Hiring and Seconding Employees in Romania: A Guide for Czech Employers

If you intend to hire a worker in Romania or second a Czech employee there, you must prepare for a different set of regulations. Romanian law differs significantly regarding social security, working hours, and administrative requirements. Discover the potential fines and what you, as a Czech employer, need to consider to ensure full compliance under both Czech and Romanian legislation.

Basic principles of Romanian labor law and differences from the Czech system

Romanian labor law differs in many aspects from Czech law, particularly in the areas of social insurance, taxation, and employer administrative obligations. The Codul Muncii (Law no. 53/2003, Labor Code) and tax regulations contain a number of specifics.

A fundamental difference is the social security system, which has undergone reform. Most of the contribution burden has formally shifted to the employee, which fundamentally affects the structure of the gross salary in accordance with Law no. 227/2015, Tax Code.

Unlike in the Czech Republic, where the system is relatively centralized, Romania requires an understanding of specific procedures, especially regarding employee records. Our attorneys in Prague at ARROWS law firm encounter these differences daily and know where typical mistakes by Czech employers are hidden. In practice, the Romanian legal framework is very formal, and any administrative error can lead to high fines.

If you want to minimize risks and save time, it is wise to contact experts with practical experience in Romanian law. ARROWS law firm has many years of practice in this area and can facilitate your journey from recruitment to the correct setup of all obligations. 

Employment contracts in Romania

In Romania, an individual employment contract (Contract individual de muncă) is mandatory and must be concluded in writing before the employee starts work according to the Labor Code. Oral agreements are not legally permissible in Romania, and their absence is sanctioned as illegal work. The Romanian Labor Code precisely defines what a contract must contain.

An employment contract in Romania must specifically include: 

• Identification details of both contracting parties (employer and employee)
• Place of work (if not fixed, this must be stated)
• Type of work (the position must correspond to the classification of occupations in Romania)
• Criteria for evaluating work performance
• Specific risks associated with the given type of work
• Start date
• Duration of the contract (indefinite or fixed-term)
• Duration of leave
• Wage conditions (base salary, bonuses, benefits, payment date)
• Working hours (number of hours per day and week)
• Probationary period (maximum 90 days for executive positions, 120 days for management)
• Notice period

Romanian authorities (especially the Labor Inspection – Inspecția Muncii) are strict regarding the quality of contracts. A major difference compared to the Czech Republic is the obligation to register the employment contract in the state register Revisal no later than the day preceding the employee's start date, as required by H.G. no. 905/2017.

One practical difference is that in Romania, as an employer, you must maintain an electronic register of employees (Revisal). Every change to a contract, salary, or termination must be reported online within strict deadlines. This is not a monthly report, but a real-time report before the change takes effect.

Language versions of the employment contract

The employment contract must be written in the Romanian language. A bilingual version (e.g., Romanian-Czech or Romanian-English) is permissible and common in the practice of international companies; however, the Romanian version is the one that is decisive for Romanian authorities.

Our Czech legal team at ARROWS law firm strongly recommends that contracts for employees in Romania always be prepared with a priority Romanian version to prevent future disputes over validity or interpretation. 

FAQ – Legal tips for concluding an employment contract in Romania

1. Does an employment contract in Romania need to be signed by a notary?
No, notarization is not required. The contract must be in writing and signed by both parties. The decisive factor is its timely registration in the Revisal system.

2. How much time do we have to sign the contract?
The contract must be signed and registered in Revisal before the employee actually begins working. Retroactive signing is not possible and carries the risk of a fine for illegal work (up to 20,000 RON per person).

3. What if the employee's position is not in the Romanian classification?
In the employment contract, you must state the COR code (Classification of Occupations in Romania) that most closely matches the actual job description. ARROWS law firm can help you select the correct code to ensure compliance with legislation.

Social and health insurance in Romania

The contribution system in Romania differs in structure from the Czech system. In Romania, most of the contribution burden was transferred to the employee's side. This means that the gross salary in Romania must be set higher to cover the high contributions deducted from the employee, while the employer's contribution above the gross salary is very low. Contributions are regulated by Law no. 227/2015, Tax Code (Codul Fiscal).

