When hiring employees in Romania, businesses must comply with a set of mandatory social benefit contributions as outlined by the Romanian Labor Code (Law No. 53/2003) and Law No. 227/2015 on the Fiscal Code. These contributions ensure employees have access to essential benefits such as pensions, healthcare, and unemployment support. Employers must remain compliant to avoid penalties, ensure employee satisfaction, and manage employment costs effectively.
This guide outlines the key components of Romania’s social benefits system, contribution obligations, and best practices for managing employee benefits in Romania.
What are the Components of Romania’s Social Security System?
Romania’s social security system is composed of the following five key components, which are funded through mandatory contributions from both employers and employees:
- Pension Insurance (CAS – Contribuții de Asigurări Sociale)
- Health Insurance (CASS – Contribuții de Asigurări de Sănătate)
- Unemployment Insurance (Contribuții pentru Șomaj)
- Work Accident and Occupational Disease Insurance (Asigurare pentru accidente de muncă și boli profesionale)
- Medical Leave and Maternity Leave (Concedii Medicale și Indemnizații de Maternitate)
These components ensure employees have access to retirement support, healthcare coverage, and financial aid during periods of unemployment, maternity leave, or work-related injury.
What Are the Contribution Requirements for Each Social Benefit?
1. Pension Insurance (CAS)
This insurance provides financial support for employees after retirement.
- Employer Contribution: None (since 2018, the employer does not contribute to the pension system).
- Employee Contribution: 25% of the gross salary.
💡 How It Works
Employee contributions are paid into their individual pension account, and employees must contribute for a minimum of 15 years to qualify for a pension. The state pension is paid upon reaching the statutory retirement age.
2. Health Insurance (CASS)
Health insurance covers employees’ healthcare expenses and provides access to medical services.
- Employer Contribution: 2.25% of the gross salary (part of the labor insurance contribution).
- Employee Contribution: 10% of the gross salary.
💡 How It Works
Health insurance contributions cover general healthcare, medical consultations, hospitalization, and treatments. Employees are entitled to free or subsidized healthcare under the public health system.
3. Unemployment Insurance
Unemployment insurance supports employees in case of job loss and provides financial assistance for a limited period.
- Employer Contribution: None (included in the labor insurance contribution).
- Employee Contribution: None (contributions to unemployment insurance are no longer separate).
💡 How It Works
In the event of job loss, employees who have made social insurance contributions for at least 12 months within the last 24 months are entitled to unemployment benefits, paid monthly for a specific duration.
4. Work Accident and Occupational Disease Insurance
This insurance covers treatment and financial support for employees injured at work or diagnosed with an occupational disease.
- Employer Contribution: Included in the 2.25% labor insurance contribution.
- Employee Contribution: None.
💡 How It Works
If an employee is injured at work, the company submits a claim to the insurance provider. Once verified, the insurance covers treatment, and the employer is responsible for the employee’s salary during recovery.
5. Medical Leave and Maternity Leave
This contribution supports employees during medical leave and maternity leave.
- Employer Contribution: Paid as part of the 2.25% labor insurance contribution.
- Employee Contribution: None.
💡 How It Works
For maternity leave, employees are entitled to 126 days of leave (63 days before birth and 63 days after birth), paid at 85% of their gross salary. Employers can claim reimbursement from the National Health Fund (Casa Națională de Asigurări de Sănătate – CNAS) for the payments made to employees.
What is the Contribution Base and How is It Calculated?
The contribution base refers to the salary used to calculate social insurance contributions. In Romania, the contribution base is the employee’s gross monthly salary.
Key Points to Know
- Minimum Base: Contributions are calculated on at least the minimum wage (RON 3,000/month as of 2024).
- Maximum Base: There is no upper limit for the base for health, pension, or labor contributions.
| Category | Contribution Rate | Contribution Base |
|---|---|---|
| Pension (CAS) | 25% (Employee) | Gross monthly salary |
| Health (CASS) | 10% (Employee) | Gross monthly salary |
| Labor Insurance | 2.25% (Employer) | Gross monthly salary |
💡 Example of Contribution Calculations
| Gross Salary (RON) | Pension (25%) | Health (10%) | Labor Insurance (2.25%) | Net Salary | Total Employer Cost |
|---|---|---|---|---|---|
| 3,000 | 750 | 300 | 67.50 | 2,250 | 3,067.50 |
| 5,000 | 1,250 | 500 | 112.50 | 3,750 | 5,112.50 |
| 10,000 | 2,500 | 1,000 | 225 | 7,500 | 10,225 |
Detailed Example of Salary Calculation
| Category | Amount (RON) | Notes |
|---|---|---|
| Base Salary | 31,918.00 | 72 hours worked (based on 160 hours/month) |
| Bonus | 94,235.00 | |
| Leave Pay (Unused Leave Days) | 9,575.00 | |
| Total Gross Income | 118,173.10 | Base salary + bonus + leave pay |
| Pension (CAS) – 25% | 29,543.00 | 25% of total gross income |
| Health Insurance (CASS) – 10% | 11,817.31 | 10% of total gross income |
| Income Tax – 10% | 7,681.28 | 10% of taxable base (total gross minus CAS & CASS) |
| Net Salary | 69,131.51 | Total gross minus CAS, CASS, and income tax |
| Employer’s Contribution – 2.25% | 2,658.89 | 2.25% of total gross salary |
| Total Cost to Employer | 120,831.99 | Total gross salary + employer’s contributions |
Summary
Compliance with Romania’s mandatory social benefit system is vital for businesses operating in the country. Contribution rates and payment bases are standardized, meaning that employment costs will remain consistent regardless of location within Romania. Employers must be aware of:
- The 5 core components of the social benefits system.
- The calculation of contribution rates based on gross salary.
- The penalties for non-compliance, which include fines, backdated contributions, and possible employee claims.