Romanian Labor Code (Law no. 53/2003, henceforth the ‘Labor Code’) and the Romanian Law on Social Dialogue (Law no. 62/2011, henceforth the ‘Social Dialogue Law’). The Labor Code applies to employment relations governed by special legislation.

In addition, the Labor Code's requirements are supplemented by other employment law laws as well as civil laws. Talk to Skuad for more information.

Contractors vs. Full-Time Employees 

In Romania, there are some hidden advantages to recruiting and paying foreign employees instead of independent contractors.

It is 30% less expensive to hire and pay international talent through a global PEO solution than hiring and paying in-house. When compared to working and paying via your own organization, you can save up to 50%.

Employee loyalty increases by 47% when they are employed, which is why you can retain the best knowledge workers for a long time. 95% of legal, financial, and economic concerns are eliminated with official foreign hiring. You may also gain flexibility by employing this service and taking on additional jobs of varying durations. In Romania, you may start a bare-bones company with just one or a handful of people and quickly scale up as your business grows.

Official PEO employment of a foreign individual in Romania, when combined with 100% compliance, ensures that there are no commercial risks because the client base and intellectual property are safe. It also ensures better on-site customer service and a thorough understanding of the local company culture. This means less time and money spent on recruiting, evaluating, and onboarding geographically dispersed teams of experts, as well as a learning curve.

Hiring in Romania

Here are the steps involved in hiring employees in Romania.

Background checks

Employers must verify application information by adhering to the fundamental principles governing the processing of personal data and the legality of the data processing, as well as meeting one of the requirements set forth in Regulation (EU) 2016/679, Article 6 (Lawfulness of Processing). The employer must also make sure that the processing is done in compliance with Regulation (EU) 2016/679.

Medical checks

According to national legislative regulations, an individual can only be hired if they have a medical certificate declaring that they are physically fit to work. 

The legislation forbids the use of pregnancy tests. In this case, the medical certificate given by the occupational health physician must not include information on the status of pregnancy since this might be a barrier to employment.

Testing for drugs and alcohol is not needed, although it is not forbidden. As a result, such tests may be conducted, but only with the permission of the employee.

Hiring Process

The legislation requires a written version of the individual employment agreement (IEA). Furthermore, the employer must follow the IEA standard, as approved by the Ministry of Labor and Social Justice, as well as the Romanian law's minimum rights (e.g., national minimum gross salary, minimum rest leave, maximum probation period, minimum notice period in case of dismissal).

In addition to the basic elements, an IEA with a teleworking element must have some necessary conditions.

Under the Labor Code, the period of a fixed-term contract is usually limited. As a result, the (initial) fixed-term contract may be completed for a maximum of 36 months and may only be renewed twice, each time for a maximum of 12 months (i.e., the maximum permissible term of fixed-term employment is 60 months). A company can also enter into a maximum of three fixed-term contracts in a row. Learn more at Skuad.

Websites for hiring in Romania

• Bestjobs
• Ejobs
• Carieranoua
• Hipo

As a business looking to expand into the Romanian market, not being well-versed with the employment laws and compliances of the country could pose several challenges and can cost you crucial time during the process. 

Hiring contractors or fixed-term employees is dependent on the organization’s priorities and business strategy. Skuad's progressive tech platform helps organizations hire both types of workers with ease and simplicity. Learn more here.

Probation & Termination

In the employment contract, the employer can include a probationary term of up to 30 days for operational roles and up to 90 days for management jobs. Employers must offer at least 20 working days' notice in the case of termination. This does not apply to dismissing a probationary employee, dismissing a worker for professional inadequacies, or dismissing a worker for disciplinary reasons.

Employees must provide 20 days' notice for non-managerial jobs and 45 days' notice for managerial ones when resigning. In Romania, there is no legal requirement to make severance compensation.

If the employee meets the following criteria, he or she may be subjected to another probationary period with the same company and under the same conditions:

• When it is a new job (held for the first time in the relevant organization)
• A new profession
• When the task is to be conducted under difficult, hazardous, or dangerous working conditions.
  

EOR Solution

All local employment contracts are written and validated by Skuad, which streamlines the onboarding process for you and your Romania employees—all you have to do is submit the essential information and evaluate and approve the employment agreement.

As your Romanian employer of record, Skuad will:

• Schedule a welcome call to explain Romanian HR and employment information and address any queries you may have.
• Prepare an English and Romanian employment contract that is tailored to your needs (or another local language)
• Provide the new employee with the employment contract and benefit details for signing and review.
• Set up payroll, and get the employee's tax and banking details.
• Provide the employee with a local point of contact who can answer any questions they have about their job, local HR, or payroll.
• Finish the employee's complete onboarding process in as little as two weeks.

