By Globalization Partners
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Since joining the European Union (EU) in 2007, Romania has become an attractive place for employers to expand their companies internationally. With its rich history and culture, picturesque castles, and famed Transylvania region full of beautiful Carpathian scenery, Romania has something to offer just about everyone. Its relatively low minimum wage and employer tax contributions also make it a good place for companies to hire.
As you expand your business, understanding the hiring process in the country will be essential. This guide to hiring employees walks you through what you need to know and offers some tips for hiring in Romania.
What to know before hiring in Romania
Before you begin hiring, you need to know specifics about important factors like labor law, payroll restrictions, taxes, and other hiring nuances. These are some areas to consider:
1. Languages in Romania
In Romania, the official language is Romanian, a romance language with Balkan influence. About 85 percent of Romanian nationals speak Romanian. Many Romanians also speak additional languages, including Hungarian, Romani, Ukrainian, Russian, and Bulgarian. About 35 percent of Romanians report speaking a language other than Romanian. Many young Romanians also study languages like English, French, or German in school.
If your company uses English or a European language, you can often locate employees fluent in the required language and conduct informal conversations without a translator. For formal negotiations and documents, you will likely want to engage translation services.
2. Employment type
At-will employment is not the typical model in Romania. Generally, a company cannot terminate a Romanian employee at will, though a few exceptions to this rule exist.
Under the law, a company must provide a notice period of at least 20 business days. Exceptions include terminations due to professional incompetence or disciplinary issues and terminations of employees still in their probationary periods. Conversely, Romanian employees must also notify their employers if they decide to leave. In Romania, the terms for terminating a contract should be explicit in the contract. An employer can set up a probationary period of 90 days for executive positions and may extend that period to 120 days for managerial positions.
3. Contract structure
Companies hiring employees will need to draw up contracts. Romanian law requires written contracts, and companies must write them in the Romanian language and register them with the Employees’ General Register. In general, Romanian contracts should be open-ended in duration. However, in specific circumstances, defined contracts are permissible. Fixed-term contracts last for up to 12 months, and companies can extend them for no more than 18 months. The employee must receive a copy, and the company must keep a copy on file. There cannot be more than three successive fixed-term contracts for the same employee.
Probation for fixed-term contracts may vary:
- Five days for a fixed-term contract of less than three months of employment.
- 15 working days for a fixed-term contract between three and six months.
- 30 working days for a fixed-term contract longer than six months.
- 45 working days for a fixed-term contract for managerial positions longer than six months.
A standard Romanian employment contract includes the following information:
- Position according to the Romanian Job Classifications of Occupations
- Duration of employment
- Place of employment
- Base salary
- Additional salary rights and benefits
- Standard working time
- Standard job risks
- Holidays provided
- Termination requirements
- Trial or probationary period, if applicable
- Job duties, detailed in the job description, which is an addendum to the contract of employment
- Additional clauses
- Criteria used to evaluate professional performance
Contracts in Romania are also considered to imply certain terms. Health and safety provisions and freedom from discrimination, for instance, are generally regarded as implied rights.
In Romania, employers contribute 20.8 percent of an employee’s monthly salary to the state social security fund. They contribute an additional 0.5 percent to unemployment, 0.85 percent to medical leave, and 5.2 percent to public health insurance. Likewise, employees contribute portions of their salaries to these funds. Compared to contributions in much of the rest of Europe, these employer social and health contributions are relatively low. Employees tend to make much higher contributions in these areas than their employers.
Romania, unlike many other European countries, has a disability tax fund. Companies that employ more than 50 people must pay a fee if at least 4 percent of those employees do not have disabilities. The exact cost depends on the number of employees.
The reason for this tax is that few people with disabilities can find employment in Romania. Employment rates are only about 14 percent, compared to figures like 62 percent in Switzerland, 46.1 percent in Germany, and 41.9 percent in Austria. The tax encourages companies to adopt more inclusive hiring practices.
