How to hire employees in Romania

Romania stands out as a hotspot for recruiting top-notch talent in fields like information technology and engineering. With its skilled professionals in software development, automotive engineering, and ICT, Romania shines as a hub for technical expertise and innovation.

Businesses looking to expand or strengthen their global footprint find Romania's labor market particularly appealing. Not only does the country offer cost-effective solutions, but it also boasts a workforce of exceptional quality. This combination makes Romania an ideal destination for companies seeking to enhance their operations or establish a stronger international presence.

What you need to know before hiring employees in Romania

Job market in Romania

When exploring how to hire employees in Romania, the following trends can help you hire cost-effectively and pay talent correctly. 

• Romania's job market is currently characterized by a moderating annual inflation rate, which stood at 7.23% in February 2024. This trend suggests a gradually stabilizing cost of living, potentially affecting wage expectations.
• The unemployment rate remains stable at around 5.61% in 2022, indicating a relatively tight labor market with low availability of job seekers, which might require employers to offer competitive packages to attract talent.
• A notable concern for employers is the youth unemployment rate, which has risen to 22.59%. This highlights a significant pool of young job seekers, suggesting opportunities for companies willing to invest in training and development.
• With the average inflation rate expected to decrease to 2.5% by 2028, Romania is moving towards economic stability, making it an increasingly attractive location for long-term investments and hiring.
• Romania's favorable score in the Global Remote Work Index indicates its potential as a destination for remote employment, offering access to a skilled workforce ready to meet the demands of the digital and technology sectors.

For businesses seeking to expand or establish a presence in Romania, understanding these dynamics will be key to successful hiring and operations, ensuring access to a talented and versatile workforce within a strengthening economy.

Romania  Hiring Trends

In 2024, Romania's hiring landscape is marked by strategic growth and an evolving emphasis on nurturing a fulfilling workplace culture, resonating with the aspirations of a modern workforce. This shift is amidst an economic backdrop where Romania's GDP is on a positive trajectory, expected to bolster the job market's attractiveness to both local and international employers.

The emphasis on personal development, diversity, and inclusion reflects a broader trend within Romania, where the labor force participation rate subtly shifted from 63.30% in the third quarter of 2023 to 63% by year-end. This minor adjustment suggests a stable yet competitive job market environment, urging employers to adopt more nuanced hiring strategies. The active job postings, which saw a decline of 10.91% in January 2024, further underscore the selective nature of job creation and recruitment, indicating a preference for quality over quantity in workforce development.

Romania's approach to economic management, aiming for an inflation rate reduction to 2.5% by 2028, offers a predictable financial environment for businesses. This stability is critical for planning long-term investment and operational costs, including salaries. With the youth unemployment rate experiencing a rise to 22.59%, there's a clear opportunity for employers to engage with and invest in the untapped potential of young talent, addressing both the workforce's aspirations and the country's economic needs.

Romania presents a compelling narrative for hiring in 2024; a stable economy, a skilled and diverse talent pool, and a societal shift towards meaningful employment. Employers leveraging these trends can not only enhance their operational success but also contribute significantly to Romania's ongoing growth story.

How to hire employees from Romania

1. Set up an entity in the country

Establishing a legal entity in Romania is a strategic move for companies targeting significant growth or seeking a sustainable presence in the country. It facilitates direct management of employees and offers advantages in long-term cost efficiency.

This process includes choosing an appropriate business form, such as a Limited Liability Company (Societate cu Răspundere Limitată - SRL) or Joint Stock Company (Societate pe Acțiuni - SA), registering with the National Trade Register Office, and securing a unique registration code for fiscal purposes.

Navigating this pathway requires a nuanced comprehension of Romanian employment regulations and adept handling of HR and payroll operations, underscoring the need for meticulous planning and possibly professional consultation to ensure compliance and operational success.

