Employer of Record in Romania

Discover how partnering with a Romania employer of record can simplify the hiring process and help you save on employment costs.

From $199/month per employee

Romania, situated in Southeastern Europe, is increasingly viewed as a strategic destination for international hiring. Known for its strong academic system, competitive labor costs, and growing digital economy, Romania is an EU member state with access to the European single market and a thriving workforce.

The country has seen a significant rise in sectors such as IT, software development, engineering, and customer service. Its multilingual population and favorable time zone make it an attractive option for nearshoring and remote operations. Bucharest, Cluj-Napoca, and Timisoara are major talent hubs with well-established infrastructure and a growing startup ecosystem.

Romania also benefits from EU funding programs that support business innovation, training, and digital transformation. These incentives, along with reforms aimed at improving the ease of doing business, make Romania a competitive choice for employers across industries. Whether you’re looking to establish a regional office or hire remote staff, Romania offers a compelling blend of talent, infrastructure, and cost efficiency.

Still, hiring in Romania requires careful adherence to labor laws, payroll tax obligations, and employment regulations. This guide outlines the options for hiring in Romania, including legal entity setup, Employer of Record (EOR) services, tax rules, leave entitlements, and termination procedures. We also cover cultural and legal nuances that may influence your approach when building teams in this market.

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How to Hire Employees In Romania

Setting Up a Legal Entity

Creating a local subsidiary allows companies full control over operations and direct employment relationships. This model is suitable for businesses planning long-term operations or hiring at scale. The process involves registering with the National Trade Register Office (ONRC), obtaining a fiscal code, opening a local bank account, and enrolling with tax and social insurance authorities.

Employers must also draft compliant employment contracts in Romanian, maintain accounting records under local regulations, and submit annual financial statements. Setting up a legal entity also allows participation in government tenders, building partnerships with local vendors, and offering employees long-term stability. However, it comes with higher administrative and compliance costs, which should be weighed against projected hiring volume and duration.

Working with an Employer of Record (EOR)

An EOR enables companies to hire employees in Romania without setting up a legal entity. The EOR becomes the legal employer, handling contracts, payroll, tax filings, benefits, and statutory compliance. Meanwhile, the client company manages the employee’s day-to-day responsibilities.

This model is ideal for businesses exploring the Romanian market, hiring remote staff, or expanding quickly. It ensures full legal compliance and simplifies the complexities of Romanian labor law. An EOR can help onboard employees in a matter of days, reducing time-to-hire and helping businesses test market viability without a long-term commitment.

In addition to core HR functions, many EORs provide support on compensation structuring, employee experience, and adapting internal policies to local norms. This can significantly reduce the risk of miscommunication or non-compliance in cross-border employment.

Hiring Independent Contractors

Independent contractors are suitable for project-based work or specialized roles. However, misclassification can lead to penalties. Contractors must operate independently, set their own schedules, and work without direct supervision. If the working relationship resembles that of an employee, authorities may reclassify the contractor as an employee, triggering retroactive taxes and benefits.

To mitigate risks, clear contracts outlining scope of work, deliverables, and payment terms are essential. Employers should also periodically assess these relationships and ensure contractors do not receive performance reviews or follow internal company policies like regular employees. Businesses often find it helpful to consult local legal professionals to validate contractor agreements before engagement.

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Romania Employer Of Record vs a Legal Entity in Romania

The historic alternative to setting up a Romania EOR arrangement is to establish a local entity and directly hire through that. Setting up a legal entity in Romania involves a lengthy registration process, tax management, and ongoing administrative costs. To establish a business in Romania, several specific procedures must be followed, following a rigid sequence, so that the legal requirements of Romania are met. The process starts by choosing the form of business legal structure that you would like to incorporate. A business can register as a Limited Liability Company (SRL) or a Joint Stock Company (SA).

An SRL is usually preferred because of its ease of use and versatility. You then submit your desired company name to the Trade Registry to confirm availability and to do a name check. This step ensures there are no conflicts with existing trademarks or company names. After this, you draw up incorporation documents, including the Articles of Association, which contain information about the company’s structure, objectives, and governance. The other necessary documents include proof of a registered office address and identification of the shareholders and directors.

Businesses in Romania are also required to open a corporate bank account in Romania and pay the minimum share capital. For an SRL, the minimum share capital is RON 200 (approximately EUR 40). All the incorporation documents are also submitted to the National Trade Register Office (NTRO). The National Trade Register Office (NTRO) is a public institution in Romania that reports to the Ministry of Justice. This step legalizes the company and includes obtaining a unique registration code (CUI). The business also has to be registered with the Romanian tax authorities to acquire the company’s tax registration number. This number is essential for complying with the tax regulations and, where necessary, VAT registrations.