Because employment in Romania is heavily regulated, it's critical that your hiring processes and contracts adhere to the rules. Skuad can verify on your behalf that every contract, for every worker, satisfies all regulations as your primary employer and PEO in Romania. Skuad can also advise you on the cultural norms and recruiting best practices and keep you up to date on changing employment rules. Talk to us to know more.

Work Permits And Visas

A person who does not have Romanian, EU/EEA, or Swiss Confederation citizenship is referred to as a ‘non-EU national.’ In general, a non-EU citizen may only work in Romania as a local employee or as a secondee provided a work authorization for employment or secondment has been secured in advance. The relevant Romanian immigration authorities provide any work authorization based on an official request by a Romanian firm, either as an employer or as a service recipient.

Permanent workers, highly qualified employees, temp workers, trainee workers, cross-border workers, and au pair workers are eligible for work authorization.

Secondees undertaking activities in Romania are awarded a work authorization for secondment based on a service agreement between their employer and the Romanian recipient of their services or under an intra-corporate transfer (ICT).

Non-EU nationals with a right to reside in Romania as family members of Romanian citizens or non-EU nationals employed in Romania may perform work activities without obtaining work authorization for employment/secondment in exceptional circumstances and subject to the fulfillment of certain specific conditions, such as non-EU nationals with a right to reside in Romania as family members of Romanian citizens or non-EU nationals employed in Romania. 

The following are some of the precise requirements that must be met for the most typical work authorizations. 

Permanent Workers' Work Authorization

The following are some of the most important unique requirements for acquiring such work authorization:

• The Romanian employer plans to sign a full-time work contract with a fixed or undetermined duration.
• No Romanian, EU/EEA/Swiss citizen, or non-EU national holder of a Romanian permanent resident permit is available to fill the vacant post, according to the Romanian employer.
• The candidate meets all of the requirements set out by current laws for filling the vacant post, including but not limited to the educational requirement.

Payroll & taxes in Romania

Companies can set up their Romania payroll in one of four ways. Because every business is different, it's essential to think about each option thoroughly before deciding which is ideal for your company or sector. These are some of them:

• Internal: Larger enterprises with a commitment to Romania may manage their payroll through a subsidiary by hiring additional personnel to manage HR and payroll. This is the most costly and time-consuming alternative.
• Remote: You can add your Romanian workers to an existing internal payroll if you manage payroll at your parent firm. However, keep in mind that the two groups' employment compliance laws will differ.
• Payroll processing firm in Romania: You may also outsource your payroll processing to a Romanian firm. Any errors will still be held against you.

The monthly payroll must be printed, stamped, and preserved and must include the computation of all employer and employee payments and income tax. The deadline for paying all salary-related taxes is the 25th of the following month. By the 25th of the next month, the competent authorities must receive a declaration of taxes to the consolidated state.

An informative statement on the income from wages and remunerations of administrators earned in Romania in the previous year by residents of other EU countries must be filed to the tax authorities by the 28th of February of each year.

Taxes

Individuals in Romania are taxed 10% of their salary, according to the Romanian Tax Code. For salaries up to 1,950 Ron, the personal deduction is 510 Ron. For taxpayers earning between 1,951 and 3,600 Ron a month, the personal deduction is degressive. Personal deductions are reduced as a consequence of a rise in compensation. If the employee has dependents, he or she may be eligible for further deductions. For monthly gross salaries over 3,600 Ron, no personal deduction is allowed.

Employer Taxation

Employee Taxation

Employers must deduct tax and social security payments from employees' paychecks and submit them to the national tax authorities. In Romania, residency status affects income tax collection: non-residents must pay tax solely on income earned within the country, whereas residents must pay tax on all international income. Talk to us to learn more.

Incorporation

If you decide to open a Romanian subsidiary on your own, you must evaluate several aspects that may influence your decision. It is crucial to investigate any current business contacts as well as the industry you intend to enter. These factors may determine where you establish your Romanian headquarters.

When you form a company, you must first determine which language is most generally spoken in the region and then hire staff or translators fluent in that language.

Various laws may apply to different areas or cities within a country. It is advisable to set up your Romanian subsidiary in a place with minimal formation expenses and a welcoming attitude towards international companies. You may find the perfect location for your headquarters with the aid of an adviser or other local company experts.

