Employment Law in Romania

Contracts

In Romania, employment contracts can be fixed-term (definite) or permanent (indefinite), governed by the Labour Code (Law No. 53/2003). Permanent contracts must include benefits such as social security, paid annual leave, and unemployment insurance. Fixed-term employees gain equal rights after one month of work.

Romania also has apprentice contracts. These stipulations in these contracts fall under collective bargaining agreements and require employers in sectors like construction or IT to hire apprentices.

Termination and notice periods

In Romania, labor laws require employers to provide written notice of termination or pay in lieu of notice, with a minimum of 20 working days for employees who have completed at least three months of continuous employment. In most cases, terminated employees are entitled to a fair process, and just cause for dismissal includes redundancy, prolonged illness, lack of capability, insubordination, habitual negligence of duty, serious misconduct, and theft.

Employees with at least 12 consecutive months of continuous employment may be entitled to severance pay, typically equivalent to one month’s wages for each completed year of service, with a minimum of five days’ wages, as specified in employment contracts or collective agreements. There is no statutory gratuity payment in Romania; however, additional compensation may be provided based on employment contracts or collective agreements. As your employer of record (EOR) in Romania, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with national labor standards and minimize legal risks.

Probation periods

In Romania, probation periods are regulated by the Labour Code, commonly set at 90 calendar days for standard positions and up to 120 calendar days for managerial roles, with shorter durations for fixed-term contracts, as outlined in employment contracts.

Working hours and overtime

In Romania, the standard workweek is typically Monday through Friday, with eight hours per day, totaling 40 hours per week. Employees are prohibited from working for more than eight hours a day without appropriate compensation.

Any work beyond eight hours a day is considered overtime, and employees are entitled to additional compensation of at least 75% over their regular hourly rate. For work performed on rest days or public holidays, the overtime pay rate is higher, as specified by the Labour Code.

Taxes

In Romania, withholding tax is known as personal income tax and is deducted by employers before paying salaries to employees. Employers must deduct personal income tax from employee salaries based on applicable income tax rates and submit it to the National Agency for Fiscal Administration (ANAF).

Employer payroll contributions

Romania’s social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers’ compensation is financed by contributions from state governments, employers, and employees.