Romanian Leu (RON)
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This country guide is for general informational purposes only and should not be construed as legal advice, nor as binding based on your relationship with Lano. When using Lano's solutions, the specifics may depend on your EOR and Payroll setup with our partners. Although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
Being the sixth biggest country in the EU in terms of population, Romania offers international businesses a big talent pool and a large consumer market. The fast-growing economy provides an ideal business environment, and the fact that Romania is a member of the European Union makes it a perfect location for companies looking to enter the EU market.
With low wage levels and low employer social security contributions, the country is an attractive destination to recruit fresh talent. English is widely spoken and educational levels are high.
Employment contracts in Romania are generally concluded for an indefinite term, but the conclusion of a fixed-term contract is also possible if certain conditions are met. Other types of employment agreements include temporary contracts and part-time contracts. Regardless of the type of contract, the agreement must be concluded in writing and signed by both parties. The contract language is Romanian.
Every employment contract should include at least the following information:
Identification of both parties
Date of commencement (and employment duration for fixed-term contracts)
Job description, duties and responsibilities
Criteria for assessing the professional activity of the employee
Basic salary as well as other compensation or benefits
Payment frequency and pay date
Total number of holidays
Reference to collective agreements
Following the implementation of EU Directive No. 1152/2019 and No. 1158/2019, the mandatory elements of employment contracts are now regulated by a new ministerial order.
Probation periods are allowed, but should not exceed 90 days – 120 days for managerial staff. Different regulations apply to fixed-term contracts.
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A normal workday is 8 hours, and full-time employees work a standard 40-hour week. The weekly rest period must not be shorter than 48 hours, with Saturdays and Sundays being the usual rest days.
Any work performed outside of standard working hours is considered overtime and requires the employee’s consent. Overtime is limited to 8 hours per week and is typically compensated with additional time off, which should be provided within the 60 days following the day on which the employee worked overtime.
Alternatively, overtime must be paid at a rate of 175%. Work on public holiday must be compensated either with additional time off or paid at double rates.
It is mandatory to pay employees once a month on the pay date stipulated in the individual employment contract. Usually, payments are made either at the end of the month or at the beginning of the following month.
Minimum wage rates in Romania differ depending on the employee’s seniority, skills, educational level and other criteria. In January 2023, the minimum gross pay for jobs that do not require a higher education is set at RON 3,000 per month - up from RON 2,550 per month. After 24 months of continuous employment, employers have to pay employees above minimum wages.
Employees who are unable to work because of illness or injury are entitled to paid sick leave. However, sick leave is only granted for up to 183 days within one year. The amount of sick pay depends on the illness which is specified in the medical certificate that needs to be presented to the employer.
The different sick pay rates are 75%, 85% or 100%. The first 5 days of sick leave are covered by the employer. Thereafter, the employer continues to make payments to the employee, but is reimbursed by Social Security.
There are no legal provisions for a 13th month salary.
Employees and employers in Romania are subject to the following tax and social security contribution rates (last review February 2023):
16% corporate tax rate
19% VAT (standard rate)
Individual income is taxed at a 10% flat rate.
2.25% of employee salary
In certain cases, employers are required to pay a 4% or 8% pension contribution on behalf of the employee – depending on their working conditions.
25% pension insurance
10% health insurance
Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).
The minimum annual leave entitlement is 20 days – 23 days for employees working under heavy, dangerous or harmful conditions. In addition, the country observes 15 public holidays.
Maternity leave in Romania lasts for 126 days, 63 days of which should be taken before and after birth respectively. It is mandatory for mothers to take at least 42 days of maternity leave after the birth.
A maternity allowance equal to 85% of the employee’s usual salary is paid by Social Security. Romanian law also provides for maternal risk leave which can be taken in cases where the mother’s or child’s health are in danger. Maternal risk leave is covered by statutory benefits amounting to 75%.
Fathers are entitled to 10 days of paid paternity leave.
After maternity leave, either one of the parents can go on paid parental leave until the child is 2 years old – 3 years in case of disabled children. During this time, the parent receives a monthly allowance equal to 85% of their usual wages from Social Security.
Additional leave includes:
Paid or unpaid training leave
Special childcare leave for children under 12
3 days of bereavement leave
5 days of carers' leave
10 days of leave for unforeseen circumstances
The employment can be terminated by either of the two parties or by mutual consent. Employers who want to dismiss an employee need a valid reason to do so. Reasons for dismissal can either be related to the individual employee or to the business’s economic situation. Possible grounds for dismissal include:
Redundancy due to downsizing, restructuring or any other changes in how the business operates
Underperformance or lack of skills
Loss of ability to perform the agreed tasks
Employees must be informed about their dismissal in writing. The statutory notice period is 20 business days and must be respected by both employee and employer. For managerial staff wishing to resign from their position, the notice period is 45 business days. No notice must be given in case of gross misconduct or during the employee’s probation period. Pay in lieu of notice is not allowed.
Severance pay is only required by law in cases where the employee is dismissed because they lost the physical or mental ability to perform their job. However, the law does not stipulate a minimum amount which needs to be paid. Employees in certain sectors might be entitled to severance pay under a collective bargaining agreement.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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