Mandatory employee benefits in Romania include a three pillar pension system, paid time off, disability (sick leave) as well as maternity, paternity and parental leaves. Supplementary employee benefits in Romania include retirement, medical insurance, life and disability insurance, and business travel insurance. Common employee perks range from meal vouchers to company cars, to mobile phones and increased vacation days.
Romanians care about healthcare benefits the most because they are more comprehensive than what the state offers, and private clinics are preferred.
Mandatory Employee Benefits in Romania
For the time being there are three pension schemes in place in Romania:
- Pillar 1 = mandatory contributions to the Public Pensions System (21,25% for employee, as of 1/1/18). For normal working conditions, the employer contribution is 0%. For difficult working conditions, the employer would be required to contribute 4% or 8%, depending on the conditions.
- Pillar 2 = mandatory contribution to Private Pension Funds (3,75% for Employee, as of Jan 1st,2018)
- Pillar 3 = concerns the contribution to Voluntary Private Pension Funds, contribution is optional (more details under supplementary employee benefits below).
Pillar 1 and 2 pension contributions are paid by employers to the state and is not something that Romanian citizens usually contribute to directly. Employers deduct these contributions from salary and pay them monthly. Calculation of income tax is after deducting social contributions from gross salary.
Pension income can start as early as age 60. Individuals who have completed a minimum contribution period of at least 15 years are eligible for pension benefits. The complete period is 35 years for men and women.
Normal retirement age is 65 for men and 63 for women.
For Pillar 1 pensions, the current pension point value is 1.265 RON. The government is working on a legislative update to increase the pension point, and it is expected to increase to 1.441 RON as of Sep 1, 2020. The benefit is the result of multiplying the average lifetime-accumulated number of pension points (average rating) by the pension point value.
The option for the Pillar 2 private fund belongs to the employee, and the employer still makes the payment. Participation in the Pillar 2 pension is compulsory for all employees below age 35 who are insured for the first time, or are contributing to the public fund. It is optional for employees up to age 45 who are contributing to the public retirement fund.
Death and long-term disability benefits apply as part of social security for all contributing employees. In the case of death, the benefit is payable to the surviving spouse, tutor, or child. Contribution is in the retirement contribution.
Public System Healthcare
According to Law 95/2006, all citizens with residence in Romania, and all foreign citizens and stateless persons with residence in Romania, must participate in, and contribute to, the public health system. Exceptions apply for: children under age 18, and persons under age 26 attending school and do not have income from work; persons with a handicap and who do not have income from work; persons persecuted by the former communist regime, deported persons, war veterans, and also those who have special rights established by law; retired insured persons who have revenues under the income tax limit; pregnant women and women after childbirth who do not have income from work or have an income lower than the minimum gross national salary; members of a family entitled to social help; individuals receiving unemployment indemnity; individuals on medical leave for temporary disability due to a work accident or professional disease; parents on leave, raising a child up to age two, or age three for children with a handicap.
All insured individuals have rights to ambulatory medical services, hospital care, intensive care, dental services,
urgent medical services, prescription drugs, preventative services, rehabilitation assistance, prenatal and postnatal assistance, treatment in balneary resorts, plastic and reparatory surgery, physiotherapy services.
Husbands, wives, and parents without their own income, and in the care of the insured person, are eligible to be added as dependents.
Contribution is 10% of gross salary for employees.
Paid Time Off
- Annual Leave – 20 days is the minimum holiday guaranteed by law per year, pro-rated with the worked period.
- Public Holidays – There are 18 public holidays.
Sick Days/ Short-Term Disability Benefit
Sick leave is paid only if the employee has a minimum contributory period to the Health House for the prior six months, based on a medical certificate issued by a physician.
The first 5 calendar days are paid by the Employer. From the 6th day, the medical allowance is supported by the National Health Fund. In practice, the Employer is paying also the amount supported by the National Health Fund and then requests the reimbursement of the amount from the Health House.
The payment percentage in case of the sick leave allowance is ranging between 75% and 100% of the calculation base (average of the employees’ monthly gross wages during his last 6 months prior to the month the medical leave is granted).
The benefit is payable up to 180 days; if the disability is prolonged, a long-term disability pension is proposed.
Contribution to social security is 2.25% of gross salary, no ceiling.
Maternity leave is 126 calendar days (usually 63 days before + 63 days after the birth of the child). It represents 85% of the calculation base (average of the employee’s monthly gross wages during her last 6 months prior to the month the maternity leave started). The maternity leave is granted based on the medical certificate issued by the physician.
Insured individuals can also take medical leave days each year as follows:
- 45 days to care for their sick children up to age seven, or handicapped children up to age 18.
- Up to 90 days to care for children with contagious diseases or paralysis.
The maternity allowance is granted by the National Health Fund (in practice the Employer pays the maternity leave and afterward he requests the reimbursement of the amount from the Health House).
Fathers are entitled to 5 days of paid maternity leave and can be used until the child reaches the age of 8 weeks. If the father chooses to participate in childcare courses, leave can be extended for an additional 10 days. This extension can only be used once.
Parental leave entitlement last until the child is 2 years old. In the case of a disabled child, leave is until the child is 3 years of age. The payment is made directly by the state institution and represents 85% of the employee’s average revenues during his last 12 months of activity. During this period, the employment contract is suspended.
During this period, the company can hire another employee for the same position, but only on a temporary employment contract and cannot terminate the parent employee.
- Bereavement Leave – 2 days of unpaid leave is granted to an employee who has had a death within their immediate family.
- Marriage leave – 5 days for an employee’s marriage and 2 days for the marriage of a child.
