An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. The EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to hire and manage employees in Romania without establishing their legal entity.
Hiring workers from Romania offers several benefits due to the country’s rapidly emerging business environment and skilled workforce. Romania has made significant progress, boasting one of Europe’s highest economic growth rates. The country has a large pool of well-educated professionals, particularly in IT, engineering, and finance.
According to recent data, Romania’s labor market continues to evolve, with a growing emphasis on technology and service sectors. The country’s workforce is approximately 9.47 million people (as of 2021), with a high literacy rate and an increasing number of university graduates entering the job market each year.
To effectively use an Employer of Record in Romania, follow these 6 steps:
- Find talent to hire in Romania
- Compare using an EOR to setting up a legal entity in Romania
- Get the information needed from your talent
- Choose an EOR provider with expertise in Romania
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
1. Find talent to hire in Romania
To find talent to hire in Romania, businesses should explore a variety of channels, emphasizing both local and global platforms to maximize reach. While LinkedIn is used in Romania, it’s less prevalent than in other countries. However, it can still be a useful tool for professional networking and talent acquisition.
Job posting websites like eJobs, BestJobs, and Hippo.ro are popular local job portals in Romania. These platforms offer avenues for employers to advertise openings and are widely used by Romanian job seekers. Employers can post their candidate requirements on these portals, allowing applicants to access them remotely.
Specialized recruitment agencies can provide tailored solutions for industries requiring specific expertise, particularly IT, engineering, and finance. These agencies manage the complexities of sourcing and vetting candidates, significantly easing the hiring process for companies.
Local job boards and regional networks can be advantageous for businesses hiring within specific industries or for particular roles. Romania’s diverse economy offers a wide range of talent across various sectors, with major cities like Bucharest, Cluj-Napoca, and Timișoara being particularly notable for their talent pools.
It’s important to note that in Romania, the hiring process often begins with drafting a detailed job description, followed by screening, shortlisting, interviews, and selection. Some roles may require candidates to pass a written test or practical assessment as part of the evaluation process.
2. Compare using an EOR to setting up a legal entity in Romania
When working with employees in Romania, you need to consider working with an EOR versus setting up your own legal entity. Here’s a comparison of the two options:
| Factor | Employer of Record | Setting Up Legal Entity |
|---|---|---|
| Setup Time | Quick, often within days | Up to several months |
| Initial Cost | Lower upfront costs | Higher, includes registration fees |
| Ongoing Cost | May become costlier with more employees | More cost-effective for larger teams |
| Complexity | Simpler, EOR handles most administrative tasks | The company is responsible for all compliance |
| Control over Operations | Limited control, EOR is the legal employer | Full control over all aspects of employment |
| Compliance Management | Handled by EOR | Significant local expertise is needed |
| Scalability | Easier to scale up or down quickly | Requires more time and resources to scale |
| Local Expertise Required | Minimal, provided by EOR | Higher, the company bears all legal risks |
| Suitable for | Testing markets, small teams, short-term projects | Long-term expansion, large teams |
| Risk | Lower, EOR assumes legal liability | Higher, company bears all legal risks |
| Customization of Employment Terms | Limited flexibility | Full flexibility to tailor policies |
| Termination Process | Managed by EOR | Higher, the company bears all legal risks |
An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Romanian market or expand quickly without significant upfront investment.
On the other hand, setting up a legal entity in Romania offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
In comparison, using an EOR is generally less expensive. It involves less risk, making it a suitable option for small to medium-sized businesses or those in the initial stages of market exploration. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects.
3. Get the information needed from your talent
You’ll need to collect essential personal information and employment details to hire employees in Romania. This typically includes:
- Employee’s full name
- Address
- Date of birth
- Personal Numerical Code (CNP) – a unique identification number for Romanian citizens
- Bank account details for salary payments
- Comprehensive job description, including title, duties, and place of work
Employment contracts in Romania must be in writing and should detail the terms of employment, such as:
- Type of contract (fixed-term, indefinite, etc.)
