In Romania, there are mandatory pensions, healthcare, unemployment common national systems that apply to all employees and employers. There are mandatory contributions made to each of these systems, by the employees. The employer pays a single contribution. The systems cover predetermined benefits for the employees. For the employer, the required monthly contribution is 2.25% of the gross income for each employee. For the employee, the required monthly contributions are 25% of the employee’s gross income for the pension system and 10% of the employee’s gross income for the healthcare system.
Healthcare and Insurances
Apart from the mandatory contributions that we referred to previously there are no other mandatory insurances that the employer is required to provide. Additional health and life insurance can be provided by the employer as a benefit. The fiscal regime of such benefits takes into consideration the amount paid by the employer.
Holidays and Annual Leave
There are approximately 15 public holidays in Romania and the workers are entitled to remuneration for each. Since some of the public holidays are religious there are legal provisions that state that paid holidays are to be granted to employees of other religions than the Christian Orthodox, considered majoritarian in Romania. Employees have the right to benefit from a minimum of 20 working days of paid annual leave each year. Compensation with financial benefits is only allowed in case of the termination of the employment. The employer has to ensure that employee benefits from a continuous period of 10 consecutive working days of paid annual leave.
Romanian law establishes a minimum duration of 20 working days of annual paid leave. The social partners may negotiate a collective employment agreement that provides more favorable conditions for the employees. Except for the case of terminating the employment contract, an employer cannot replace the right of the employees to a minimum annual holiday entitlement with the payment of the indemnity for the holiday.
Maternity and Paternity Leave
Romanian law provides for a period of 126 mandatory maternity leave days, of which 63 days can be granted before the due date and 63 days after the due date. The employee can receive more than 63 days for each of the periods, but has to benefit from at least 42 days of leave after the due date. The maternity leave is considered a medical leave, the employee’s physician being the deciding factor in how the days are divided between the two periods.
Apart from maternity leave, parents can also benefit from a paid leave in order to raise a young child, up to 2 years of age, or if the child has a disability. During this leave period the parent receives an indemnity that is a percentage of the income the parent had prior to the leave period. Incentives are granted to parents that return to work before the 2-year period expires. The indemnity is not paid by the employer.
Sickness and Disability Leave
Medical leave is granted to the employee if the illness prevents him/her from performing his/her activity. The medical leave indemnity is paid by both employer and the state healthcare system depending on the number of days of medical leave. The first 5 days of medical indemnity are paid by the employer and the rest of the period by the state healthcare system. The indemnity is a percentage of the income of the employee.
Disability leave can be a form of medical leave or a form of pension, depending on the type of disability (people with permanent disabilities that cannot work benefit from a special type of pension).
Other Required or Typically Provided Leave(s)
Employees have the right to paid or unpaid training leave. The employer has to grant paid training leave if he failed to ensure the periodic training of the employee. Unpaid training leave can be granted to employees who engage in training activities on their own initiative.
Parents have the right to receive paid leave if they have children under the age of 12 enrolled in schools where classes were suspended due to exceptional events (such as extreme weather or medical crisis). Only one of the parents can benefit from this type of leave and only if neither of the parents work from home.
Pensions: Mandatory and Typically Provided
The mandatory contribution to the pension system covers in Romania 2 Pylons of the pension system – the state provided pension (Pylon 1) and the mandatory private pension (Pylon 2). In order to fund these two pylons, the mandatory pension contribution of both the employer and the employee are divided between the state pension system administrator and private insurance companies. The percentage of the mandatory contribution that is given to private insurance companies is very low; 3.75% in 2020.
In addition to these 2 mandatory pylons the pension system in Romania recognises 2 more pylons. Pylon 3 or the individual facultative pension system allows the employee to contribute to a private pension system with up to 15% of his monthly income, while pylon 4 allows the employee to contribute to a private pension system without any limits to the contributions. Pylon 4 pension plans usually include life insurance. Pylons 3 and 4 are not mandatory. The employer can offer the employees the benefit of one of these facultative insurances. In addition to contributions to the national healthcare system the employer can offer the employees the benefit of private health or life insurance.
Other Required or Typically Provided Benefits
Any uniform of equipment necessary for health and safety reasons will be provided, free of charge, to the employee by the employer. In certain industries where there are known risks to the health of the employees (such as exposure to toxic or irritant materials) additional rights to cover what is known as a protection diet should be granted. The employer can also grant daily meal tickets to employees as an additional benefit. The meal tickets are strictly regulated, have a legally established value, and have a distinct fiscal treatment (they are only subject to income tax). Employers can grant vacation tickets (vouchers) with distinct fiscal treatment that can only be used for traveling services within the country. Vacation tickets are more common in public companies. Other forms of benefits that can be granted by the employer are the kindergarten tickets or gift tickets, all having a distinct fiscal treatment.