An Employer of Record (EOR) is one of the most cost-effective, simplest, and fastest ways to expand beyond borders. Moldova makes an attractive home to foreign employers largely because of its low cost of hiring.
How Does an Employer of Record Help with Remote Work?
Without a permanent establishment (PE) status in Moldova, a foreign company cannot conduct business in the country. An EOR is the legal employer on paper for a foreign company. Working with the foreign employer, an EOR oversees the major areas of global employment. These include hiring, tax withholding, and structuring compensation and benefits packages, among others.
The Benefits of Hiring Remote Workers in Moldova
Lower Hiring Costs
As of January 2023, the Moldovan monthly minimum wage has increased to 4000 Moldovan Leu (MDL). At about USD 219, this is much lower than anywhere in North America or Europe.
The modest corporate tax rate and relatively low wage levels in Moldova are among the reasons hiring Moldovan employees can lower your company’s payroll expenditures during expansion. This can help improve your bottom line.
However, not needing permanent establishment status to hire in Moldova, a foreign employer would typically only be subject to taxes on payments such as service or commission fees to an EOR. For this reason, among many others, EOR is one of the most cost-effective ways of global hiring.
Work Culture
While the official language is Romanian, English is often used when doing business. Foreign employers should be aware that relationships and formalities in business meetings are highly valued.
Time Zone Overlap
Moldova observes Eastern European Time, enabling easy coordination and collaboration with adjacent European regions. Collaboration with North America is likely to take place in the mornings, which are afternoons in European time zones.
Public Holidays
There are 13 public holidays in Moldova:
- January 1: New Year's Day
- January 7: Orthodox Christmas Day
- January 8: Orthodox Christmas Holiday
- March 8: International Women's Day
- April 16: Orthodox Easter Sunday
- April 17: Orthodox Easter Monday
- April/May: Easter of Blajini (second Monday following Easter)
- May 1: Labor Day
- May 9: Victory Day
- June 1: Children’s Day
- August 27: Independence Day
- August 31: National Language Day
- December 25: Christmas Day (Catholic and Protestant)
Manage Employees Through a Global Employer of Record
Here are some of the key employment areas that a foreign employer must comply with when hiring employees in Moldova. These are governed by the Labor Code of the Republic of Moldova.
Employment Contracts
Probationary periods, which must be put into employment contracts, are allowable for up to six months. In the case of hiring unskilled workers or temporary employees, probation cannot surpass 30 days.
An employment relationship can be either indefinite or fixed-term and must be written into an employment contract. If an employment relationship continues after a definite contract has expired, an indefinite contract, by default, continues. Fixed-term contracts cannot exceed five years, and if there is less than an interval of three months between the terms, employment is regarded as one continuous term, as opposed to successive separate terms.
An EOR like Borderless is here to support you in navigating the requirements of employment, ensuring your compliance with evolving local regulations.
Paid Leaves
After six months of continuous employment, paid annual leave is 28 days per year and can be divided into parts, one of which must be taken for at least 14 calendar days with exceptions to carry forward. Sick day entitlement is 15 days, of which the first five are employer-paid. Paid maternity leave is 128 days (around 18 weeks). Either parent is also entitled to partially paid child leave until the child is three years old, and an additional year of unpaid leave can then be taken until they are four.
An EOR like Borderless is your resource for receiving the most up-to-date employment requirements. This allows you to provide statutory leaves aligned with the mandated levels of pay and required lengths of time off.
Overtime
A standard workweek is Monday to Friday, eight hours per day and 40 hours per week. Where a five-day workweek is unreasonable due to the nature of the work, a six-day workweek, with one day of rest, is accepted. Any work carried out on a Sunday or public holiday is compensated at a 100% premium (200% of monthly wage).
At an employer’s request, an employee can work up to 240 hours of overtime per year, with each week generally not exceeding 48 hours. The first two hours of overtime are paid a 50% premium (150% of the monthly wage). The subsequent hours in excess of two hours of overtime are paid a 100% premium (200% of the monthly wage).
Social Security Benefits
As of 2021, contributions to social security differ for employers by sector. They are:
- 29% for employers in private sectors, higher education, and medical institutions
- 24% for employers in agriculture (6% is paid by the state budget), and
- 32% for employers with employees working in special conditions.
Employees fully pay 9% to mandatory health insurance.
Rates of contribution to social security are calculated as a percentage of monthly earnings. Administered by the Casa Națională de Asigurări Sociale (CNAS), Moldova’s social security system, the contributions are allocated to benefits for old age, unemployment, illness, disability, and loss of maintenance.
An EOR like Borderless will provide the revised rates of contributions to social security that both you, the foreign employer, and your employees will need to make.
Other Employer Responsibilities
Termination of employment in Moldova under summary dismissal, which may include unsatisfactory job performance, strips an employee of severance pay and advance employer notice. Dismissal of a “head of the unit” a salaried employee who typically oversees a department or division, without just cause, requires a one-month notice in addition to a three-month salary severance. Dismissal due to a company’s financial hardship obligates employers to provide two months’ notice and employees to receive a one-month severance.
Regular employees may resign with 14 days’ notice but a head of the unit employee must provide one month’s notice. Employees dismissed without just cause are generally eligible for severance pay equal to one week’s wages for every year worked.
In the event of separation of employment, an EOR like Borderless can ensure that you diligently fulfill your employer responsibilities.
Choosing the Right EOR for Your Business
There are several key considerations for employers to make the most informed decisions in choosing the best EOR for their businesses.
- Geographic coverage: Make sure that your EOR of choice can legally operate in Moldova.
- Employment services: The suite of employment services offered by a competitive EOR should cover hiring, onboarding, payroll, benefits, and HR management.
- Reputation: When selecting an EOR, get a sense of its past work and experience. Make sure that it has a great track record and the local know-how to bring you value add.
- Cost: A high-value EOR’s pricing should be transparent and reasonable.
- Flexibility: An EOR should offer customized employment solutions to meet your specific needs and requirements.
Overall, foreign employers should choose an EOR that can provide cost-effective, reliable, and compliance-first employment solutions. This will enable you to navigate and expand into foreign waters with confidence, ease, and trust.
Borderless, Your Choice of Employer of Record
In over 170 countries, we are ready to help you hire, onboard, manage, and pay remote employees, wherever you are. Our experienced team of legal experts provides guidance on compliance and assists employers all over the world in navigating the cultural and professional environment in the country they choose to do business in. Book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