5. Wages and work schedule
In January 2021, Romania’s minimum wage increased 3 percent to 2,300 lei per month, a sum approximately equal to 572 U.S. dollars or 472 euros. Compared with minimum wages in other European countries, this minimum wage is relatively low.
In Romania, as in many countries, the standard working week consists of eight hours a day, 40 hours a week. The workweek may not extend beyond 48 hours, even if you pay your employees overtime.
Your company will also need to give its Romanian employees at least 20 working days off per year as required under Romanian law. Employees can take additional time off for their weddings, a child’s wedding, or a death in the family. Additionally, Romania celebrates 11 public holidays on which businesses remain closed.
Romanian law requires employees to receive five sick days with compensation at 75 percent of their base salaries. However, this percentage may vary according to the National Code of Diagnosis/Allowance:
- 75 percent for regular disease
- 100 percent for contagious disease, surgical emergency, quarantine, cancer, or tuberculosis
- 80 percent for work accident
- 85 percent for pregnancy and sick childcare
Beyond those initial five days, the Romanian government covers compensation. The maximum permissible sick leave is 183 days, though leave of up to 18 months is also possible in the case of serious illness.
A company operating in Romania must also provide maternity and paternity leave. Pregnant employees may take at least 126 days of maternity leave with compensation at 85 percent of their base salaries. Fathers can generally take five days off, or 15 days if they enroll in childcare courses. Once parents have taken maternity leave and paternity leave, they may also take up to two years of additional childcare leave.
7. Anti-discrimination practices
Like many other countries, Romania has passed laws prohibiting hiring discrimination. Your hiring processes may not discriminate against potential employees for any of the following characteristics:
- Ethnic origin
- Marital or family status
- Social status
- Social group
- Sexual orientation
- HIV-positive status
- Noncontagious chronic illness
- Union affiliation
Romanian law places few explicit restrictions on the questions you may ask on your employment applications and in interviews. If you are used to hiring in a country that restricts interview inquiries to specific topics, you can expect to encounter more latitude in your Romanian hiring practices.
However, the accepted practice generally requires that interview questions avoid personal topics. Your company will want to restrict questions to work-related subjects to make a good impression on your potential hires. Of course, under the law, you cannot ask explicitly discriminatory questions.
8. Background checks and physicals
The Romanian Labor Code prohibits pre-employment background checks, including state or criminal background checks, so you’ll need to take this restriction into account as you plan your hiring practices. However, you can ask the potential employee to present a criminal record statement issued by the relevant authorities. If you wish to look into potential employees’ records, you may ask directly about previous work experience or seek recommendations from previous employers.
The steps to hiring in Romania do include pre-employment employee physical examinations, which the government requires. Each physical examination certificate must indicate that the employee is medically fit for employment.
Cost of hiring an employee in Romania
Hiring a Romanian employee incurs both direct and indirect costs. To assess your company’s expenses, you’ll need to consider the full recruiting and hiring process.
In Romania, as in many countries, hiring a new employee can be expensive because of costs like these:
- Job advertisements
- Time spent reviewing and interviewing applicants
- Hiring bonuses or additional perks
Beyond paying into the public health insurance fund, Romanian companies do not typically offer their employees health insurance. They do, however, commonly offer tax-free meal vouchers as additional perks. As a gesture of goodwill, your company may want to provide these benefits and budget accordingly.
In Romania, employers are under no obligation to provide severance payments or benefits unless the terms of a Collective Bargaining Agreement (CBA) require them. For this reason, if your company does end up terminating its hires, the direct costs of doing so will be relatively low.
The cost to hire employees in Romania also tends to vary by industry. Because of a relative shortage of information technology (IT) professionals in the country, for instance, the costs of hiring in the IT field may be high. Software Development Academy, a programming school serving Central and Eastern Europe, has calculated that a company hiring in Romania will likely invest a minimum of 43,665 lei into recruiting, hiring, and onboarding one IT specialist.