Workers Compensation/Work Accidents/Professional Diseases
In Romania, the whole system is still handled by the State through funds collected on monthly basis from the employers as well as from the employees. According to the Law 346 / 2002, the Public System grants the following compensations in case of work accidents and / or professional diseases:
- Indemnity for temporary or permanent disability
- Death following a work accident
- Indemnity for loss of body integrity
- Indemnity for temporary change of the current job due to work accidents/ professional disease
For Personal Accidents and professional diseases there are also facultative insurance products available, in addition of the benefits offered by the state system.
There is not any workmen’s compensation facultative insurance product in place due to the lack of legislation in this field.
Premium related to Personal Accidents Insurance is not tax free from the fiscal point of view, but the indemnities received following Personal Accidents claims are tax free and independent from any other compensation given by the state.
Parents have a right to a child allowance, payable until age 18. If a child is disabled or continues to attend school in a state-recognized education program, benefits can be payable to age 26. The state child allowance is not taxable. Its monthly value as of Aug 1, 2020 is:
- RON 185 for children age 2 up to 18 (or 3 and above, if disabled)
- RON 369 for each child up to age 2 (or up to age 3, if disabled).
State budget allocations fund these child allowances. The government plans to increase the allowances by 20% in 2021 and again in 2022, up to 300 RON, respectively 600 RON.
Supplementary Employee Benefits in Romania
Pillar 3 concerns the contribution to Voluntary Private Pension Funds, contribution is optional (minimum €10/person/month, maximum 15% of gross). The plan is defined contribution (DC).
Once the contribution plan is set up with the pension fund and with the employer, the pension fund opens a personal account for each and every employee so that the individual can have full access to its net asset balance and to the evolution of its funds over the years. As soon as the enrollment is done, the financial flow runs automatically, and the monthly contributions are accumulated into the personal account of the employee.
For private pension plans, which are still not widely implemented, the contributions are split between the employee and company, with the company usually paying 50% to 100% of the contribution.
The right to voluntary pension opens at the request of the participant, subject to the following cumulative conditions:
- The participant has reached the age of 60.
- At least 90 monthly contributions have been paid.
- The personal asset is at least equal to the amount required to obtain the minimum voluntary pension provided by the rules adopted by the commission.
As of 2020, there are 10 pension funds available on the local market applicable for Pillar 3 pensions. The plan structure is strictly regulated by law.
For Pillar 3 Pensions, the contribution is considered tax free for the Employer up to the limit of €400 per year/ per person, as well as for the employee up to the limit of €400 per year/per person.
Private Medical Insurance
This is highly recommended and is one of the most popular benefits for employees in large part due to the inadequacy of the public system.
Usually funded by the employer for all employees, with the possibility of family extension (spouse/children; for larger groups, can also be extended for partner or parents/siblings). Family extension is often funded by the employee, with exceptions in highly competitive industries such as IT, where the employer often funds dependents coverage.
This coverage can include outpatient coverage (consults with GP or specialists, lab tests or investigations, high tech imaging), inpatient coverage (room & board, medication/treatment during stay in hospital, surgery + consumable and accessories used in the surgery room), road ambulance / emergency Room, medical recovery, maternity (pregnancy monitoring, birth), dental, vision, cancer, and critical illness extensions.
Direct subscription to clinics is also a popular complementary or even alternate option to a medical insurance plan, with more focus on prevention services, but usually without access to hospitalization or surgical interventions. By comparison, medical insurance usually offers a more comprehensive coverage such as complex investigations as well as hospitalization and birth. Additionally, medical insurance offers access to any private medical facility in Romania with direct settlement or reimbursement for out-of-network services.
The contribution for medical insurance is considered tax free for the employer up to the limit of €400 per year per person, as well as for the employee up to the limit of €400 per year per person.
Business Travel Insurance
This is usually funded by the employer for employees only for business related travel. It can cover medical expenses occurred during trips abroad following accidents, medical expenses occurred during trips abroad following sudden illness and emergencies, dental care subject to certain sub limits (emergency), additional costs with relatives who assist the victim, additional costs with repatriation, luggage insurance, and personal liability.
Group Life and Disability Insurance
This is usually fully funded by the employer for all employees. The main coverage available is death by any cause (illness, accidents), and it is customary to cover 1-2x annual salary or a lump sum insured for entire group.
- Permanent total or partial disability (illness, accidents) – customary to cover % of same sum insured as death coverage.
Other available riders:
- Indemnity for critical illness
- Daily cash benefit for temporary disability (days of hospitalization and/or ambulatory plus days of
- Daily cash benefits for medical expenses up to different sub-limits
- Indemnity for surgical intervention expenses up to different sub-limits
- Indemnity for broken bones (following accidents)
- Indemnity for burns (following accidents)
The insurance premium bears the tax on income and social contribution as on any other type of employee benefit. Insurance indemnities are tax-free.
Employee Perks in Romania
Other benefits available for employees can include:
- Meal vouchers
- Performance bonus, holiday bonus
- Gym membership
- Work from home or Flexible hours programs
- Transportation benefits – company bus, public transport allowances, bike allowances, fuel allowance, parking space etc.
- Workplace canteens
- Professional training and certification programs, participation in conferences and seminars
- Company car – typically for sales positions, management positions, executives
- Mobile phones and calls covered fully by employer
- Company laptop
- Increased annual leave days
- Discounts on company products, if applicable
Less common perks include:
- Flex benefits
- Relocation allowances, rent – usually top management only
- Savings plan or financial wellness
- Employee loans
- On-site day care
- On-site wellness programs
- Health coaching
- Personal development trainings and coaching
- On-site or online books and libraries
- On-site relaxation or game areas