Introduction to Payroll in Romania
If you are thinking of expanding your business to an up-and-coming European country, then look no further than Romania. With its growing economy and open-minded attitude towards foreign investors, this country can be a great source of business success.
Nonetheless, expanding to Romania comes with its challenges. The main one? Processing and managing payroll. This can be a very complex task, and one that you should not tackle by yourself but with the expert and dedicated help of a global payroll provider like Skuad.
Payroll Process in Romania
The payroll process in Romania, just like elsewhere in the world, is divided into three different phases: pre-payroll, payroll calculation, and post-payroll. In this guide, we are going to discuss each of these in detail.
The first, essential step of the pre-payroll phase requires you to understand the local laws governing payroll and employment, and establish a business entity in Romania.
Setting up the Organization
Creating your new business entity in Romania is mandatory, as it enables you to operate in full compliance with the country’s laws.
As soon as you have registered your new Romanian business, the relevant local authority will send you a unique business number. Remember to specify this number on all official paperwork.
You might need to comply with different rules and regulations, depending on where in Romania you set up your business. Check carefully before you begin your operations.
At this stage, you will also need to establish and communicate to your employees specific policies on all the different types of leave that you offer, including sick leave, maternity and parental leave, and vacation leave.
Whether or not your company is offering both full-time and part-time work contracts, it’s important to define provisions on standard and special work attendance.
All the policies discussed so far are yours to define, officialize, and communicate. However, they always must be in full legal compliance with Romania’s labor and employment laws.
Just like in most other countries, Romanian wages are inclusive of both allowances and deductions.
In Romania, most employees get paid once per month. Your company can select its own payday and must always ensure that salaries are paid out on that day or on the closest working day.
Check with your local authorities regarding the specific information about your employees that you need to provide before you move ahead with finalizing payroll.
Payroll Calculation Phase
Completing the pre-payroll phase allows you to swiftly move on to the payroll calculation phase. At this stage, you will need to transfer all the data gathered during the pre-payroll stage onto your payroll system, which will verify it and calculate precise salaries for each of your employees.
As you might expect, the most important element of the post-payroll phase is ensuring that your employees’ salaries are paid out promptly and correctly. Most companies prefer to do so via automated software, but you can choose to handle this manually by liaising with your bank.
Remember that monitoring your salary payouts is a crucial element that enables you to keep your internal accounting up-to-date and reliable.
Payroll Reporting and Compliance
On top of keeping track of salary payouts internally, you will also need to provide payroll-related information to all the relevant Romanian entities and authorities.
Are you already feeling confused and overwhelmed by the huge amount of information so far? It’s understandable, but it doesn’t need to be this way. You can simplify all things payroll in Romania by working with a trusted, professional, and committed payroll provider — like Skuad.
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Payroll Processing in Romania
In Romania, companies are required to pay several different taxes to different authorities, all the while respecting specific deadlines.
Payroll Processing Company in Romania
Remembering who to pay, when, and how much can be incredibly challenging if you choose to handle payroll in Romania independently. On the other hand, teaming up with a skilled, hands-on team like Skuad will give you the peace of mind that your payroll services in Romania are in the best possible hands.
Payroll Management in Romania
Payroll management involves keeping track of all payroll-related data, particularly, information on your employees, as well as ensuring that your company always complies with the country’s rules and regulations.
Payroll Compliance in Romania
In Romania, most laws around labor and employment are included in the Labour Code (Codul muncii). There are, however, a number of additional statutes that tackle topics such as parental leave and benefits, temporary work, remote work, and sick leave.
Payroll Components in Romania
The sections below detail the most important components of payroll in Romania. It’s crucial that you become familiar with them in order to process and manage payroll effectively.
At the moment, the Romanian government has confirmed that the gross minimum wage in the country has been raised to 2,550 leu, roughly equivalent to 553 U.S. dollars per month.
Typically, Romanian employees on a full-time contract are expected to work 40 hours per week, over five working days. Nonetheless, the Labour Code might be soon amended to reflect the introduction of an optional four-day working week.
This new arrangement will enable employees to work ten hours a day over four days.
Overtime work in Romania is classified as work that exceeds eight hours a day, or 40 hours a week. By law, weekly overtime is not supposed to exceed eight hours.
In Romania, social security contributions are paid by the employer only in the case of particular or special working conditions.
All Romanian employees who are protected by social insurance and have paid the relevant contributions can access up to 183 days of sick leave in one year. If necessary, this can be extended to an extra 90 days.
The first five days of sick leave are paid for by the employer, while the rest is funded by the Social Security Fund.
Pregnant employees in Romania can receive 126 days of maternity leave. This begins 63 days before the expected childbirth, and continues for another 63 days after childbirth.
During maternity leave, new mothers are entitled to receive 85% of their standard wages. Maternity leave in Romania is entirely paid for by the Social Security Fund. Maternity pay is also offered when a baby is stillborn.
New fathers can receive five working days of paternity leave, to be taken after the birth of the baby. Upon successful completion of a special childcare course, fathers can request an extra ten days of leave. It’s also important to note that fathers only receive paternity leave for their first-born child.
Below is a list of the main public holidays in Romania:
- New Year: January 1 and January 2
- Day of the Union of Romanian Principalities: January 24
- Good Friday: the last Friday before Easter
- The first and second days of Easter
- Labor Day: May 1
- The first and second days of Pentecost
- The Assumption of the Virgin Mary
- Saint Apostle Andrew the First-called, Protector of Romania: November 30
- National Day: December 1
- The first and second days of Christmas
There are no specific payroll taxes in Romania.
Termination of Employment
Provisions around termination of an employee in Romania vary according to the specific employment contract and collective agreement, as well as the reason for dismissal. Employees can be terminated either due to their conduct at work, or because their job no longer exists.
Paid Annual Leave
In Romania, the minimum annual leave allowance for full-time employees is 20 working days.
Payroll management in Romania can bring about a myriad of challenges, while also being a very costly process if you decide to tackle it by yourself. Internal payroll, in fact, requires companies to hire and pay specialized HR and accounting staff, which adds to overhead costs and eats into margins.
Other options to manage your payroll in Romania include:
- Remote payroll. This method involves managing payroll from your parent company in your home country. It is generally more affordable than internal payroll, but it also requires you to stay constantly up-to-date on all rules and regulations in Romania
- Payroll processing company in Romania. With this approach, you can handle payroll via a local Romanian agency. Again, this can be cheaper and quite efficient, but it’s also a much lengthier process as it requires finding a reputable, professional agency that you can trust with your payroll services.
- Outsourced payroll. As the most comprehensive, efficient, and legally-compliant payroll management solution, outsourced payroll is a real no-brainer. By joining forces with a global payroll provider, you will not need to lift a finger as all aspects of your payroll will be handled directly by your trusted agency.
If you are interested in finding out more about how Skuad’s outsourced payroll platform works, then check out our FREE demo, or get in touch with the Skuad team today.
As of May 24, 2022, the U.S. dollar is equivalent to 4.62 Romanian Leu (RON), the currency in use in Romania.