- Start date
- Job title and responsibilities
- Working hours and place of work
- Remuneration details
- The notice period for termination
- Information about collective agreements, if applicable
It’s important to note that in Romania, collecting this data before the employee starts working is crucial for compliance with local labor laws and regulations, including social security registration.
The Romanian Labor Code requires employers to inform new hires about the rights and obligations of both parties (the employment relationship), remuneration, probation period, and other relevant details. This information must be provided in writing as part of the employment contract before the employee starts work.
4. Choose an EOR provider with expertise in Romania
When choosing an EOR provider to work with in Romania, selecting one with deep expertise in the Romanian market and a strong understanding of local labor laws is crucial to ensure compliance and smooth business operations.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in Romania. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as work permit support, employee benefits management, and payroll processing. It is important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Romanian labor laws.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. This is particularly important in Romania, where data protection is covered by the European Union’s General Data Protection Regulation (GDPR).
Evaluate their pricing models, looking for transparency in fees, whether they charge a fixed monthly fee or a percentage of the employee’s salary, and assess the cost-effectiveness for your business.
Finally, choose an EOR provider that demonstrates a commitment to staying up-to-date with Romanian employment laws and can provide proper guidance and support to ensure your business remains compliant while operating in Romania.
What are the best EOR providers to use in Romania?
| EOR Provider | Why Selected |
|---|---|
| Remote | Known for user-friendly platform and competitive pricing for Romanian market |
| Deel | Offers comprehensive global hiring solutions with strong presence in Romania |
| Rippling | Provides integrated HR, IT, and Finance solutions suitable for Romanian operations |
| Oyster HR | Offers comprehensive global hiring solutions with a strong presence in Romania |
| Multiplier | Offers tailored EOR services with expertise in Romanian labor laws and regulations |
5. Communicate your hiring needs to the EOR
Communicating your hiring needs to the EOR is important to ensure the process aligns with company goals and legal requirements. Provide a detailed job description, including title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location, and whether it’s remote or onsite. Outline the proposed salary, bonuses, commission structures, and other compensation benefits. Clarify the contract length, whether permanent or fixed-term, and detail the working hours, including any flexibility or shift requirements.
Discuss the company culture, growth plans, and how the position fits into future expansion. Specify equipment needs and onboarding procedures. By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.
Additionally, communicate any specific requirements related to Romanian labor laws, such as the need for social security registration or any industry-specific regulations that may apply to your business. It’s also important to discuss any specific benefits you want to offer, as the EOR can help you design a competitive package that complies with local norms and regulations.
Be sure to mention any language requirements, as while Romanian is the official language, many businesses in Romania also operate in English, especially in the tech and international business sectors.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with local labor laws and employment practices.
The EOR will draft employment contracts that adhere to Romanian labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
The EOR also registers employment with relevant Romanian authorities, such as the General Register of Employees (REVISAL), to ensure the company is properly licensed and authorized to operate and hire employees in Romania.
They’ll ensure your company complies with local working hours, minimum wage, and leave entitlements regulations. Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture.
The EOR will also ensure that all necessary paperwork is completed, including registering the employee for social security and health insurance purposes. They will handle setting up payroll systems to ensure timely and accurate payment of salaries and statutory contributions.
What help does an EOR provide in Romania’s payroll, taxes, and benefits administration?
The EOR will support Romania’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
The EOR manages payslips that reflect mandatory withholdings for income tax and social security contributions, adhering to Romanian regulations. It files monthly and annual tax returns with Romanian authorities, including the National Agency for Fiscal Administration (ANAF), and manages any other required reporting.
For benefits, the EOR ensures compliance with statutory requirements, such as annual, sick, and maternity leave. It can also administer additional benefits common in Romania, such as meal vouchers or private health insurance.
Specific tasks include:
- Calculating and withholding personal income tax at a flat rate of 10%
- Managing social security contributions, with employer contributions of about 20% and employee contributions of about 35% of the gross salary
- Handling contributions to the health insurance fund and unemployment fund
- Ensuring compliance with the minimum wage requirements, which are subject to annual increases
- Administering the mandatory annual leave entitlement of at least 20 working days
What labor laws do you need to consider when hiring in Romania?
