Employee benefits in Romania: All you need to know

If you’re looking to expand your team globally, you’ll soon discover that hiring employees in other countries can get complicated. Employers need to understand the statutory benefits required in a foreign country like Romania (as well as the in-market expectations for compensation) before developing a compliant employment contract.

Remote has been built for this exact purpose. Our team of global HR experts makes it easy to understand your obligations as an employer of Romanians or any other workers from around the world.

As an experienced employer of record with entities all over the world, Remote’s team can take the risk and the hassle out of managing a competitive and compliant benefits package across multiple countries (including Romania).

In this guide to benefits for Romanian employees, we’ll explain the mandatory benefits you must provide as well as additional perks you can offer to give your business an edge in attracting top talent. We’ll walk you through the following key elements of hiring in Romania:

• Which workers are entitled to benefits in Romania?

• What are the statutory benefits you must provide by law

• Additional benefits to attract quality Romanian talent

• How to set up and manage benefits for international employees

Read to hire your team in Romania? For detailed information on payroll, benefits, taxes, and compliance, check our our Romania hiring guide.

Which workers are entitled to benefits in Romania

Statutory benefits, also known as mandatory benefits, are entitlements that employers are obligated by law to provide to their employees. Common examples include benefits like paid annual leave, parental leave, worker's compensation insurance, and paid sick leave.

The Romanian government, like many others, requires employers to provide their workers with a minimum amount of employee benefits. Employees in Romania are entitled to standard employee benefits as required by the Romanian government.

Independent contractors in Romania are not entitled to any specific statutory benefits. Any benefits or remuneration are determined by the specific contractual agreement between your business and the contractor.

Employers need to understand the nuances involved in this determination, and when you’re attempting to classify employment relationships — your global hiring can start to get more complicated.

Regardless of whether you consider a worker to be an employee or a contractor, legislators will make the only determination that matters. If you’re found to have an employment relationship and you haven’t provided the required entitlements, your company will face the risks of misclassification and any subsequent fines or penalties.

For more detailed information about understanding this concept, be sure to read our dedicated guide to employee misclassification.

Statutory employee benefits

The government of Romania sets the standards for statutory employee benefits. These benefits are generally required for all employees, with a few exceptions. The most common benefits include maternity leave, sick leave, vacation, and social security.

There are several standard employee benefits mandated by the Romanian government, which employers are obligated to provide by law.

Annual leave in Romania

Employees are entitled to 20 days of paid annual leave per year, prorated according to the period worked. Employers are required to pay staff their salary at least five working days before the leave begins.

If an employee is unable to take all or part of their annual leave allowance in a year, the employer must carry it over to the first six months of the next year.

Sick leave

Employees who are covered by the pension and social insurance system and have made required payments are entitled to up to 180 days of sick leave within one year, with a potential 90-day extension, under the Labor Code.

The employer pays the employee a daily rate during the first five calendar days; from then on, the FUNASS (Unique National Fund of Health Insurances) covers the payment of sick leave.

Sick pay is 75% to 100% of an employee's average monthly earnings during the previous six months of work, depending on the type of illness.

Maternity and parental leave

Romanian legislation allows a standard of 126 days of maternity leave, with 63 days allowed before the expected date and 63 days after the expected date. The employee can get more than 63 days for each of the phases, but he or she must be able to take at least 42 days' worth of benefits after the due date.

Maternity leave is regarded as medical leave, with the employee's physician determining how many days are assigned to each part of the period. This benefit amounts to 85.00% of the average salary paid for the previous 12 months before childbirth.

In addition to maternity leave, parents may take advantage of a separate paid leave provision to raise a young child, up to age two, or if the child has a disability. During this time off, the parent is compensated at a rate proportionate to the income they had before taking leave. If a parent returns to work before the two-year period ends, he or she is eligible for incentives. The employer does not pay the indemnity.

Parents also have the legal right to paid leave if their children are under the age of 12 and are attending schools where classes were canceled owing to exceptional circumstances such as extreme weather or a medical emergency. However, this type of leave is only available to one parent and can only be utilized if both parents do not work from home.

Pension plans and retirement contributions

The retirement age for men is 65 and for women 63. To be insured, both employees and employers in Romania are required to pay into the social and health insurance system. Old-age pensions are given to Romanian individuals who have completed the required length of contribution in the public pension system and have reached the stipulated retirement age.

Individuals who have worked for at least 15 years and made a minimum number of contributions are eligible for pension benefits. For both genders, the period is calculated as 35 years.

If non-Romanian citizens have a residence permit, they are entitled to all benefits provided by Romanian law in the field of social security. The share of the employee's gross salary that is paid is set yearly, differentiated between employee and employer, and calculated on total salary.

