Understanding Employee Benefits and Compensation in Romania

Employee benefits are the non-salary compensation employers offer to their employees in addition to the base salary. These benefits help companies attract new employees, retain a talented workforce, and enhance productivity. These benefits and compensation offered to employees are either monetary or non-monetary depending on the employees’ requirements and the company’s capital.

The employment contracts outline certain obligatory benefits offered to all Romanian employees. These benefits cover statutory minimum wage, working hours, overtime payment, paid leave, annual leave, sickness benefits, paternity leave, maternity leave, retirement benefits, disability pension, severance fund, and more.

Compensation Laws in Romania

Different compensation laws in Romania that govern employee benefits in the country are discussed below:

1. The Labour Law in Romania

• Primarily, it is controlled by the Labour Code of 2003.
• It administers the terms and conditions of employment, like holidays, rest periods, working hours, overtime, wages, and employment relationships.
• The Labor relationship is also controlled by the Government Emergency Ordinance No. 158/2005 on the social health insurance indemnities and leaves; Government Emergency Ordinance no. 96 of 14 October 2003 on Maternity Protection at Work.

2. Insurance for accidents at work and Occupational diseases (Law 346 / 2002)

According to this law, the Public System permits the following compensations in occurrences of professional diseases and/or work accidents:

• Indemnity for permanent or temporary disability
• Death following a work accident
• Indemnity for loss of body integrity
• Indemnity for a temporary amendment of the current job owing to professional disease/ work accidents

How to Design an Employee Benefits Program for Employees in Romania?

It is imperative to consider a few vital considerations before designing a compensation package in Romania, which are as follows:

Step 1: Set down your business objectives and funds

To ensure your compensation policy is highly effective, the first step is to set down the objectives you expect from the compensation structure in Romania.

You must inspect collective bargaining agreements or employment contracts to validate employee benefits rights and employment relationships. Moreover, you should assess your company’s available funds to invest in employee benefits. Before creating the benefits policy in Romania, you must consider the company’s competency, commercial climate, and the economic department it runs.

Step 2: Learn the employee requirements

You should meticulously learn the employees’ requirements and anticipations by creating use cases or interviews or sending questionnaires. The motive is to encourage the employees to express their opinions confidently.

Comprehensively research the set industry standards and the benefits your competitors provide their employees. The relevant research outcomes and the internal survey help you to design a comprehensive compensation and benefits policy in Romania that fulfills industry principles and market competition.

The internal survey specifies the areas of improvement and designates essential changes to be entailed in the compensation and benefits policy in Romania. You can lay off certain worthless benefits and decrease company expenses.

Step 3: Prepare your benefits plan

Once you learn the employees’ requirements and expectations, you should implement a gap analysis to evaluate the existing state of the benefits plan. You can create a flexible benefits plan that follows the volatile nature of business. Furthermore, the flexible benefits framework lets the employees easily select the obligatory benefits. It also advises the employer to obtain the maximum benefits from it.

You must cover the aspects like employee contributions, the company’s budget, and outsourcing requirements while developing a benefits plan for worker’s compensation in Romania.

Step 4: Share the benefits with the stakeholders and acquire feedback

Convey your benefits plan’s advantages to all the stakeholders and employees. They can provide feedback after you share the plan’s draft. Consequently, you can implement a profitable plan for the organization and the employees.

If you detect any constructive feedback, you can blend them into your compensation policy. Conversely, if the feedback stipulates any benefit as redundant, you can revise the employee benefits in Romania accordingly.

Step 5: Regularly assess the plan

Companies in Romania always aim to provide optimal employee benefits to enrich their competitive advantage in the market. Hence, you must routinely assess the compensation structure in Romania. Also, it helps you discern the benefits plan’s expediency.

Before implementation, make sure the employee compensation policy in Romania is error-free. You should closely assess all the benefit plan’s components and execute them accordingly.

Types of Guaranteed Benefits in Romania

To attract, retain, and motivate employees, employers offer employee benefits in Romania to their employees. The mandatory benefits are discussed below:

Minimum wage

• The minimum monthly wage in Romania is RON 3,000 per month.

Working hours and overtime

• The standard working hours in Romania are 8 hours a day and 40 hours per week.
• The standard working hours are 2 hours per day and 10 hours per week for part-time employees.
• The standard working hours are 6 hours per day and 30 hours per week for employees under 18.
• The work that exceeds the standard working hours is remunerated as overtime. The overtime limit is 48 hours per week.
• Employees under 18 years of age, pregnant employees who can’t work well during working hours, and part-time employees are not allowed to work overtime.
• The overtime compensation is done by providing leaves for the overtime hours worked. Otherwise, the employer should provide 75% of the base salary.

Paid leaves

• In Romania, employees get 20 days of paid annual leave.
• The employer must pay this allowance minimum of 5 working days before the leave begins.
• Employees can transfer their unused annual paid leaves to the first six months of the following year.

Public holidays

• The employees in Romania get 15 public holidays per year.

Sick leaves

• The employees are entitled to up to 180 days of paid sick leave annually with a 90-day extension.
• Based on the illness category, sick leave compensation equals  75.00% to 100.00% of the average monthly salary during the earlier six months.
• The employer compensates for the first five working days. The FUNASS (Unique National Fund of Health Insurances) fund compensates the sick leave from the 6th day onwards.

