Romania boasts a sound and healthy economy, with a GDP of US$300.69 billion in 2022. Due to its proximity to major European markets, the country provides easy entry to over 440 million consumers within the EU and beyond. It has generous state aid schemes and a competitive tax system with low flat and income tax rates.
However, global hiring in Romania is easier said than done. It demands a thorough understanding of the local labor laws and regulations to ensure 100% compliance. You must know the following aspects before you proceed with the hiring process:
- The official language of this country is Romanian. Additionally, English and Hungarian are also frequently spoken by the residents of Romania.
- The standard working time for full-time employees in Romania is 40 hours/week.
- For part-time employees, it is 20 hours per week.
- The official currency of Romania is the Romanian Leu (RON, lei).
- The minimum wage in Romania has been revised to 3300 RON on October 1, 2023.
Let’s delve into a few challenges you will likely encounter when you decide to hire in Romania. Additionally, you will learn about some of this country's most effective hiring methods.
Challenges of Hiring in Romania
While Romania is undoubtedly an ideal spot for global hiring, it also has unique challenges. You must create strategic ways to navigate global hiring and ensure you hire by following the defined labor laws.
Let’s start with the challenges:
1. Compliance with employment laws
The primary employment regulation in Romania is the Romanian Labor Code, adopted in March 2003. These laws cover aspects like hours, time off, and worker rights. They're often changing, which makes it hard to keep up.
Some of the key provisions of the Romanian Labor Code include,
- Overtime is generally not allowed.
- In situations where employees are required to work beyond the standard working hours, they need to be compensated with paid leave within 90 days.
- Employees are entitled to 20 days of annual paid earned leave, 180 days of sick leave, and 17 public holidays per year.
- The minimum notice duration before and after the probationary period includes 20 working days.
If you fail to follow these rules, you could get in trouble and pay fines. That's why it's important for you or any business to get help understanding and following Romanian labor laws. You might need experts to guide them through the process and make sure you are doing everything right.
2. Payroll
Apart from the employment laws, you also need to be aware of the intricate payroll system in Romania. It includes provisions like social security contributions, minimum wage, and others. One of the biggest issues with payroll processing is tax payment.
You can have the perfect administrative team to handle all hiring tasks. But if you do not have the legal expertise to comply with Romania's payroll policies, all these efforts will be of no value. Instead, they will cost you legal repercussions and hefty penalties.
3. Currency mismatch
- Romania is not a member of the Eurozone, meaning that all transactions in this country are made in the official currency, which is the Romanian Leu (RON, lei).
- This can turn out to be a potential disadvantage for companies, as most organizations and consumers have debt denominated in euros, and major purchases are often priced in euros.
- This currency mismatch can result in higher transaction costs and enhanced vulnerability to exchange range fluctuations, thereby impacting the financial stability and planning of your organization.
4. Complicated Visa application process
- Employers often find the visa application process in Romania difficult to navigate since it boasts some unique immigration rules and regulations.
- For example, while most countries only require a work permit or work visa, the same does not apply to Romania.
- In Romania, you need to possess separate documents with different application procedures to obtain a work visa.
How to Hire in Romania
The most pressing question you have been waiting for is how you hire employees efficiently and successfully in Romania.
Well, there are primarily three main ways of global hiring in this country. They include,
- Setting up a local entity
- Hiring employees via EOR
- Hiring employees via AOR.
Let’s take a closer look at what these three methods entail.
Setting up a local entity
- Contact the National Trade Register Office to set up a local entity in Romania. The Romanian Chamber of Commerce and Industry organizes it.
- This process is usually highly time-consuming and expensive.
- It is suitable for enterprises that wish to hire many employees in Romania.
Hiring employees via EOR
- Partnering with an EOR such as Skuad is a much more cost-effective way to hire employees in Romania.
- Skuad is responsible for complying with local employment laws, including payroll, taxation, and termination.
- Its benefits include rapid market entry, compliance assurance, and scalability.
