OUTLINE
Minimum wage in Romania
Romania's payroll
Statutory benefits in Romania
Other employee benefits in Romania
Compliant, seamless payroll and benefits in Romania and beyond
Payroll in Romania
In Romania, payroll management is governed by the Labour Code and tax legislation, which outline employee rights and compensation standards. Key components of payroll include gross salary, income tax, and mandatory social security and health insurance contributions, which must be accurately calculated and deducted.
Employers are generally required to pay employees monthly and must maintain accurate payroll records, including payslips and employment contracts, to ensure compliance with local labour laws.
Regular reporting to tax and social security authorities is mandatory as well. Some of the best practices for effective payroll management include making timely payments, providing transparent and detailed payslips, and staying informed about changes in labour laws and tax regulations. To ensure compliance, it’s best to use payroll software that can help automate calculations and reduce the risk of errors.
It is also essential to establish clear procedures for resolving payroll disputes, ensuring that employees feel heard and valued. In addition, offering benefits like health insurance or meal vouchers can enhance employee satisfaction.
If you are unfamiliar with the local market, managing payroll can be overwhelming, and payroll mistakes can lead to costly fines and legal disputes. However, partnering with a reliable global payroll provider, such as CXC, can help you overcome such challenges. You can rely on their expertise in the local market and understand the Romanian rules, regulations, and best practices.
In this guide, we’ll explore some of the most important factors you need to consider when managing payroll in Romania.
Minimum wage in Romania
Romania’s statutory minimum wage is set by the government and is subject to periodic revisions. As of 1 July 2024, the gross statutory minimum wage is 3,700 RON per month (approximately 744.62 EUR). After taxes, the minimum wage in Romania is roughly 2,200 RON. This translates to an hourly minimum wage of 22,024 RON.
The minimum wage is applicable to full-time workers across most sectors and serves as the baseline wage for employers across the country. The statutory wage is influenced by factors such as inflation, labour market conditions, and economic growth.
Romania’s government regularly adjusts the statutory minimum wage in response to economic conditions, with the goal of supporting lower-income workers and reducing income inequality. These adjustments also aim to bring Romania’s wages closer to those of other EU countries, though the gap remains significant when compared to Western European nations.
Despite these increases, the minimum wage hikes have been carefully calibrated to minimise their potential impact on employment, particularly for small and medium-sized enterprises.
Minimum wage for different sectors in Romania
Minimum wage rates also differ across sectors in Romania. For example, employees in the construction sector benefit from a higher minimum wage of 4,000 RON gross per month (around 808 EUR), due to industry-specific incentives such as reduced social security contributions.
In sectors like agriculture and textile manufacturing, wages tend to align with the statutory minimum, though sector agreements and bonuses can influence total compensation. Workers in the IT sector, on the other hand, often benefit from income tax exemptions, resulting in significantly higher net earnings compared to other industries.
Minimum wage hikes and their impact on employment in Romania
The frequent minimum wage increases in Romania have sparked debates about their effects on employment. Some argue that wage hikes may strain small businesses or reduce job opportunities for unskilled workers, while others see benefits in worker satisfaction and productivity.
In dealing with these changes, it is advisable for companies to work with global payroll providers, especially if said companies are new to the jurisdiction. CXC, for example, takes the burden off businesses by managing payroll while ensuring compliance for them.
Romania's payroll
Navigating the payroll system in Romania involves understanding the payroll frequency, optional 13th-month salary benefits, and the country’s payroll tax obligations. Whether you are managing a business or working in Romania, being aware of these factors will help ensure smooth payroll operations and compliance with the law.
Payroll frequency in Romania
When it comes to the payroll cycle, employees’ wages are typically processed on a monthly basis. Romanian labour laws mandate that wages be paid at least once per month, usually on the last working day of the month, unless otherwise agreed in an employment contract.
Some companies may pay salaries on a bi-weekly or weekly basis, but the Romania’s payroll system primarily revolves around monthly payments. This frequency applies to both gross and net salary disbursements, with employees receiving their net wages (after tax) in their bank accounts.
In cases of overtime or bonuses, employers are required to ensure that these additional payments are included in the payroll for the respective month, unless otherwise stipulated in a company agreement.