2. Hire independent contractors

Hiring contractors in Romania involves forming agreements with individuals or entities for designated projects or tasks, providing a level of flexibility well-suited for temporary or specialized assignments. It's essential for employers to accurately classify these workers to navigate Romania's labor laws effectively and avoid potential legal issues or penalties. While engaging contractors can meet immediate needs, it's important to recognize that these arrangements may not foster the same level of commitment or loyalty as seen with permanent, in-house staff, a critical consideration when opting for this employment strategy.

3. Partner with an EOR in the country

Leveraging an EOR service streamlines the process of entering the Romanian market by eliminating the need to create a legal entity. This approach minimizes liabilities and is economically advantageous for companies seeking expansion. Collaborating with an EOR ensures adherence to the intricate web of Romanian employment laws, taxation, and regulations, significantly diminishing legal exposures and fostering compliant business practices. This method enables businesses to concentrate on strategic development and achieving operational goals in Romania.

Compliance risk while hiring in Romania

Hiring in Romania presents compliance risks concerning labor laws, tax regulations, and proper classification of workers. To navigate these complexities and avoid potential legal penalties, it's crucial for companies to thoroughly understand and adhere to Romanian and EU directives. Engaging with local legal expertise or leveraging an Employer of Record can effectively mitigate these risks, ensuring ethical employment practices and compliance with all regulatory requirements.

Key Aspects of Romania Labor Law

Employment Contract:

In Romania, employment agreements are generally considered to be without a fixed end date unless specified otherwise. While the law does not mandate contracts to be in written form, it is common practice for businesses to document employment terms for clarity and legal integrity. These contracts should include:

• The names and addresses of the employer and the employee.
• The start date of employment and, if applicable, the end date for fixed-duration contracts.
• The job's location.
• A detailed description of the employee's role and responsibilities.
• The salary in Romanian lei and any additional benefits.
• The standard working hours per week.
• Entitlements to annual leave.
• Notice period requirements for both resignation and termination.
• Reference to any applicable collective labor agreements affecting the employment conditions.

While fixed-term contracts are allowed under Romanian law, they come with specific restrictions, especially regarding pension eligibility, which generally requires at least four years of employment under such contracts

Working Hours:

Under Romanian regulations, the working week cannot exceed five days of eight hours each, totaling a maximum of 48 hours. Part-time employees are required to work at least ten hours weekly, distributed over a minimum of two hours daily. For workers younger than 18, the legal limit is set to six hours a day or 30 hours a week.

It's mandatory for employers to maintain detailed logs of each employee's daily work hours, documenting the commencement and conclusion of their shifts. These records must be readily available for review by labor inspection authorities upon request.

Overtime:

Romanian law caps the workweek at 48 hours, including any overtime. Employees are entitled to a 24-hour rest period following any day they work for 12 hours. Overtime, defined as hours worked beyond the standard eight-hour day or 40-hour week, should be compensated with equivalent time off within 60 days of accruing the overtime. When compensatory time off is not feasible, employees must receive overtime pay at a rate not less than 75% of their standard hourly wage, adjusted for the extra hours worked.

Special considerations are made for certain groups: employees under 18, those working part-time, and pregnant employees who are medically advised against standard work hours are exempt from overtime requirements.

Minimum Wage:

The legal minimum gross salary is set at 3,300 RON.

Payroll laws in Romania

In Romania, payroll regulations mandate that employees are paid on a monthly basis. Employers must adhere to this schedule to ensure timely compensation of wages to all staff members.

Employment benefits in Romania

Leave Policies in Romania

1. Paid Time Off:

Romanian employees are legally granted up to 20 days of paid vacation annually, adjusted based on the duration of employment within the year. Employers must ensure vacation pay is provided at least five days before the start of the leave. Unutilized vacation days within a year must be deferred to the first half of the subsequent year. Should the employee be unable to utilize their vacation due to reasons like prolonged illness, with their agreement, the employer is obligated to allocate the unused vacation days within 18 months from the start of the year following the accrual year.

