Romania

The Romanian labour market

Each labour market has some peculiarities. Foreigners may find it difficult to fully comprehend payment methods, taxes, and other benefits. TalentUp is starting a series of different blog articles, one for each country. This article analyzes the Romanian labour market.

Even if the national currency is the Romanian Leu (RON), the whole article is in EUR to easily compare across countries and exchange rates.

General data about the Romanian labour market

Payroll taxes in Romania

Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.

Once contributions are paid, employees need to pay an income tax that is established at a 10% flat rate for income above 1,005.58€. 

Contingencies from self-employees

Sole proprietors need to pay pension and health contributions once they exceed the minimum income threshold. This rule means that if your income is less than or equal to the minimum salary, you only pay income taxes. The contributions amount to 25% (pension) and 10% (health contributions) of the annual minimum wage. If your income is higher than 5042.30€ a year, there is a flat rate of 1764.80€ per year for contributions.

Self-employed individuals earning up to 65,000 EUR per year are exempt from VAT on a national level. But, even if this limit is not exceeded, a self-employed person in Romania should register for VAT since certain instances may require this registration.  

Example of net salary in Romania

As a reference, we use the average salary of a software engineer. In Romania, on average, software engineers earn 15,000€ annually.

The employer contributes 937.5€ to social security, and the employee contributes 5,250€.

After paying the income tax, the employee has a net salary of 8,875.56€, coming from a gross salary of 15,000€.

Romanian unemployment regulation

The maximum probation periods are:

A written decision from the employer is always required, except for terminations during the trial period. 

The notice period in case of dismissal is a minimum of 20 working days, or 45 days for management positions.

Different kinds of leaves in Romania

There are 15 public holidays. The minimum amount of time off per year is 20 days.

The first 5 calendar days are paid by the employer. From the 6th day on, the medical allowance is supported by the National Health Fund. 

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

Other leaves are:

• Bereavement leave: 2 days of unpaid leave is granted to an employee who has had a death within their immediate family.
• Marriage leave: 5 days for an employee’s marriage and 2 days for the marriage of a child.

Paid parental leave

The maternity leave is 63 days before and 63 days after birth. It represents 85% of the calculation base, and it is paid by the National Health Fund.

Fathers are entitled to 5 days of paid paternity leave, which can be used until the child reaches the age of 8 weeks. It can take up to 10 days just for the birth of the first child.

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.

Expected benefits offered by Romanian companies

How to employ a Romanian worker

Companies hiring employees will need to draw up contracts. Romanian law requires written contracts, and companies must write them in the Romanian language and register them with the Employees’ General Register. 

According to the Labour Code, Art. 34 (7) of law no. 53/2003, republished and updated, each employer from Romania has the obligation to instate a General Registry of Employees in electronic format, more widely known as a Revisal.