Breakdown of contributions:

Employee (deducted from gross salary):

• Social insurance (CAS): 25% (including pension contribution).
• Health insurance (CASS): 10%.
• Income tax: 10% (calculated from the base after deducting insurance).
• Total employee deductions amount to 35% for insurance + tax.

Employer (paid above the gross salary):

• Labor insurance contribution (CAM): 2.25% of the gross salary.
• For special working conditions, the employer pays additional social insurance.

For comparison: In the Czech Republic, the employer pays high contributions (33.8%) for the employee above the gross salary. In Romania, the employer's cost is "hidden" directly within the employee's gross salary. Total labor costs are comparable, but the structure is different.

Note that in Romania, for standard employment contracts, there is no cap on health and social insurance for income from dependent activity; it is paid on the entire gross salary. Exemptions and tax benefits exist for specific sectors (IT, construction, agriculture), where employees may be exempt from income tax or part of the contributions.

FAQ – Legal tips for social and health insurance in Romania

1. Who pays the insurance?
All contributions (including those that come "out of the pocket" of the employee) are calculated, deducted, and paid to the state by the employer. Payments are made to the state treasury account (ANAF).

2. What are the penalties for non-payment?
Failure to remit withheld taxes and social security contributions within the statutory deadline (by the 25th day of the following month) is strictly sanctioned in Romania. In certain cases (intentional withholding of collected funds), it may be classified as a criminal offense under Law No. 241/2005.

3. What is the tax incentive for IT?
Software developers with appropriate education and in specific positions may be exempt from the 10% income tax on gross salaries up to 10,000 RON per month.

Working Hours and Leave in Romania

Standard working hours in Romania are 8 hours per day and 40 hours per week. The maximum working time, including overtime, must not exceed 48 hours per week (usually averaged over a 4-month period).

The minimum statutory annual leave is 20 working days. In practice, it is common for employers to provide more (21 or more days) depending on the employee's length of service, which is often governed by internal policies.

A specific feature is the public holidays, of which Romania has many, and which are non-working days (e.g., January 24th, Orthodox Easter, June 1st). If an employee works on a holiday, they are entitled to compensatory time off or a 100% salary supplement.

The Labor Inspection (Inspecția Muncii) actively monitors working time records. The employer is obliged to maintain records of the arrival and departure times of every employee. Failure to comply with this obligation is a frequent reason for fines.

Employee Registration in Romania

If a Czech company (without a branch in RO) employs a Romanian resident working from Romania, this Czech company must register with the Romanian tax authority (ANAF) for contribution purposes. Here, it will obtain a tax identification number (NIF - Număr de Identificare Fiscală) according to Law No. 207/2015 on the Tax Procedure Code.

Basic steps for direct employment (if you do not have a subsidiary in RO):

1. Fiscal registration of the employer: Obtaining a NIF for the foreign employer.
2. Medical examination: Before signing the contract, the employee must undergo a medical examination (medicina muncii) to confirm fitness for work.
3. Contract signing and registration in Revisal: The contract must be entered into the Revisal system the day before the start date in accordance with local regulations.
4. Monthly reporting: Every month, you must submit electronic reports on wages and contributions and pay the relevant amounts.

The process of obtaining a NIF and setting up payroll is administratively demanding. If you do not have an entity in Romania, we recommend using the services of our Prague-based law firm, ARROWS, for representation before the authorities.

FAQ – Legal Tips for Registration

1. How long does NIF registration take?
Usually 10 to 30 days depending on the workload of the ANAF office. This should be planned for in advance.

2. Must the employee have a medical exam before signing?
Yes, under Romanian law, the absence of a medical certificate at the time of signing the contract results in the absolute nullity of the contract.

Rules for Posted Workers

If you are sending a Czech employee to work in Romania only temporarily (posting), the procedure is different. If the posting does not exceed 24 months and the conditions of EU coordination regulations are met (specifically Regulation (EC) No 883/2004), the employee remains in the Czech social security system.

