How to Hire Remote Employees In

Romania

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The Basics

Currency
Romanian Leu (RON)
Employer Taxes
6.25%
Payroll Frequency
Monthly
Official Language
Romanian
OVERVIEW

Employment in

Romania

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
Romania

Set up a subsidiary in

Romania

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Romania can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Romania, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Romania.

EMPLOYMENT IN
Romania

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in Romania is not the same as paying workers in your own country. Employees have to be paid using Romania’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Romania

 Specific Information

Working Hours

A full workweek in Romania is 8 hours a day and 40 hours a week. For employees under the age of 18, work is limited to 6 hours a day or 30 hours a week.

The Employer has the obligation to keep a record of the daily work hours performed by each employee, highlighting the start and end hour of the working program, and shall present such records to the labor inspection control when required.

Overtime

Employees are allowed to work a maximum of 48 hours per week including overtime. After working a 12 hour day, employers must give a 24 hours rest period. Work performed outside the standard 8 hours per day, 40 hours per week must be compensated with paid hours off during the 60 calendar days after the overtime has been performed. If the compensation with paid time off is not possible, the overtime shall be paid to the employee by adding a benefit that must not be lower than 75% of the basic wage, pro-rated to the overtime performed.

Workers under 18 years of age, part-time employees, pregnant employees who are unable to work normal working hours for health reasons are not permitted to work overtime.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

6.25%
- Employer Contributions

Minimum Wage

Romania has two minimum gross wages guaranteed in payment (both excluding bonuses and other additions): RON 2,230 for a work schedule of 8 hours per day, from Monday to Friday (full time employees). RON 2,350 for a work schedule of 8 hours per day, from Monday to Friday, for the employees assigned in positions for which higher education studies are required and have at least one year of seniority in the higher education area The minimum gross wage is amended yearly under the conditions of law.

Payroll

Pay Cycle

The payroll cycle in Romania is monthly with the payment date stipulated in the individual employment contract.

13th Salary

Not required.

Leave

Paid Time Off (PTO)

20 days is the minimum holiday guaranteed by law per year, pro-rated with the worked period. The vacation days must be taken within the work year. If the employee for justified reasons cannot take all or part of the annual leave in that calendar year the Employer is obliged to grant the annual leave not taken, within a period of 18 months from the year following the one when the entitlement to vacation leave arose.

Public Holidays

There are 15 public holidays.

Sick Days

Sick leave is paid only if the employee has a minimum contributory period to the Health House for the prior six months, based on a medical certificate issued by a physician.

The employee must inform the employer of his condition within 24 hours from the moment the medical certificate was issued. If the sickness occurred on the non-working days, the employee must announce the Employer about his condition on the first working day.

The first 5 calendar days are paid by the Employer. From the 6th day, the medical allowance is supported by the National Health Fund. In practice, the Employer is paying also the amount supported by the National Health Fund and then requests the reimbursement of the amount from the Health House.

The payment percentage in case of the sick leave allowance is ranging between 75% and 100% of the calculation base (average of the employees’ monthly gross wages during his last 6 months prior to the month the medical leave is granted).

Maternity Leave

The maternity leave is 126 calendar days (usually 63 days before + 63 days after the birth of the child). It represents 85% of the calculation base (average of the employee’s monthly gross wages during her last 6 months prior to the month the maternity leave started). The maternity leave is granted based on the medical certificate issued by the physician.

The maternity allowance is granted by the National Health Fund (in practice the Employer pays the maternity leave and afterward he requests the reimbursement of the amount from the Health House).

Paternity Leave

Fathers are entitled to 5 days of paid paternity leave and can be used until the child reaches the age of 8 weeks. If the father chooses to participate in childcare courses, leave can be extended for an additional 10 days. This extension can only be used once and on the birth of the first child.

Parental Leave

Parental leave entitlement last until the child is 2 years old. In the case of a disabled child, leave is until the child is 3 years of age. The payment is made directly by the state institution and represents 85% of the employee’s average revenues during his last 12 months of activity. During this period, the employment contract is suspended.

Other Leave

Work-Related Injury Leave – The employer covers all work-related injuries that an employee has suffered either directly or through insurances.

The employee should receive 100% of their average monthly earnings in the 12 months prior to the disability for 14 days if not hospitalized.

After 14 days they shall receive 66.7%. As of September 1, 2020, all work-related medical leave must be reported to the Ministry of Manpower. 

Marriage Leave

5 days for an employee’s marriage and 2 days for the marriage of a child.

Bereavement Leave

2 days of unpaid leave is granted to an employee who has had a death within their immediate family.

Termination

Termination Process

The termination types are:

  • Rightfully
  • Based on the parties’ consent, on the date agreed upon by them
  • As a result of one of the parties’ unilateral will, in the cases and under the limitation terms stipulated by the law (resignation, dismissal, etc).

A written decision of the Employer is always required, except for terminations during the trial period. During the trial period, the employment contract may end based on the termination letter of either party (the Employer or the employee) and no notice period is required. 

Notice Period

Notice period in case of dismissal is a minimum of 20 working days for all types of job titles, regardless of the employment contract is concluded for a limited or unlimited duration.

  • Notice period in case of resignation for non-management positions: no more than 20 working days.
  • The notice period for management positions: no more than 45 working days.

Severance Pay

There is no statutory severance pay in Romania unless conditions have been set in a collective agreement.

Probation Period

Labor agreements in Romania must be set up for an indefinite period (i.e. as permanent contracts).

The probation period when having an employment contract for an indefinite period cannot exceed:

  • 30 calendar days for disable persons
  • 90 calendar days for operational positions
  • 120 calendar days for management positions.

Fixed-term employment agreements can be used as exceptions, which are defined in the law: replacement of an employee whose labor agreement is suspended, temporary modification of the Employer’s activity, the progression of some seasonable activities, the employee meets retirement conditions within 5 years from the date of employment.

The probation period in case of a fix term employment agreement cannot exceed:

  • 5 working days, for a fixed-term employment contract concluded for a period that does not exceed 3 months
  • 15 working days, for an employment contract, concluded for a fixed-term period ranging between 3 and 6 months
  • 30 working days, for an employment contract, concluded for a fixed-term period exceeding 6 months
  • 45 working days, in the case of management positions, for which the fixed-term employment contract is concluded for more than 6 months.