When hiring in Romania, several key labor laws must be considered. Romania’s approach to labor laws generally protects employees, offering extensive employee protections considered more stringent than those in many other countries.
Employment contracts
Employment contracts in Romania must be in writing and specify job details, including position, duties, working hours, salary, and termination conditions. There are several types of employment contracts:
- Indefinite-term contracts (most common)
- Fixed-term contracts (limited to 36 months with the possibility of two extensions)
- Part-time contracts
- Temporary work contracts
Working hours and paid holidays
The standard work week in Romania is 40 hours, typically over five days. Overtime is permitted but limited to 48 hours per week, including regular hours. Overtime must be compensated with paid time off or additional pay at 175% of the regular wage.
Employees are entitled to a minimum of 20 days of paid annual leave per year and 15 public holidays annually.
Taxes
Personal income tax in Romania is a flat rate of 10%. Employers are responsible for withholding and remitting these taxes.
Social security contributions are shared between the employer and employee, with the employer typically contributing about 20% of the employee’s gross salary and the employee contributing about 35%.
Severance pay
Severance pay is not mandatory in Romania unless specified in the employment contract or collective bargaining agreement. However, employees dismissed for reasons unrelated to their performance are entitled to notice periods based on their length of service.
Probationary period
Romanian labor law allows for probationary periods, which vary depending on the type of contract:
- Up to 90 days for regular positions
- Up to 120 days for management positions
Maternity and paternity leave
Female employees are entitled to 126 days of maternity leave, paid at 85% of their average monthly income. Fathers are entitled to 5 days of paternity leave, which can be extended to 15 days if they take a childcare course.
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Must be written, specifying job details and conditions |
| Working Hours | 40-hour standard work week, overtime limited and compensated higher |
| Paid Holidays | Minimum 20 days annual leave, 15 public holidays |
| Taxes | 10% flat income tax, shared social security contributions |
| Severance Pay | Not mandatory unless specified in contract |
| Probationary Period | Up to 90 days for regular positions, 120 for management |
| Maternity Leave | 126 days paid at 85% of average monthly income |
How does the hiring process work in Romania?
When hiring staff in Romania, employers typically follow these steps:
- Identify the vacancy and create a detailed job description
- Advertise the position through various channels, including local job portals like eJobs and BestJobs
- Review applications and shortlist candidates
- Conduct interviews and assessments, which may include written tests or practical evaluations for some roles
- Select the preferred candidate and make a job offer
- Negotiate and finalize the employment terms
- Prepare and sign the employment contract
- Register the employee with the General Register of Employees (REVISAL)
- Complete necessary paperwork, including social security registration
- Onboard the new employee
Employers must ensure compliance with Romania’s labor laws and regulations throughout this process, including anti-discrimination legislation and data privacy requirements. It’s also important to be aware of cultural nuances in the Romanian hiring process, such as the importance of formal education and qualifications.
Employers should also be prepared to discuss benefits beyond the statutory requirements, as Romanian employees often expect additional perks such as meal vouchers, private health insurance, or professional development opportunities.
Is Romania a relatively easy country to hire employees remotely through an EOR?
Yes, Romania is generally considered a relatively easy country to hire employees remotely through an Employer of Record. The country’s well-developed legal system, growing economy, and skilled workforce make it an attractive destination for international hiring.
Pros and Cons of hiring employees in Romania
Pros
Cons
Romania’s labor laws, while protective of employees, are clear and well-established, making compliance manageable with the help of an experienced EOR. The country’s improving digital infrastructure facilitates remote work arrangements, especially in urban areas.
However, it’s important to note that while hiring through an EOR in Romania is relatively straightforward, employers must still be mindful of local labor laws and cultural nuances. An experienced EOR can navigate these requirements effectively, ensuring compliance while simplifying the hiring process for foreign companies.
In conclusion, Romania’s combination of a skilled workforce, favorable business environment, and established legal framework makes it a viable option for companies hiring remote employees through an EOR, provided they partner with a knowledgeable and experienced EOR provider.