Hiring contractors through AOR
- Leveraging the services of an AOR can be a wise decision when you wish to hire contractors in Romania.
- They serve as a point of contact for local government authorities, managing all paperwork and compliance inquiries.
- Some significant benefits of hiring in Romania via AOR include local compliance expertise, risk mitigation, flexibility, and control.
Cost of Hiring in Romania
If you have the time and resources to splurge, feel free to do so without worrying about the costs incurred in the hiring process.
However, if you wish to spend your resources wisely and effectively, understanding the various costs involved in global hiring is crucial.
Truthfully, the cost of hiring in Romania varies based on multiple factors. These include salary and benefits or the type of industry. Additionally, the hiring method your organization utilizes can influence it.
Let’s examine a detailed analysis of the various costs involved and how they may differ.
| Types of costs |
Setting up a local entity |
Using AOR/EOR |
| Hiring costs |
Typically high, since you will be in charge of everything ranging from conducting interviews to performing background checks. |
Significantly low since Skuad facilitates quick onboarding and runs efficient background checks. |
| Setup costs |
High, as you will be directly responsible for office setup expenses, legal, and compliance fees. |
Minimal, as Skuad already has an established presence in Romania. |
| Administrative costs |
You must build in-house teams to handle payroll tasks and maintain HR records. |
Low, Skuad handles compliance seamlessly and optimizes payroll management on your behalf. |
| Types of costs |
Using AOR/EOR |
Setting up a local entity |
| Hiring costs |
Significantly low since Skuad facilitates quick onboarding and runs efficient background checks. |
Typically high, since you will be in charge of everything ranging from conducting interviews to performing background checks. |
| Setup costs |
Minimal, as Skuad already has an established presence in Romania. |
High, as you will be directly responsible for office setup expenses, legal, and compliance fees. |
| Administrative costs |
Low, Skuad handles compliance seamlessly and optimizes payroll management on your behalf. |
You must build in-house teams to handle payroll tasks and maintain HR records. |
You can use a hiring cost calculator to estimate the amount you have to invest when hiring in any country.
A Brief About Employment Laws in Romania
The Romanian Labor Code is the primary legislation guiding this country's employee-employer relationship. It covers various crucial aspects of employment, including:
- Article 164 of the Romanian Labor Codesome text
- It states that the national minimum wage corresponds to the normal work schedule.
- Article 112 of the Labor Codesome text
- It provides that the normal working time for full-time employees is 8 hours per day and 40 hours per week.
- Occupational health and safety regulations some text
- You must ensure a safe working environment, provide protective equipment, train employees in safety procedures, and report workplace accidents.
- Employment contracts and conditionssome text
- Employment contracts must be in writing and provide details on job descriptions, working hours, salary, benefits, and employment duration. Make sure they are signed by both parties and compliant with legal requirements.
Hire in Romania with Skuad
Skuad’s innovative solutions make international hiring seem effortless. Its comprehensive platform lets you digitally onboard new employees from anywhere in the world within minutes. Whether you're calculating the cost to hire, collecting relevant documents, or issuing work devices, Skuad has your back.
But wait! The benefits do not just end here.
Skuad also runs payroll in over 100+ currencies. This means that you can always ensure your team gets paid on time, every time, in their local currency.
Book a demo today and experience the power of Skuad firsthand.
FAQs
Q1: What is the minimum wage in Romania in dollars?
Ans: The current minimum wage in Romania is 3300 RON per month, which equates to USD 706.13.
Q2: How much do employers cost in Romania?
Ans: Several factors come into play when calculating employer costs in Romania, including social insurance and labor insurance.
Q3: What is the payroll tax in Romania?
Ans: Both employees and employers in Romania are subject to various payroll taxes. These include social insurance contributions, health insurance, and labor insurance. For example, the social insurance contribution rate for employees and employees has been currently set at 25% and 4-8%, respectively.
Q4: What are the labor regulations in Romania?
Ans: The critical labor regulation in Romania consists of the Romanian Labor Code, adopted in March 2003.
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