Minimum Wage in Romania – 2017

We are looking today at the reevaluation of the main payroll and HR indicator in Romania in 2017, the minimum wage. What changed starting this January, 1st  for Romanian employees ? What is the financial impact of these changes for Romanian employers ?

1ST OF JANUARY 2017 : NEW MINIMUM WAGE IN ROMANIA

The minimum wage in Romania was increased beginning of this year from 1 250 RON (~278 €) to 1 450 RON (~322 €). This new value translates into an hourly pay of 8,79 RON (1,94 €).

This was one of the first measures taken by the new government, by the Decision Decision no.1/2017, published in the Official Journal of Romania no.15/2017. It should be effective starting the 1st of February 2017.

More than 1,3 million people are paid with the minimum guaranteed wage in Romania. Almost all of them are employed in the private sector, by SMEs (10-49 employees) and SMBs (up to 249 employees). Retail, construction, transport, extractive and food industries are some of the fields in which an important number of employees are paid by the minimum wage.

MINIMUM WAGE 2017 : FINANCIAL IMPACT FOR ROMANIAN EMPLOYERS

For an easier understanding of this indicator’s financial impact for employers, have a look at the figures below (gross values, on a montly basis)  :

Currency Minimum monthly wage – Jan 2017 Minimum monthly wage – starting Feb 2017 Total wage costs – Jan 2017 Total wage costs – starting Feb 2017 Increase in total wage costs
RON 1 250 1 450 1544 1789 16 %
EUR 278 322 343 398 16 %

Regarding the net amounts, if an employee is paid this month a net salary of 925 RON (~206 €), starting February 2017 he will be receiving 1 065 RON (~237 €) – the equivalent of the net minimum wage. This means a raise of 15 %.

OBLIGATIONS FOR THE HR DEPARTMENT

For companies with employees paid by the minimum wage,  this raise is mandatory. As for the paper work, it can be done in two ways:

  • they can either issue an individual addendum for each employee, mentioning the legal base of this raise, the amount of the new salary and the starting date; in this case, both parties are required to sign the addendum (employee and employer’s representative);
  • or they can issue a collective decision.

The deadline to report this action to the National Registry of Employees (REVISAL) is  20 working days starting the 1st of February 2017, or the 27th of February at the latest.

For the companies not complying with this new obligation, the law stipulates fines between 300 and 2000 RON, and this for each employee whose salary was not raised.

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