13th-month salary in Romania
The concept of a 13th-month salary is not a mandatory requirement under Romanian labour law. However, many companies, especially multinational organisations, and businesses in sectors like IT, banking, and manufacturing, offer a 13th-month salary as a form of bonus or incentive. This additional payment is typically provided in December or can be spread across the year, depending on company policy.
The 13th-month salary is often linked to the company’s performance or the employee’s individual achievements, though it can also be offered as a flat bonus to all employees. While it is not compulsory, the practice is becoming more common as businesses compete to attract and retain talent.
Payroll taxes in Romania
Romania’s payroll taxes are an essential consideration for both employers and employees. Payroll taxes are deducted at source, meaning that employees receive their net salary after taxes have been withheld.
For employees, the following Romania payroll taxes are applicable:
- Income tax: A flat rate of 10% applies to all employee earnings.
- Social security contributions: Employees contribute 25% towards social security, which covers pensions and related benefits.
- Health insurance contributions: Employees also pay 10% of their gross income towards health insurance.
Employers in Romania are responsible for additional contributions on top of the employee’s gross salary:
- Work insurance contribution: Employers pay 2.25% of the total gross salary to cover various forms of social protection, including unemployment and accidents.
In addition, social insurance contributions vary depending on the working conditions as well. For employees working under particular conditions, employers are required to contribute 4% of the employee’s gross salary. For those in special working conditions, this contribution increases to 8%. However, for employees working under normal conditions, employers are not obligated to pay any social insurance contributions.
Statutory benefits in Romania
The statutory benefits, including health insurance and various types of pensions in Romania, ensure that employees have access to essential services during their working years and beyond.
The country’s pension system, which includes public and private funds, offers flexibility for both standard and early retirees, as well as support for those who are disabled or survivors of contributors. Understanding these benefits is critical for financial planning and long-term security.
Health insurance in Romania
All employees are required to contribute to the national health insurance system, which is managed by the National Health Insurance House (CNAS). This public health system provides access to medical services, including general healthcare, hospital treatments, and prescriptions.
Contributions for health insurance are deducted from employees’ gross wages at a rate of 10%. Employers are not required to contribute additional amounts towards health insurance but may offer supplemental private health insurance as part of an employee benefits package.
While public healthcare in Romania is funded through these contributions, many employees opt for private health insurance to cover treatments not fully subsidised by the public system. The increasing availability of private health insurance options makes it a popular supplement, especially for those seeking faster or more specialised healthcare services.
Retirement and pension benefits in Romania
The Romanian pension scheme is designed to provide financial security during retirement, ensuring that both Romanian citizens and foreigners with permanent residence in the country have a reliable income once they reach retirement age.
The pension system is based on a pension points system, which takes into account an individual’s contribution period and their income level during their working years.
Standard retirement (old age pension) in Romania
The standard retirement age in Romania is 65 for men and 63 for women, though these ages are gradually being equalised.
To qualify for a full old-age pension, employees must meet specific contribution requirements, which is typically around 15 years of contributions to the pension scheme. This pension is funded by a pay-as-you-go system, meaning current workers’ contributions fund the pensions of retired citizens.
The pension in the country is calculated based on the individual’s contribution history, salary, and the country’s average salary index. Upon reaching the retirement age and contribution period, retirees are entitled to receive monthly payments from the state.
Moreover, thanks to international agreements Romania has established with other countries, the social security rights of Romanian citizens and foreigners can be transferred to other nations where they may choose to reside. This ensures that workers who spend time working abroad do not lose out on their Romanian pension benefits.
Early retirement in Romania
Early retirement is an option available for individuals who have contributed for a period longer than the minimum required. Employees can retire up to five years earlier than the standard retirement age without facing reductions in their pension, provided they have contributed at least eight years beyond the standard contribution requirement (i.e., 43 years for men and 41 years for women).
Partial early retirement in Romania
For those who wish to retire before the required contribution period, partial early retirement is an option. However, in this case, the pension amount will be reduced in proportion to the years remaining until reaching the full retirement age. This reduction is permanent, and the pension benefits are adjusted based on the number of years contributed below the requirement.
Disability pension in Romania
In addition to old-age pensions, Romania offers disability pensions for individuals who can no longer work due to illness or injury. There are three categories of disability pensions, depending on the severity of the condition and the ability to continue working in some capacity.
- Category I: Full disability, where the individual is completely unable to work.
- Category II: Severe disability, where the individual is unable to continue in their current role but may be able to take up less demanding work.