It is recommended that if the company intends to hire employees, it register with the Romanian social security system to comply with labor and social insurance requirements. Depending on your business type, you may require other permits or licenses. For instance, companies in the finance, health care, or construction business must meet certain legal obligations. Once all the registrations and all other formalities are done, then it will be lawful for you to carry out business.

On the other hand, an EOR eliminates these challenges, providing immediate access to the Romanian workforce. They serve as your legal employer, hiring employees, managing payroll and taxes, and administering benefits. They ensure that all employment processes follow Romanian labor laws and standards, protecting your company from noncompliance risks.

Using an Employer of Record in Romania

A Romania Employer of Record (EOR) is a professional HR service that enables international companies to hire employees in Romania without the need to establish a legal entity. Acting as the legal employer, the EOR manages essential HR functions, including payroll, tax compliance, benefits administration, and employment contracts, while you maintain control over your employees’ daily tasks and performance.

Key Benefits of Partnering with a Romania EOR:

Fast Market Entry – Hire talent in Romania quickly without the time-consuming process of setting up a local entity.
Legal and Tax Compliance – The EOR ensures full compliance with Romania’s labor laws, tax codes, and employment regulations, reducing the risk of legal issues.
Efficient Payroll and Benefits Management – Handle payroll in local currency (Romanian Leu), manage social contributions, and administer employee benefits seamlessly.
Cost Savings – Avoid the high costs associated with establishing and maintaining a local entity while accessing Romania’s growing talent pool.

A Romania EOR service is an ideal solution for companies looking to expand into the region efficiently, ensuring compliance and reducing overhead while tapping into local expertise and talent.

How Much Does Employer of Record Cost in Romania?

A Romania EOR service typically costs in Romania around 10/15% of the employee’s gross salary or a fixed fee per month. These costs are determined by the number of employees, services provided, and the nature of any complications caused by legislation affecting the company’s operations.

Payroll and Employment Taxes in Romania

Payroll Cycle

Wages are typically paid monthly, and Romanian law requires employers to provide payslips detailing salary, deductions, and net pay. Salaries must be paid in local currency (RON), and payroll filings must be submitted to the National Agency for Fiscal Administration (ANAF).

Employers must also keep payroll records for five years and ensure employees are informed of any updates to payroll or tax deductions. Payroll cut-off dates vary by employer and should be aligned with national holidays to avoid payment delays.

Outsourcing payroll to a local provider or an EOR is a common choice among international employers to ensure compliance and reduce internal complexity.

Employer Tax Contributions

Contribution Type	Employer Rate
Labor Insurance Contribution	2.25%

This contribution covers risks such as work-related injuries and unemployment insurance. Even though the employer contribution is relatively low compared to other EU countries, timely and accurate filing is essential.

Employee Payroll Contributions

Contribution Type	Employer Rate
Social Security (Pension)	25%
Health Insurance	10%

These are withheld from the employee’s salary and remitted by the employer. Employers are responsible for monthly declarations and payments using the electronic ANAF system.

Individual Income Tax Contributions

Romania’s income tax is a flat rate of 10% on all income. The simplicity of Romania’s flat tax system is appealing for foreign companies. However, all employee benefits, bonuses, and reimbursements must be included in gross salary calculations unless otherwise exempted.

Additional Tax Notes

Meal vouchers, travel reimbursements, and other benefits may have favorable tax treatment if structured correctly.
Employers should consult local experts to optimize compensation packages and remain compliant with Romanian tax laws.
The government has introduced tax relief programs for R&D staff and IT professionals, which may exempt certain employees from income tax.

Employers should also consider compliance with GDPR when managing payroll and employee records, particularly when outsourcing any services involving sensitive personal data.

Time Off and Leave in Romania

Mandatory Leave Entitlements

Employees are entitled to a minimum of 20 working days of paid annual leave per year. Some industries or company policies may offer additional days. Leave must be used within 18 months from the end of the leave year and is scheduled by mutual agreement.

Employees may not waive their right to leave or receive cash compensation in lieu except at the end of the employment relationship. Employers are required to keep a leave register and monitor leave balances.

In practice, many companies offer 21 to 25 days of annual leave to attract and retain top talent. Additional days may also be granted based on tenure or performance.

Public Holidays

Romania observes 15 national holidays, including:

New Year’s Day
Union Day (January 24)
Orthodox Easter Monday
Labor Day (May 1)
Children’s Day (June 1)
Orthodox Pentecost Monday
St. Mary’s Day (August 15)
St. Andrew’s Day (November 30)
National Day (December 1)
Christmas (December 25–26)

Employees required to work on public holidays are entitled to compensatory time off or increased pay, often double their standard rate. Employers should document this in employment contracts and communicate policies clearly.

