Romania is an attractive destination for foreign direct investment because of its low tax rates and highly-skilled but affordable workforce. The downside for local business is the country’s frequent legislative changes and fiscal complexity.
Here is an overview of the country’s key HR and payroll regulations:
Social security
Both employees and employers must pay social security contributions. It is worth noting that these contributions may change when the government updates the annual State Budget Law at the start of each year.
Employers normally pay social security contributions of 15.8%, while employees pay 10.5% out of their salaries, 2% of which goes to the state pension scheme. Employers are responsible for withholding employees’ social security contributions from their gross salary. Other statutory payments include:
• Health insurance: Employers pay 5.2% of an employee’s gross salary into the scheme, while employees contribute 5.5%;
• Medical leave fund: Employers pay 0.85% of an employee’s gross salary into the fund, with monthly payments capped at 12 times the national minimum wage (RON1450 or US$371) multiplied by the number of employees it has. In the case of work-related accidents and disease, employers’ contributions are capped at between 0.15%-0.85% of an employee’s salary.
For cases of disability, contributions are 4% x average number of employees x 50% x national minimum wage;
• Unemployment fund: Both employer and employees pay contributions of 0.5% of the individual’s gross salary each.
Work permits for foreign employees
The Emergency Ordinance on the Employment and Assignment of Foreigners regulates the employment of foreign nationals in Romania. Foreigners, other than those from the European Union (EU), European Economic Area (EEA) and Swiss Confederation, must have work permits and a residence visa to enter, work and live in the country. EU, EEA and Swiss Confederation citizens require only a certificate of registration, which it is possible to acquire within a day.
Workers from outside of the EU, EA or Swiss Confederation can only be employed if the vacancy in question cannot be filled by a Romanian national, an individual with permanent residency in the country or an EU or EEA citizen. But certain non-EU citizens may be employed without a work permit, including people with permanent residency status, asylum seekers and nationals whose home countries have treaties or bilateral agreements with Romania, which allow free access to its labour market.
Work permits are granted for one year and are automatically extended for successive periods until the termination of a worker’s employment contract. The number of work permits issued annually is decided by the government and depends on both the health of the country’s labour market and its current labour migration policies.
Visas can be obtained from the diplomatic missions and consular offices of an individual’s home country. There are a number of possible options:
1. Short-stay visa: This is issued for a period not exceeding 90 days and is valid for six months from the date of entry. It cannot be extended;
2. Long-stay visa: These are issued for 90 days and may be extended by making a request to the Romanian Immigration Office;
3. Residence permits: Foreign nationals wishing to reside in the country can apply for a residence permit, of which there are two types:
• Temporary residence permit: This must be obtained from the local Romanian Embassy if individuals wish to stay in the country for 120 days or more;
• Permanent residence permit: These can be obtained from the Romanian Immigration Office and apply if a foreign national marries a Romanian citizen or an individual’s temporary legal stay lasts for at least three years.
“Work permits are granted for one year and are automatically extended for successive periods until the termination of a worker’s employment contract.”
Work permits for foreign employees
The Emergency Ordinance on the Employment and Assignment of Foreigners regulates the employment of foreign nationals in Romania.
Foreigners, other than those from the European Union (EU), European Economic Area (EEA) and Swiss Confederation, must have work permits and a residence visa to enter, work and live in the country. EU, EEA and Swiss Confederation citizens require only a certificate of registration, which it is possible to acquire within a day.
Workers from outside of the EU, EA or Swiss Confederation can only be employed if the vacancy in question cannot be filled by a Romanian national, an individual with permanent residency in the country or an EU or EEA citizen. But certain non-EU citizens may be employed without a work permit, including people with permanent residency status, asylum seekers and nationals whose home countries have treaties or bilateral agreements with Romania, which allow free access to its labour market.
Work permits are granted for one year and are automatically extended for successive periods until the termination of a worker’s employment contract. The number of work permits issued annually is decided by the government and depends on both the health of the country’s labour market and its current labour migration policies.
Visas can be obtained from the diplomatic missions and consular offices of an individual’s home country. There are a number of possible options:
1. Short-stay visa: This is issued for a period not exceeding 90 days and is valid for six months from the date of entry. It cannot be extended;
2. Long-stay visa: These are issued for 90 days and may be extended by making a request to the Romanian Immigration Office;
3. Residence permits: Foreign nationals wishing to reside in the country can apply for a residence permit, of which there are two types:
• Temporary residence permit: This must be obtained from the local Romanian Embassy if individuals wish to stay in the country for 120 days or more;
• Permanent residence permit: These can be obtained from the Romanian Immigration Office and apply if a foreign national marries a Romanian citizen or an individual’s temporary legal stay lasts for at least three years.