A limited liability corporation is one of the most common subsidiary structures (SRL). The following are the steps to creating an SRL:

• Obtain a minimum share capital of 40 EUR.
• Obtain a certificate from the parent firm stating that it is in good standing.
• The parent company's complete Memorandum and Articles of Association.
• Solve the parent company's choice to open a subsidiary in Romania. Register a physical office.
• Assign a signatory for the subsidiary to an administrator.
• To formally register, submit paperwork to the Trade Register.

Subsidiary rules in Romania vary depending on the sort of company you form. You'll need at least one shareholder and a director who does not have to live in Romania or the European Union to form an SRL (EU).

Limited liability companies must file financial accounts and tax filings with the Romanian tax office every year. If your subsidiary has more than 15 shareholders or meets the following criteria, an audit is required:

• Annual turnover of over 7.3 million Euros
• Assets worth over 3.6 million Euros
• Workforce with more than 50 workers.

The first big stumbling block to conducting business in Romania is establishing a subsidiary. You'll be able to legally run your subsidiary in the country once you've incorporated. After that, you may hire staff, set up payroll, and create a salary and benefits plan that is appropriate for your company.

Both the subsidiary and the parent company benefit from having an SRL. The parent firm does not have to worry about any losses or lawsuits against the subsidiary because there is little responsibility between them. On the other hand, the subsidiary is free to function under its own structure to conform with Romania's general culture. 

If you want to establish a Romania subsidiary on your own, you'll need a thorough grasp of the country's subsidiary legislation. In addition, you'll need to budget for some stages of the procedure and be prepared to bear these expenses. Also, bear in mind that you will have to go to Romania regularly, which will take you away from other firm responsibilities.

Before you think of starting a subsidiary on your own, consider a better way of doing this. Working with Skuad might help you avoid these costs. To discover more about forming a Romania subsidiary by partnering with us, contact Skuad now.

PEO

A Professional Employer Organization (PEO) is the organization's co-employer and is used to hire the whole workforce. It shares an organization's HR obligations and liabilities and takes over all HR-related tasks. It works for a company with a minimum of 5-10 workers and is registered in each nation or state where its workers are located.

The Employer of Record acts as a legal employer by taking on a portion of the organization's obligations. EOR can be utilized for a segment of the workforce and can take over only a portion of the HR tasks. It enables businesses to relocate to another state or nation without having to form a formal company. Worker's compensation and unemployment claims are handled through the Employment of Record company.

For organizations operating across several locations, employment rules and regulations get increasingly complicated and diversified as the business develops throughout many locations.

If a corporation partners with a PEO, it must create a legal presence in each state or nation where it employs people. However, if the firm's EOR is created across geographies, the EOR allows the corporation to employ individuals in those states lawfully. 

For more information and guidance, contact us. Skuad's EOR solution helps businesses to extend their operations. Learn more here.

Conclusion

Skuad recognizes that entering any overseas market can be a lengthy and tedious process. The Skuad platform enables organizations to employ and craft a unified invoice that includes all salary and taxes, so you can focus on operating your business. Compared to a traditional EoR, our solution is a tech-enriched HR platform that makes it seamless and easy to onboard, pay and manage distributed global talent.

FAQs for EOR in Romania

1) What is an employer of record in Romania?

An Employer of Record (EOR) in Romania is a legal entity that hires and pays staff on behalf of another company. It handles legal compliance, payroll, taxes, and other HR responsibilities, enabling companies to employ staff in Romania without establishing a local entity. This service is vital for businesses looking to expand into the Romanian market quickly and compliantly.

2) What is the EU employer of record?

An EU Employer of Record (EOR) acts as your legal employer in Europe, simplifying workforce management. They handle HR tasks like payroll, taxes, and legal compliance across borders. This lets you hire top European talent without setting up local entities in different country.

3) What are the benefits of EOR?

The benefits of using an EOR service include reduced legal risks, cost savings on administrative functions, quick market entry, and HR tasks handled by experts. It also allows businesses to test new markets without long-term commitments and navigate foreign employment laws easily.

4) What is the difference between EOR and PEO?

An employer of record (EOR) legally employs individuals on behalf of another company and handles all compliance, payroll, and HR tasks. A Professional Employer Organization (PEO) co-employs staff, sharing responsibilities with the client company but typically requires the client to have an established business entity in the country.

5) What are the leave types in Romania?

Romania recognizes several leave types, including annual leave, medical leave, maternity and paternity leave, and bereavement leave. Employees are also entitled to time off for professional training and unpaid leave for personal reasons.

6) Is annual leave carried over in Romania?

In Romania, employees can carry over annual leave to the next year if it’s not used, subject to certain conditions. The carry-over period is usually limited to 18 months after the year in which the leave was accrued. Employers must ensure that employees use their leave entitlements to comply with labor laws.