Hiring practices in Romania
Hiring someone in Romania may not differ substantially from hiring someone in your home country. Still, you’ll likely want to tailor your strategy to the local customs and expectations. Below are some best practices to keep in mind:
- Use local references and currency: To establish a strong rapport with new Romanian hires, make your communications with those individuals as clear and relatable as possible. In your contracts and offer letter, give salary and benefit amounts in new Romanian lei instead of your home country’s currency. You should also use local references wherever possible — for instance, in designating holidays off and specific state programs for healthcare and unemployment.
- Provide comprehensive onboarding: Once you’ve hired new employees, be sure to provide a welcoming, informative onboarding process. Despite best efforts on both sides, cultural differences may crop up, so provide clear materials to illustrate the culture you hope to cultivate in your workplace. Depending on the circumstances, you may also want to have key partners from your parent company stop by to make your new hires feel welcome and appreciated.
- Learn the language: Even though some Romanians know other languages, prospective employees will likely appreciate any efforts your company can make toward learning Romanian. Learning a few phrases in Romanian shows your new hires that you’re invested in forming genuine relationships and makes your company more attractive to potential employees.
What does a company need to hire employees in Romania?
How you prepare for hiring new employees in Romania depends on how you decide to establish your company within the country. If a business chooses to set up a Romanian subsidiary, the list of requirements becomes relatively lengthy. A company that chooses this route will need to provide or obtain the following items:
- Certificate of good standing
- Complete memorandum and articles of association
- Designated administrators
- Fiscal registration
- Minimum share capital of 40 euros
- Names of company shareholders and directors
- Registered offices
- Romanian bank account
If the company works with an Employer of Record (EOR), on the other hand, the list of requirements becomes smaller because the EOR already has a business entity in place. For this reason, many companies partner with an EOR to make business expansion more convenient.
Hiring remote employees in Romania
If your executives and managers have remained in your home country, you’ll likely end up interviewing and hiring remotely. Below are a few tips for optimizing video interviews and other aspects of remote hiring:
- Work out the bugs: When it comes to remote interviews, you want to represent your company as polished and professional. Test your interview software ahead of time and make sure your team knows how it works to avoid potentially awkward moments caused by technical difficulties.
- Be understanding with technical difficulties: Even the best-prepared candidate can fall victim to an unstable internet connection or an outage. If technical challenges occur, do your best to focus more on the candidate’s genuine strengths and weaknesses and less on the vagaries of technology.
- Embrace digital recruiting and onboarding: Many companies focus on digital interviews — but you can recruit and onboard employees remotely as well. Experiment with advertising jobs online, and look into implementing and using software that allows you to complete employee paperwork and training online.
Additional tips for how to hire in Romania
Below are a few more strategies for a successful company entry into Romania:
- Look into CBA requirements: Some industries in Romania maintain CBAs. Most restrictions on compensation and benefits come from industry CBAs, as do severance requirements. You will likely want to check with the CBA for your industry, if it has one, to learn the particulars.
- Meet paperwork requirements and deadlines: New business arrivals in Romania may find the country’s laws and government more bureaucratic than their own. Developing strategies for handling paperwork and deadlines gives companies an advantage in expanding their operations in the country.
- Keep up with evolving legislation: Laws in Romania tend to change rapidly. Keep abreast of new developments and modify your practices as necessary to comply with the law.
- Comply with the GDPR: In 2018, the European Union’s General Data Protection Regulation (GDPR) went into effect, requiring heightened data protection for residents of EU member nations. The GDPR governs all types of data, including information sent by email, stored on company servers, and collected through third-party vendors, if applicable. Companies hiring in Romania will need to assess how they handle collected personal data and ensure their practices are compliant.
Choose Globalization Partners to help you build your remote teams
To streamline and expedite your processes as you build your company’s international teams, contact Globalization Partners for assistance. As a global EOR with a presence in 187 countries worldwide, we can take on the work involved in onboarding your employees and ensuring legal compliance, so you can focus on a successful expansion.