Payroll cycles and overtime rules
Salaries must be paid at least monthly. As of 1 February 2017, the monthly national minimum wage is RON 1,450 (US$371).
Overtime payment for work undertaken during the week is paid at a rate of 75% more than normal or, alternatively, employees may be granted equivalent time off in lieu. Weekend overtime payments are 100% higher than usual weekly work rates.
For at least three hours of any work performed at night, employees should be paid either 25% more than their normal rate or have an hour cut from their usual work schedule without any concomitant reduction in salary.
In Romania, it is standard to work eight hours a day, which amounts to a 40-hour, five-day working week from Monday to Friday. Normal working hours are between 9am and 5pm. Working between 10pm and 6am constitutes a night shift.
Be aware that employees are not allowed to work for more than 48 hours per week including overtime. Under 18 year-olds are allowed to work for no more than six hours per day and 30 hours a week.
HR legislation
Employment in Romania is governed by the Labour Code (Law No. 53/2003), which came into force in March 2003 but was subsequently amended in May 2011.
It regulates both individual and collective employment relationships and all major employment-related issues such as salaries, leave entitlement, working hours, rest, termination of employment and discrimination. The Code applies equally to both local and foreign employees working in the country.
Other major laws governing employment relationships include:
- Law No. 319/2006 on health and safety at work;
- Emergency Governmental Ordinance No. 56/2007, which covers the employment of foreign nationals;
- Law No. 168/1999, which focuses on how to settle labour conflicts;
- Social Dialogue Law No. 62/201; and
- HG 500/2011 on the General Registration of employee records.
Camelia Nita has been managing director of TMF Romania since 2005 and has worked with TMF Group for almost 18 years. Her experience spans local and international financial reporting, tax compliance, business processes and systems implementation. Camelia is a certified member of ACCA, the Romanian Association of Chartered Certified Accountants (CECCAR) and the Romanian Chamber of Tax Consultants (CCF).
Romania is an attractive destination for foreign direct investment because of its low tax rates and highly-skilled but affordable workforce. The downside for local business is the country’s frequent legislative changes and fiscal complexity.
Here is an overview of the country’s key HR and payroll regulations:
Social security
Both employees and employers must pay social security contributions. It is worth noting that these contributions may change when the government updates the annual State Budget Law at the start of each year.
Employers normally pay social security contributions of 15.8%, while employees pay 10.5% out of their salaries, 2% of which goes to the state pension scheme. Employers are responsible for withholding employees’ social security contributions from their gross salary. Other statutory payments include:
• Health insurance: Employers pay 5.2% of an employee’s gross salary into the scheme, while employees contribute 5.5%;
• Medical leave fund: Employers pay 0.85% of an employee’s gross salary into the fund, with monthly payments capped at 12 times the national minimum wage (RON1450 or US$371) multiplied by the number of employees it has. In the case of work-related accidents and disease, employers’ contributions are capped at between 0.15%-0.85% of an employee’s salary.
For cases of disability, contributions are 4% x average number of employees x 50% x national minimum wage;
• Unemployment fund: Both employer and employees pay contributions of 0.5% of the individual’s gross salary each.
Work permits for foreign employees
The Emergency Ordinance on the Employment and Assignment of Foreigners regulates the employment of foreign nationals in Romania. Foreigners, other than those from the European Union (EU), European Economic Area (EEA) and Swiss Confederation, must have work permits and a residence visa to enter, work and live in the country. EU, EEA and Swiss Confederation citizens require only a certificate of registration, which it is possible to acquire within a day.
Workers from outside of the EU, EA or Swiss Confederation can only be employed if the vacancy in question cannot be filled by a Romanian national, an individual with permanent residency in the country or an EU or EEA citizen. But certain non-EU citizens may be employed without a work permit, including people with permanent residency status, asylum seekers and nationals whose home countries have treaties or bilateral agreements with Romania, which allow free access to its labour market.
Work permits are granted for one year and are automatically extended for successive periods until the termination of a worker’s employment contract. The number of work permits issued annually is decided by the government and depends on both the health of the country’s labour market and its current labour migration policies.
