What is a PEO?

PEO stands for professional employer organization.

It’s a service provider that takes on the role of human resources and legal teams for startups as well as small and mid-sized companies that want to hire internationally.

The responsibilities of a PEO include managing your payroll, curating competitive employee benefits packages, and ensuring that your business remains compliant with the local labor laws of whichever country you hire in. Essentially, they take on all of the administrative functions of an HR department so that businesses don’t have to hire entire teams of people or fulfill these roles by themselves.

With the help of a PEO, you can create a global team that works for you remotely from all over the world, including Romania. Your PEO service provider will ensure that all of your international employees are onboarding quickly and efficiently, receive their pay stubs in the proper currency, and that the local statutory requirements are fulfilled.

Want to learn more about how PEO services can help your business? Speak to a team member at Skuad today to get all of your questions answered.

What are the benefits of using a PEO provider in Romania?

When you enlist the help of PEO services in Romania, you’re creating opportunities for your business. Below are all the benefits of using a PEO in Romania.

Hire the best international talent

The perfect candidate for the job can be anywhere. Literally. Remote work has opened up the door for many businesses to look beyond their own city and even country to find the person who will serve as an asset to their team. 

Romania is currently trying to create more sufficient numbers in regard to its skilled labor force to meet the demands of the ever-evolving technology sectors around the world. 

Using a PEO in Romania means you can tap into the emerging talent that’s hungry to work for an international company like yours.

Become globally competitive

In the modern world, a successful business is one that is recognized internationally — by employees.

PEO services in Romania will go beyond the minimum requirements for the statutory benefits to create competitive benefits packages to attract and retain top candidates, giving you a competitive edge.

Save on the costs of doing business

Doing business in Romania poses some significant costs, especially without the help of a PEO. 

Without a PEO in Romania, you would have to hire your own in-house teams to take care of your HR needs as well as a legal team to keep you compliant within the country. All of this tends to be much too expensive for small and even medium-sized businesses.

Become experienced in a new market

Entering into the Romanian market means entering into the single market of the entire European Union. 

By working with a PEO in Romania, you’ll gain firsthand insights into how the EU works through your new Romanian employees, which will get you ready to expand into the surrounding markets including the Middle East and Northern Africa.

Learn more about how international business in Romania works and how you can break into this new market by talking to a Skuad team member today!

Avoid setting up your own legal entity in Romania

As mentioned earlier, if you choose to forgo PEO services in Romania, then you would have to establish your own legal entity in the country to hire employees. This can take up to a year of hard work and is associated with an exorbitant amount of expenses between travel and accommodations, incorporation, and hiring your own legal team to set the wheels in motion.

When you use a PEO in Romania, you won’t have to worry about setting up a legal entity in the country because the PEO service in question will have its own legal entity established. You’ll be able to use their legal entity for your business, without all the extra hassle and associated costs, which would also allow you to start hiring immediately.

Become culturally aware

When it comes to hiring internationally, it’s incredibly important to understand the cultural differences in regards to doing business and work-life balance abroad. 

As your partner service, your PEO in Romania will ensure that you stay informed about work culture practices and more.

For example, Romanians are very formal when it comes to doing business. They believe in the hierarchy of the office, respecting seniority. So, even when it comes to virtual meetings, you can expect them to be prompt, respectful, and extremely professional.

Remain compliant

Each country will have its own legal requirements for what employers are expected to provide their employees. If you don’t comply, your business could face some serious fines or even be banned from doing business in Romania or elsewhere. 

Compliance ranges from payroll to social security contributions to paid time off. Here are some of the labor requirements in Romania at a glance: 

Payroll  

• The currency that Romanian employees are paid in the Romanian Leu.
• Payments are made monthly.
• The minimum wage is 2,550 Leu per month.
• Part time work requirements are 10 hours per week while full time can reach 48 hours per week which includes overtime. 
• There is no statutory requirement for a 13th month bonus.
• Employee termination will vary by law and employee contract, which includes stipulations for severance pay.
• Notice periods for termination are set at a minimum of 20 working days for all jobs regardless of employment contract.

Tax and employer contributions  

The Romania income tax for employees is charged at a flat rate of 16% on corporate income. For businesses, the Romania corporate tax rate depends on the size of the business and how many employees — 1% is applied if your company only has one full-time employee while a 3% rate is applied to the annual turnover if you have no employees.  

Employers must also contribute up to 32.6% to the social security system while employees must contribute 15.5%.

Paid leave

• Romanian employees are entitled to a minimum of 20 days paid annual leave. If an employee cannot take their full amount of leave within a calendar year, what’s left over is applied to the first six months of the following year.

• Under the Romanian Labor Code, employees covered by the pension and social insurance system who have made their required contributions are entitled to 180 days of sick leave within one year.

• Mothers are entitled to 126 days of maternity leave, which includes prenatal and postnatal periods.

• Fathers are entitled to up to 10 days paid paternity leave. If they take infant care courses, they’re entitled to 15 days.

• After maternity leave, one of the parents will be eligible for child care leave for up to two years provided they have paid into their tax contributions.

Learn more about how Skuad’s PEO services can help your business to grow by booking a demo today.

What does it cost to build a team in Romania?

If you’re thinking about forming a legal business entity in Romania, you should be aware that the costs will range anywhere from €8,820 to €17,070, depending on the type of corporation. The amount is in Euros rather than Leu since Romania is part of the European Union — which makes it more expensive.

That’s not including the associated costs such as opening a corporate bank account and other legal fees. It can also take upward of 14 weeks for the incorporation to be completed.

Of course, when you choose to work with a PEO in Romania, the pricing for services will vary between providers and the packages they offer. With Skuad, you can get started for free and cancel at any time if you’re not satisfied.

Our PEO services allow you to onboard and start paying your international employees at just $19 per month, making it an affordable solution to an otherwise expensive problem.

If you’re ready to start onboarding and paying employees in Romania, book in for a demo of Skuad’s global PEO solution right away!