- Category III: Partial disability, where the individual can work part-time or in less demanding roles.
To qualify, individuals must undergo a medical evaluation, and their pension is calculated based on the extent of their disability and contribution history.
Survivor’s pension in Romania
In the unfortunate event of a contributor’s death, survivor’s pensions are available to their dependents, including spouses, children, or other family members. This benefit ensures that the deceased’s dependents receive financial support based on the contributor’s contribution record.
Private pension schemes in Romania
Alongside the public pension system, private pension schemes in Romania provide an additional layer of security. Romania’s Pillar II pension system is mandatory for employees under 35 and voluntary for those aged between 35 and 45. This private pension fund is managed by private administrators, and it offers workers the opportunity to build supplementary retirement savings.
In addition, Pillar III represents optional private pension schemes, which allow individuals to voluntarily contribute to private pension funds in addition to their mandatory contributions. These private pension schemes are an attractive option for those seeking to boost their retirement savings, as they come with tax benefits and more investment flexibility than the public system.
Fourth pension pillar employer-employee contributions in Romania
Introduced in February 2020, the fourth pillar allows employers and employees to contribute additional funds toward retirement savings. The contributions made by the employer and employee combined cannot exceed one-third of the employee’s gross salary. This pillar adds flexibility, enabling companies to offer enhanced pension benefits to their employees as part of their overall compensation packages.
Other employee benefits in Romania
As the labour market in Romania evolves, employers are increasingly recognising the importance of offering supplemental employee benefits to attract and retain top talent. Beyond the mandatory benefits mandated by law, companies in Romania are introducing various perks that enhance the overall employee experience.
Private healthcare for employees in Romania
One of the most sought-after employee benefits in Romania is private healthcare. While the public healthcare system provides essential services, many employees prefer the quicker access and higher quality of care associated with private healthcare options. Employers often partner with private healthcare providers to offer comprehensive health insurance plans that cover a wide range of medical services.
This benefit not only helps employees feel more secure regarding their health but also enhances their overall job satisfaction. Companies that offer private healthcare in Romania typically see improved employee morale and reduced absenteeism, as workers have access to timely medical care and preventive services.
Additional vacation days in Romania
Another valuable benefit is the provision of additional vacation days. While the legal minimum for vacation days in Romania is 20 days per year, many employers offer extra days to enhance employee work-life balance and job satisfaction. This can be especially attractive for employees looking to take longer breaks for personal reasons, travel, or family time.
Providing extra vacation days is a strategic move for companies aiming to foster a positive workplace culture and improve employee retention. Research shows that employees who take regular vacations are generally more productive and less prone to burnout, benefiting both the individual and the organisation.
Mobile phone and laptop subsidies for employees in Romania
Many companies in Romania are also providing mobile device subsidies as part of their employee benefits package. With remote work becoming more common, organisations understand the importance of equipping their employees with the necessary tools to perform their jobs efficiently.
By subsidising mobile phones and laptops, companies ensure that employees have access to the latest technology, which can improve communication and productivity. These subsidies are particularly beneficial in sectors such as IT, sales, and consulting, where employees often work remotely or travel for work.
Employee travel expenses reimbursement in Romania
For employees who travel for work, travel expenses reimbursement is a crucial benefit. This includes covering costs for transportation, accommodation, and meals incurred during business trips. Offering this reimbursement not only alleviates financial stress for employees but also encourages them to participate in necessary travel for meetings, conferences, or client interactions.
Implementing a clear and fair travel expense reimbursement policy helps ensure that employees feel valued and supported while representing the company on the road. This can lead to improved job satisfaction and increased loyalty to the organisation.
Compliant, seamless payroll and benefits in Romania and beyond
For companies looking to hire in Romania, managing and running payroll can be a daunting task, especially with evolving labour laws and shifting best practices. But there’s a simpler way to do this: partnering with a reliable global payroll provider.
When you work with CXC to engage workers in Romania, we’ll handle everything from tax withholding to employee bonuses on your behalf. With over 30 years of experience in the global employment space, we have the expertise to help you hire workers compliantly in Romania and 100+ countries.
Interested to find out more? Speak to our team today
Compliantly hire employees anywhere with CXC
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.
Australia/New Zealand Head Office
Asia Head Office
EMEA Head Office
North America Head Office
Latin America Head Office
Level 3, 99 Walker Street
North Sydney, NSW 2060 Australia