Visas can be obtained from the diplomatic missions and consular offices of an individual’s home country. There are a number of possible options:
1. Short-stay visa: This is issued for a period not exceeding 90 days and is valid for six months from the date of entry. It cannot be extended;
2. Long-stay visa: These are issued for 90 days and may be extended by making a request to the Romanian Immigration Office;
3. Residence permits: Foreign nationals wishing to reside in the country can apply for a residence permit, of which there are two types:
• Temporary residence permit: This must be obtained from the local Romanian Embassy if individuals wish to stay in the country for 120 days or more;
• Permanent residence permit: These can be obtained from the Romanian Immigration Office and apply if a foreign national marries a Romanian citizen or an individual’s temporary legal stay lasts for at least three years.
“Work permits are granted for one year and are automatically extended for successive periods until the termination of a worker’s employment contract.”
Work permits for foreign employees
The Emergency Ordinance on the Employment and Assignment of Foreigners regulates the employment of foreign nationals in Romania.
Foreigners, other than those from the European Union (EU), European Economic Area (EEA) and Swiss Confederation, must have work permits and a residence visa to enter, work and live in the country. EU, EEA and Swiss Confederation citizens require only a certificate of registration, which it is possible to acquire within a day.
Workers from outside of the EU, EA or Swiss Confederation can only be employed if the vacancy in question cannot be filled by a Romanian national, an individual with permanent residency in the country or an EU or EEA citizen. But certain non-EU citizens may be employed without a work permit, including people with permanent residency status, asylum seekers and nationals whose home countries have treaties or bilateral agreements with Romania, which allow free access to its labour market.
Work permits are granted for one year and are automatically extended for successive periods until the termination of a worker’s employment contract. The number of work permits issued annually is decided by the government and depends on both the health of the country’s labour market and its current labour migration policies.
Visas can be obtained from the diplomatic missions and consular offices of an individual’s home country. There are a number of possible options:
1. Short-stay visa: This is issued for a period not exceeding 90 days and is valid for six months from the date of entry. It cannot be extended;
2. Long-stay visa: These are issued for 90 days and may be extended by making a request to the Romanian Immigration Office;
3. Residence permits: Foreign nationals wishing to reside in the country can apply for a residence permit, of which there are two types:
• Temporary residence permit: This must be obtained from the local Romanian Embassy if individuals wish to stay in the country for 120 days or more;
• Permanent residence permit: These can be obtained from the Romanian Immigration Office and apply if a foreign national marries a Romanian citizen or an individual’s temporary legal stay lasts for at least three years.
Payroll cycles and overtime rules
Salaries must be paid at least monthly. As of 1 February 2017, the monthly national minimum wage is RON 1,450 (US$371).
Overtime payment for work undertaken during the week is paid at a rate of 75% more than normal or, alternatively, employees may be granted equivalent time off in lieu. Weekend overtime payments are 100% higher than usual weekly work rates.
For at least three hours of any work performed at night, employees should be paid either 25% more than their normal rate or have an hour cut from their usual work schedule without any concomitant reduction in salary.
In Romania, it is standard to work eight hours a day, which amounts to a 40-hour, five-day working week from Monday to Friday. Normal working hours are between 9am and 5pm. Working between 10pm and 6am constitutes a night shift.
Be aware that employees are not allowed to work for more than 48 hours per week including overtime. Under 18 year-olds are allowed to work for no more than six hours per day and 30 hours a week.
HR legislation
Employment in Romania is governed by the Labour Code (Law No. 53/2003), which came into force in March 2003 but was subsequently amended in May 2011.
It regulates both individual and collective employment relationships and all major employment-related issues such as salaries, leave entitlement, working hours, rest, termination of employment and discrimination. The Code applies equally to both local and foreign employees working in the country.
Other major laws governing employment relationships include:
- Law No. 319/2006 on health and safety at work;
- Emergency Governmental Ordinance No. 56/2007, which covers the employment of foreign nationals;
- Law No. 168/1999, which focuses on how to settle labour conflicts;
- Social Dialogue Law No. 62/201; and
- HG 500/2011 on the General Registration of employee records.
Camelia Nita has been managing director of TMF Romania since 2005 and has worked with TMF Group for almost 18 years. Her experience spans local and international financial reporting, tax compliance, business processes and systems implementation. Camelia is a certified member of ACCA, the Romanian Association of Chartered Certified Accountants (CECCAR) and the Romanian Chamber of Tax Consultants (CCF).