For employees, the general amounts contributed are as follows:

• social insurance is 25%

• health insurance contribution is 10%

Employers must also make contributions of 2.25% for labor insurance for all workers and pension contributions of 4% or 8% for each employee depending on the circumstances. There are a small collection of other mandatory contributions:

• Medical Leave Indemnity contribution is 0.47%

• Work Accident or Professional Disease Indemnities contribution is 0.05%

• Residual collection - work insurance contribution is 1.1%

There is no additional social insurance contribution paid by the employer for employees in ordinary working conditions. However, some exceptions apply in particular circumstances.

Along with this, employers are obligated to pay a labor insurance contribution of 2.25%. The law does contain certain exceptions in the case of the construction industry.

Overtime and minimum wage

From January 1, 2022, the Romanian minimum wage in the country is now RON 2,300 to RON 2,550 per month. Individuals with at least one year of seniority in higher education are eligible to receive RON 2,350.00 a month or RON 13.88 an hour.

Romania's labor law sets a maximum of five eight-hour days per week and no more than 48 hours weekly (including overtime). A part-time employee must work at least ten hours each week, two hours every day. Employees under the age of 18 are not permitted to work more than six hours a day or thirty hours per week.

Employers must keep track of each employee's daily work hours and submit records to the labor inspection control as needed.

Employers must provide a 24-hour rest period after completing a 12-hour day. Paid time off is required for work completed outside of the normal 8 hours per day, 40 hours per week. This paid time off must be given within 60 days of overtime work being performed.

If compensatory time off is not feasible, the employee must be compensated by adding a benefit that shall not be less than 75% of his or her base wage, prorated for any overtime worked.

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

Health insurance

There are no mandated insurance provisions for employees under Romanian law. This means employers don’t need to provide health insurance.

However, Remote strongly advises all companies hiring Romanian employees to offer private health insurance as part of an equitable benefits plan. This communicates your genuine care and helps build a stronger connection with your globally distributed team.

Some global companies may opt out of offering private health insurance in this instance, but it is still relatively common for progressive local employers to offer health insurance to their employees.

Indeed, offering a health insurance benefit, or other additional insurance benefits (like dental insurance, vision insurance, and life insurance), can be such an effective way to build trust with new hires and separate your offer from that of a competitor.

Want to see a full breakdown of employment costs for new hires in Romania? Check out our free Employee Cost Calculator tool.

Supplemental benefits to consider for Romanian employees

Beyond what is government-mandated, we strongly encourage employers to offer extra incentives and provisions to all of their employees regardless of minimum statutory requirements.

Remote cares passionately about providing perks and benefits to enable your global team to enjoy security, stability, and work-life balance. Our team of internal HR specialists and global benefits experts are constantly working with our customers to create customized and competitive benefits packages to attract top talent.

Romania is one of Europe’s more competitive emerging labor markets, especially in the field of software engineering. Offering the bare minimum will reduce your chances of hiring the best local talent. Workers are starting to seek out certain perks now that remote work is readily available with businesses across the world (we explain in more detail in our values-based benefits guide).

Additional perks can act as powerful motivators for star candidates to join and stay with a given company and we’ve gathered a short list below for you to consider:

• personal learning and development budget

• therapy or coaching allowances

• mentorship programs

• volunteering days

• birthday leave

• meal and travel expenses

• gym or health club membership

The size of your business shouldn’t prevent you from sourcing international talent either. If you’re a smaller business looking to employ a Romanian (or any other international worker), your benefits plan can still be both attractive and affordable. This small business guide to affordable global benefits will help you find inexpensive perks that international employees will love.

How to set up and manage benefits for international employees

Whether you’re hiring a software engineer from Romania, a CFO from India, or an SEO manager from Singapore, you need to understand how benefits work in each nation to maintain compliance and (and keep your offer competitive in the local market).

But how can you manage to stay compliant with all of the ever-changing local labor laws in each country you are hiring across the globe?

Instead of building a fully-owned local legal entity with a specialist HR function in each new market, an employer of record provides a cost-effective, fast, and secure alternative to help you grow your team across borders.

When should you use an employer of record?

If you don’t have an established process to manage the complicated parts of scaling global hiring (in Romania or further afield), an employer of record like Remote will give you immediate relief.

Remote’s EOR service gives you the advantage of dedicated local employment experts that can offer the insight you need to create a strong benefits package, a compliant employment contract, and a competitive offer to your candidate.

We’ve previously dedicated an entire guide to when should you use an employer of record, but there are a few critical trigger areas where an EOR can dramatically minimize your risk:

• Creating a competitive and compliant global benefits package

• Managing the delivery of benefits in the safest, simplest, most efficient way

• Setting up payroll for employees in multiple countries

• Terminating an employee in compliance with local regulations, and

• Protecting any IP & patents produced by your remote employees

An employer of record like Remote can manage the complicated parts of international employment so you don’t have to worry.

The combination of Remote’s simple software hub and our team of global HR experts combine to organize all the tiny details of managing a distributed team.

Learn how Remote simplifies international hiring so you can scale your distributed team faster.

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