In sectors such as hospitality or healthcare, where holiday work is more common, proactive scheduling and formal policies help prevent disputes and ensure employee satisfaction.

Sick Leave

Sick leave is available with a medical certificate and is paid at 75% of the average income over the previous 6 months. The employer pays the first 5 days; after that, the National Health Insurance Fund covers the allowance. Higher compensation may apply for specific illnesses such as cancer, tuberculosis, or other long-term conditions.

Employers are advised to implement internal procedures for sick leave notification, required documentation, and reintegration support. Failure to process sick leave correctly may result in penalties or denied claims.

Employers should also encourage regular check-ins and wellness initiatives to support employees’ physical and mental health, especially during longer absences.

Maternity Leave

Policy	Details
Duration	126 calendar days (before and after birth)
Pay	85% of average gross earnings (subject to a cap)
Funding	Social health insurance

Expectant mothers are protected from dismissal and may request adjustments to working conditions if medically required. Employers must comply with workplace safety standards and provide flexible work arrangements where possible.

Providing support for returning mothers through phased reintegration or part-time options can enhance retention and productivity.

Paternity Leave

Policy	Details
Duration	10 working days of paid leave
Extension	Additional 5 days if the father completes a childcare course

Fathers must take this leave within 8 weeks of the child’s birth. Employers are required to process applications promptly and retain documentation for audit purposes.

Including paternity leave in broader family-friendly policies reflects a company’s commitment to inclusion and employee wellbeing.

Parental Leave

Available to either parent until the child is 2 years old. Leave is paid by the state at a capped rate, and part-time work may be allowed during this period. Job protection applies during parental leave.

Employers may allow parents to transition back gradually through part-time arrangements or adjusted hours. This flexibility can enhance employee retention and loyalty.

In some cases, employees can also access child-rearing leave (unpaid) for an extended period beyond the statutory parental leave window.

Other Leave Types

Leave Type	Duration	Notes
Bereavement Leave	3 days	Typically applies to immediate family members
Marriage Leave	5 days	Granted upon employee marriage
Study Leave	Varies	May be paid or unpaid depending on employer policy

Employers should document all leave policies and ensure compliance with collective agreements where applicable. In industries with specific union agreements, additional leave entitlements may apply.

Terminations and Severance in Romania

Termination Process

Employers must provide written notice, outline reasons for termination, and ensure documentation is submitted to the relevant authorities. Failure to follow correct procedures can lead to reinstatement or compensation claims. Special rules apply for terminating employees on protected leave (e.g., maternity or medical leave).

The Labour Inspectorate may conduct investigations in cases of contested terminations. Clear documentation, legal compliance, and open communication with employees help mitigate disputes.

Employers are also expected to conduct exit interviews, issue final settlement reports, and provide the necessary tax forms to the departing employee.

Notice Period

Party	Minimum Notice Period	Notes
Employees	20 working days	May be extended by contract or collective agreement
Employers	20 working days	Minimum required; actual period may vary by contract terms

Termination must be justified and follow a defined legal process. Grounds for dismissal include disciplinary issues, redundancy, or inability to perform duties. Employers must issue a written notice and document the reasons for termination.

Legal counsel is recommended when terminating employment to ensure compliance with Labor Code provisions. Employers must provide a termination decision, a final payslip, and an employment certificate.

Certain employee groups, such as pregnant workers, union representatives, or those on medical leave, have special protection and cannot be dismissed under normal procedures.

Severance Pay

Severance is not mandatory under Romanian law but may be provided under collective agreements or individual contracts. In redundancy cases, it is common to offer severance to reduce the risk of legal disputes.

Customary severance packages range from one to three months’ salary depending on tenure and seniority. Employers may also consider offering outplacement support or reference letters.

Providing clear documentation of redundancy criteria and considering redeployment options can also reduce the likelihood of litigation.

Expand into Romania Easily with Remote People’s Employer of Record in Romania

Romania offers international employers a cost-effective, skilled labor pool and access to the broader European market. With its growing technology sector, multilingual workforce, and strategic location, the country is an ideal base for expanding global teams.

However, employers must ensure strict compliance with labor and tax regulations. Using an Employer of Record helps navigate local laws and simplifies payroll, benefits, and employee management. Partnering with an EOR also reduces administrative overhead, accelerates time-to-hire, and offers local expertise on workforce expectations and cultural norms.

Whether you’re hiring one employee or establishing a remote team, Romania offers strong potential for growth, provided employment is handled correctly from day one. Contact RemotePeople today to discover how we can support your expansion and ensure you stay compliant as you scale in Romania.