Maternity leaves

• Female employees in Romania are entitled to 126 days of paid maternity leave.
• It contains two periods, i.e., parental leave (in which the employee must take 63 days of leave before the expected delivery date) and postnatal leave (in which the employee takes the remaining 63 days of leave after the child’s birth).
• The FUNASS (Unique National Fund of Health Insurances) compensates for maternity leave at an 85.00% rate of the employee’s average monthly gross salary.
• The FUNASS also provides maternal risk-benefit (to ensure the good health and safety of the employee and the child) at 75.00% of the employee’s average monthly gross salary.

Paternity leaves

• The father is entitled to 5-10 days of paid paternity leave.
• Its duration increases to 15 days if the employee joins an infant care course.

Parental leave

• After completing maternity leave, one of the parents is entitled to parental leave until the child’s age reaches two years.
• It is only provided if the employee paid taxes during the previous year of employment. Its pay equals 85.00% of the employee’s average standard salary. 

Bereavement leave

• The employees are entitled to 3 days of paid bereavement leave if there is a death of a close family member. 

Employee Benefits for Expatriates

Foreign employees in Romania are entitled to the same benefits as local employees. Romania is a preferable destination for expats due to its low cost of living, friendly work culture, powerful educational platform in science and technology, and the fastest Internet (broadband) speeds.

During their employment in Romania, the expats are entitled to benefits like relocation, accommodation, language training, health care insurance, dental care, child home care allowance, travel allowance, meal allowance, and unemployment benefits for their employment. Moreover, they also benefit from expatriate family benefits (tuition payments for kids in international schools, reimbursement for potential loss of spouse’s income, and visa assistance).

Expats repeatedly move abroad to achieve their short-term projects. So, businesses employ a simple, reasonable alternative to recruiting and compensating expats through local subsidiaries.

How are Employee Benefits Taxed in Romania?

In Romania, employees must pay a flat rate of 10% income tax. The tax residents must pay for their worldwide income, whereas the non-residents only pay for their income obtained from Romania. Self-employed individuals should also pay contributions for disability, pension, and general sickness.

All employees and employers in Romania must make the below contributions from their monthly salary:

Restrictions for Romania Benefits and Compensation

The majority of benefits offered to employees in Romania are taxable. So, you should be accustomed to the benefits’ monetary worth to precisely compute the tax amount owed by the employer. An employer should also ascertain that all tax payments are punctually released and transferred to the corresponding authorities.

Before framing the employee benefits plans, make sure your business is integrated into Romania and functions legally. Companies ought to pay the minimum remunerations to the employees based on their job roles and department. Furthermore, the benefits and compensation package in Romania should follow all the labor laws administered by the government.

As per Article 13 of the Romanian Labour Code, the minimum age agreed upon for employment is 16 years. The employment contract must be concluded for an unlimited duration to protect the employee.

Foreign citizens intending to work in Romania should acquire a work permit and, successively, a long-stay residence and work permit visa.  But EU and EEA citizens, or citizens of a country that has contracted agreements with Romania on labor market access, are exempted from this obligation.

The parties engaged in an employment contract can sign a non-competition agreement. Within this agreement, the employee can consent not to perform competitive activities throughout employment or for a pre-agreed duration after termination. While working on a current job, employees can commence another employment relationship. This is allowed only if the employment contract permits it. 

Supplemental Benefits for Employees in Romania  

Certain additional benefits offered to employees in Romania are discussed below.

Meal voucher

It’s an elite rechargeable card that employees can use in most restaurants in Romania to get free meals during work.

Food vouchers

The employees can use these vouchers in supermarkets and grocery stores.

Private pension

In Romania, some prominent companies offer private pensions to their employees. It can be 3% of the employee’s wage.

Private health insurance

Certain tech companies in Romania provide employees with health insurance, including dependents.

Life insurance

It is commonly linked to the employee’s job title and salary.

Education and training

To facilitate better education, certain companies provide tuition assistance, continuous training, education allowance, and annual budgets for professional conferences.

Flexible work

Certain companies enable employees to work full-time remotely or in a hybrid structure.

Fuel allowance

Many tech companies in the country offer a fuel allowance to employees who don’t utilize public transportation.

Wellness

Many companies benefit employees with snacks, breakfast, drinks, pet days, video games, and a dress code.

Telephone costs

Certain companies cover telephone costs for employees who use phones for work.

Stock options

They are available in the range of 0.01% to 0.1% to entice a proficient workforce and keep up their enthusiasm.

Other supplemental benefits

The list includes personal learning and development budget, therapy/coaching allowances, mentorship programs, travel expenses, volunteering days, birthday leave, and gym/health club membership.

How Multiplier Can Help with Benefits Management in Romania

Establishing a business abroad and hiring a skilled workforce can be challenging and tedious. The employer should follow the local laws and regulations before designing employment contracts and confirming employee benefits. You can contact an international PEO platform like Multiplier to simplify this process.

Multiplier facilitates compliance with Romania’s labor rules. We also benefit you by engaging talented employees. Our proficient staff can help you smoothly manage the workforce without setting up a subsidiary in the country. So, you can lessen your employment expenditures and investigate new markets.