Romania Payroll and Benefits Guide
What global businesses need to know about payroll in Romania
Romania is a modern European success story, with consistently healthy performance since the end of Communist rule. Now a member of the European Union, Romania ranks 12th in the EU by GDP, and has become a regional leader in IT and mobile technology thanks to considerable investment into skills in that sector.
Romania, however, still benefits from a highly mixed economy where nearly 30% of its economic output is still driven by heavy industry, including a number of big automotive factories. As a result, there are plenty of opportunities for all types of incoming businesses to explore, further bolstered by a well-educated workforce that is relatively cheap to employ by western European standards.
Romania’s tax rates are low and its tax system is simple to understand, but there have been some recent changes in legislation around minimum wage and sick pay that you should be aware of. This guide gives you all the latest information around running payroll in Romania and your employment compliance requirements.
Getting Started
Limited-liability companies are probably the best way to go in terms of setting up a business entity in Romania, especially as the minimum share capital is a nominal RON 200 (approx. £25, $45, €40).
The first step is to reserve the company name at the National Trade Register, then open a Romanian bank account (which you will need to process payroll). Then you can go back to the National Trade Register to officially register the company, and then go on to register with the Ministry of Public Finance for tax and VAT. You’ll also need to set up an electronic staff register to be transferred to the Labor Inspectorate.
Employment Considerations
Employment contracts are mandatory and must outline the role and responsibilities, compensation and leave entitlements, probationary period, place of work, and other details. All new employees must register with the Labor Chamber at least one day prior to commencing work.
Collective agreements can be negotiated at the industry and company levels, and is mandatory for any company with a workforce of at least ten people.
The standard working week in Romania is 40 hours, most commonly consisting of eight-hour shifts from Monday to Friday. These limits reduce to 30 hours a week and six hours per day for any employees under 18. Anyone working a 12-hour day must get at least the following 24 hours off as a rest period.
A maximum of eight hours of overtime can be worked per week, and should normally be compensated with time off in lieu, within two months of the time worked. If that time off cannot practically be given, then overtime pay of at least 175% of normal salary is due. Overtime is banned for employees under 18, working part-time, and pregnant employees who can’t work their normal shifts.
Notice periods are a minimum of 20 working days, although managerial employees resigning must give at least 45 working days’ notice. Probation periods are normally three months, increasing to four months for managers and supervisors.
Compensation & Severance
The minimum wage in Romania has been subject to several substantial hikes in recent years. As of January 1 2025, the rate is RON 4,050 per month (approx. £700, $920, €795). At the time of writing, Romania’s Prime Minister Ilie Bolojan has stated that further rises in 2026 are unlikely, but you should still keep an eye out for further changes, as rates have been increased every six months in the past. Wages are generally paid once a month, by electronic bank transfer or in cash.
There are no statutory requirements around paying bonuses and employee benefits in Romania, but it’s common for employers to provide them as additions for employees to help with staff retention and acquisition. These include meal vouchers, transport allowances, health insurance, gym membership subsidies, flexible working arrangements, additional paid leave and more.
There is no legal requirement around severance pay in Romania, but arrangements can be agreed through collective bargaining or employment contracts.
Tax and Social Security in Romania
Romania stands out as one of the most straightforward countries around from the perspective of tax and social security.
Income tax in Romania is levied at a flat rate of 10% and there is no personal allowance or exempt amount. Corporation tax runs at 16%, while VAT is 19% (with some reductions applicable at 9% and 5%).
Employees pay 25% into their pension, while employers contribute an additional 4%. Employees also pay 10% for health insurance, while employers pay 2.25% for unemployment insurance.
Holidays and Leave
Paid leave entitlement in Romania is 20 days per year: at least half of that must be taken in one unbroken period (typically for a summer holiday). Holidays can be carried over into the first half of the following year if unused. All pay that employees would accrue during their time off should be paid to them a minimum of one week before their leave begins.
There are 17 days of public holidays in Romania each year, although those that fall on weekends are ‘lost’ as far as time off is concerned.
Maternity leave is a total of 18 weeks, split equally before and after the birth. Social security covers maternity pay during this time at 85% of the mother’s usual salary, calculated according to their average earnings in the preceding six months. Mothers can also take ‘maternal risk leave’ to help care for their child if unwell, paid at 75% of salary by social security.
Interestingly, new fathers have the opportunity to increase their paid paternity leave entitlement from ten days to 15 if they take part in an infant care course. Employers are required to cover paternity pay at their normal wage rate, and the leave has to be taken within the first eight weeks post-birth.
Parental leave entitlement is two months total across mother and father, which can be taken any time before the child turns two, and is paid at 85% of salary by social security, up to a maximum of RON 8,500 per month (approx. £1,470, $1,930, €1,670). One parent can take all of this leave, or it can be shared between the two parents at one month each.
Romania’s rules around sick pay were changed on August 1 2025, with a new tiered system replacing the previous 75% rate. Employees now receive 55% of pay for the first seven days of absence, 65% for the next seven, and 75% thereafter, with the calculation based on the average income of the employee over the previous six months. Employers cover the first five days of this pay, with social security picking up the tab from day six onwards. The general time limit for paid sick leave is 180 days within a year, but this can be extended to 270 in some circumstances.
Payroll in Romania: a summary
Many countries in Eastern Europe – rightly or wrongly – have a reputation for bureaucracy and red tape, but that certainly isn’t the reality in Romania, where regulations are clear and straightforward in many areas. However, recent changes in legislation in areas such as sick pay and minimum wage underline the importance of accessing in-country payroll expertise, so you can stay compliant as and when new requirements arise. The best way to access this know-how across all your territories and markets is to partner with a global payroll provider with a network of experts all over the world.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.