2. Public Holidays:

Romania observes 14 public holidays in the year 2024.

3. Sick Days:

In Romania, employees who contribute to the pension and social insurance system can take up to 180 days of sick leave per year, with the possibility of extending it by another 90 days if necessary. The employer covers the first five days of sick leave. Starting from the sixth day, sick leave payments are supported by the FUNASS (Unique National Fund of Health Insurances). Sick pay ranges from 75% to 100% of the employee's average monthly income over the last six months, based on the illness type, and requires a doctor's medical certificate.

4. Maternity Leave:

In Romania, pregnant employees are granted 126 days of paid maternity leave, split between 63 days before the expected delivery date (prenatal leave) and 63 days after the birth (postnatal leave), as recommended by their doctor. The FUNASS (Unique National Fund of Health Insurances) pays the maternity benefit at 85% of the employee’s average monthly gross income from the previous six months. Additionally, employees can take leave for maternal risk, funded at 75% by FUNASS, to ensure their and their child’s health. This requires a medical certificate and a request to the employer. Maternal risk leave is in addition to the standard maternity leave.

5. Paternity Leave:

In Romania, fathers or partners actively involved in childcare are eligible for 10 days of paid paternity leave, which extends to 15 days if they complete an infant care course. This leave is available within the first eight weeks after a child's birth, based on a written request to the employer, along with the child's birth certificate. The paternity leave pay comes from the employer's salary fund and is taxable.

If the child’s mother passes away during childbirth or maternity leave, the father can receive:
a) A payment equivalent to the maternity allowance the mother would have received if the father hasn't met the required insurance period for medical leave.
b) A maternity-related payment based on the father's earnings, provided he qualifies for medical leave insurance.

These payments are covered by the employer’s salary fund.

Public Health Insurance 

In Romania, public health insurance is a fundamental component of the national health system, ensuring access to a range of medical services for its citizens. Managed by the National Health Insurance House (Casa Națională de Asigurări de Sănătate, CNAS), the system is funded through mandatory health insurance contributions paid by employees, employers, and other categories of contributors. 

This insurance provides coverage for a variety of healthcare services, including general and specialist consultations, hospitalization, prescriptions, and preventive services. Insured individuals are entitled to choose their family doctor and have access to medical services across the country. 

Despite the coverage, challenges such as underfunding and accessibility issues persist, driving some to seek additional private health insurance for more comprehensive care. The system aims to offer equitable access to healthcare, but efforts to improve service quality and infrastructure are ongoing.

Filing tax in Romania

Income Tax:

In Romania, the employee income tax system is structured around simplicity and fairness, with a 0% tax rate for monthly earnings up to 5,000 RON. For incomes exceeding 5,000 RON monthly, a flat rate of 10% is applied, ensuring a straightforward tax calculation process. This system reflects Romania's approach to taxation, aiming to provide clarity and ease for taxpayers. For a closer look at the specifics of Romania's income tax rates and how they might impact your financial planning, our detailed guide offers a thorough exploration.

Other Tax and Social Security Contributions:

In Romania, the payroll contribution framework encompasses both employer and employee commitments. Employers are responsible for a 6.25% total employment cost, which includes contributions towards unemployment insurance and social security pensions. Meanwhile, employees contribute a substantial 35% of their salary towards pensions and health insurance, marking a significant investment in their future and wellbeing.

These contributions are vital components of Romania's social security system, providing essential support for pensions, unemployment, and healthcare. The structure ensures a comprehensive safety net for the workforce, contributing to a stable economic and social environment. For an in-depth analysis of Romania's tax and social security contributions, our guide offers a detailed examination.

Business culture in Romania

• Personal connections are crucial in Romanian business culture, with a preference for individual relationships over corporate ties.
• Starting conversations with non-controversial topics can help build a foundation of trust with Romanian partners.
• A handshake is the customary greeting, symbolizing respect and formality.
• Sensitive subjects such as politics, religion, or economic issues should be avoided in business discussions.
• Understanding and respecting these cultural nuances is key to successful business operations and collaborations in Romania.