You must ensure:

1. A1 Form: Issued by the Czech Social Security Administration (ČSSZ). It confirms that the employee is subject to Czech legislation.
2. Notification to the Inspectorate: In Romania, there is an obligation to report posted workers to the local labor inspectorate.
3. Working Conditions: Even if you follow Czech law, you must comply with the so-called "hard core" of Romanian labor law (minimum wage, working hours, health and safety) if it is more favorable to the employee.

If the posting lasts longer or the conditions are not met, the employee falls under the Romanian system and must be registered in Romania.

Who can help you with this issue: 

JUDr. Jakub Dohnal, Ph.D., LL.M.

associate, managing partner

• dohnal@arws.cz

Mgr. Vojtěch Sucharda

associate, partner

• sucharda@arws.cz

Business Trips in Romania and Per Diems

Rules for travel allowances (diurnă) have their own specifics. In Romania, there is an entitlement to a meal allowance when traveling for work to another location (over 5 km away) if the trip lasts at least 12 hours.

The per diem amount in Romania is a double-edged sword, as there is a statutory limit for tax deductibility and exemption from contributions according to the Codul Fiscal:

1. An amount up to 2.5 times the statutory limit for public institution employees (currently a limit of 57.5 RON/day for domestic travel).
2. At the same time, a cap applies where these per diems must not exceed 33% of the employee's basic monthly salary (cumulatively with other benefits).

If you pay per diems above these limits, the excess amount is considered employment income and is subject to full taxation and social and health insurance contributions.

Risk and Penalty Table: What you face if things are not done correctly

Occupational Health and Safety

In Romania, the field of OHS (in Romanian SSM - Securitate și Sănătate în Muncă) is highly formalized according to Law No. 319/2006. Every employer must have a contract with a certified OHS technician or have their own qualified staff member.

Employees must undergo regular training (upon induction, at the workplace, periodically), which must be signed in individual OHS cards. The absence of these signatures is one of the first findings in any inspection.

Executive Summary for Management

Conclusion

Employing staff in Romania offers opportunities but requires respect for formal rules that are, in some respects, stricter than in the Czech Republic. Specifically, the Revisal system, mandatory pre-employment medical check-ups, and the contribution structure are areas where errors most frequently occur.

Our attorneys in Prague at ARROWS law firm have extensive experience with the expansion of Czech companies into Romania. We can assist you with tax registration (NIF), preparation of bilingual employment contracts, setting up remuneration structures, and handling the posting of workers. See why you should choose us. 

Do not hesitate to contact us at office@arws.cz for professional legal consultation. ARROWS law firm is insured for damages up to high limits, ensuring you receive a secure and professional solution.

FAQ – Frequently asked legal questions about employment in Romania

1. Do I need to establish a branch if I want one sales representative in Romania?
Not necessarily. You can employ them directly as a foreign entity (Czech s.r.o.), but you must register for fiscal purposes in Romania (obtain a NIF) and pay Romanian taxes and insurance for the employee. This is an administratively viable solution. For setup assistance, write to office@arws.cz.

2. What is the difference between "detașare" (posting) and "delegație" (business trip)?
Delegație is a short-term business trip (e.g., 3 days for meetings) where the place of work changes, but the employer remains the same. Detașare (posting) often involves a temporary change of employer or a longer-term transfer and is subject to specific rules regarding social security and top-up payments.

3. Can I terminate an employee without stating a reason?
No. In Romania, dismissing employees is much more rigid than in some other jurisdictions. Termination by the employer must be based on legal grounds (e.g., disciplinary, reorganization, unsatisfactory performance) and must follow a strictly defined process set out by law. 

4. What is Revisal?
Revisal is the general register for employee records regulated by H.G. nr. 905/2017. It is an electronic database managed by the Labor Inspection. Every employment contract, its amendment, suspension, or termination must be reported to this system online within legal deadlines (usually no later than the day before the change takes effect).

Disclaimer: The information contained in this article is for general informative purposes only and serves as a basic guide to the issue. While we ensure maximum accuracy of the content, legal regulations and their interpretation evolve over time. To verify the current wording of regulations and their application to your specific situation, it is essential to contact our Prague-based law firm ARROWS directly (office@arws.cz). We bear no responsibility for any damages resulting from the independent use of information from this article without our prior individual legal consultation.