Top sectors to hire from in Romania

Service Sector

The largest sector, employing 51% of the workforce and contributing 57.61% to the GDP. This broad category includes IT, finance, healthcare, and education, highlighting the service sector's central role in Romania's job market and economic structure

Industry Sector

Encompasses 30.39% of the workforce, contributing 28.88% to the GDP. This sector includes manufacturing, engineering, and construction, offering a wide range of job opportunities.

Information Technology and Software Development

Continues to lead as Romania's powerhouse sector, showcasing robust growth and innovation. With an established reputation as a tech hub, it offers extensive opportunities for developers, engineers, and IT professionals, reflecting the country's strategic emphasis on digital transformation.

Renewable Energy and Cleantech

Emerges as a key sector, driven by global sustainability trends and Romania’s commitment to green energy solutions. This industry's rise signifies opportunities for specialists in renewable energy technologies, environmental science, and sustainability projects, aligning with the global shift towards eco-friendly initiatives.

Top cities to hire from Romania

Bucharest:
‍As the capital and largest city, Bucharest stands as Romania's economic and technological heart. It hosts a multitude of multinational corporations and startups, especially in IT, finance, and services sectors, making it a prime location for talent acquisition.

Cluj-Napoca:
‍Often referred to as the "Silicon Valley of Romania," Cluj-Napoca is renowned for its vibrant tech scene, bolstered by a strong academic community from universities like Babes-Bolyai University. It's an ideal city for recruiting highly skilled professionals in software development, engineering, and information technology.

Timișoara:
‍With a reputation for innovation and a strong industrial base in automotive, technology, and manufacturing sectors, Timișoara offers access to a diverse talent pool. The presence of several universities and research institutes adds to its attractiveness for hiring in engineering and tech roles.

Iași:
‍As one of the leading educational centers in Romania, Iași nurtures a rich talent pool, especially in the fields of IT, pharmaceuticals, and biotechnology. Its several universities and research institutions make it a strategic city for recruiting fresh graduates and experienced professionals alike.

Brașov:
‍Known for its robust manufacturing sector, including automotive and aerospace, Brașov also boasts a growing IT and services industry. The city's quality of life and proximity to nature make it an appealing location for talent looking for a balance between work and personal life.

Hire in Romania compliantly with Gloroots

Hire in Romania seamlessly with Gloroots. Gloroots, serving as an Employer of Record (EOR) in Romania, streamlines the hiring process, facilitating rapid onboarding of candidates while ensuring full compliance with Romanian and international regulatory standards. Tailored to accommodate businesses of varying scales, Gloroots efficiently manages payroll, administers benefits, and navigates tax obligations, thereby eliminating the complexities associated with establishing a local corporate entity. This strategic approach empowers organizations to efficiently assemble a remote team in Romania, enabling them to concentrate on core business activities without the bureaucratic hurdles. For more information on how Gloroots can facilitate your Romanian hiring needs, please contact us.

Frequently Asked Questions 

1. What are the key steps for legally hiring employees in Romania?

Hiring in Romania involves several legal steps, including drafting a written employment contract in Romanian, registering the contract with the National Agency for Employment before the employee starts work, and adhering to Romania's labor laws regarding working hours, minimum wage, and social security contributions.

2. Can foreign companies hire employees in Romania without establishing a local entity?

Yes, foreign companies can hire in Romania without establishing a local entity by using an Employer of Record (EOR) service like Gloroots. An EOR manages all legal, HR, and payroll responsibilities, ensuring compliance with Romanian employment laws and regulations.

3. What are the requirements for employment contracts in Romania?

Employment contracts in Romania must be written in Romanian and include essential details such as the identity of the parties, job description, workplace, salary details, working hours, and vacation entitlements. It's also required to register the contract with the National Agency for Employment before commencement.