Approaching a professional relationship with a natural person is a widely debated topic, and rightfully so. We sometimes need some support and intake from a specialist or professional; this support or intake can be temporary, sporadic, on demand or, on the contrary, with continuity, constant.

Then the question arises – should a service agreement or an employment contract be concluded?

The problem arises naturally in the context in which the best and most timely decisions are sought both by businesses (SME or large) and by individuals per se; the best quality/price ratio is sought, as little bureaucracy and payment obligations to public authorities as possible, and the persons (i.e. the professional or expert) seeks to have as much flexibility and professional independence as possible and, in general, pursues the best ways to improve the quality of professional life.

We will see in the following that we can have a business collaboration with a natural person via a PFA (authorised natural person – in Romanian, Persoană Fizică Autorizată) by concluding a service agreement, or we can conclude a CIM (employment agreement – in Romanian, Contract Individual de Muncă). In short and oversimplifying, with a PFA we can conclude a service agreement and with a natural person an employment agreement, and both have benefits and associated risks, and each person interested in the subject must determine for themselves which it is the best option.


We will approach the list of CIM (employment agreement) risks and benefits from two perspectives, that of the employee and that of the employer.

a. From the employee’s perspective

The individual employment contract is regulated by the Labor Code and is defined as “the contract under which a natural person, called an employee, undertakes to perform work for and under the authority of an employer, natural or legal person, in exchange for a remuneration called a salary”.

The main benefits for the employee in the employment relationship based on the CIM are:

  • Stability over time – the employee is well protected from the various aspects or problems that could arise in an employment relationship (on the payroll side, work accidents, days off etc.). The employment relationship is strictly regulated by legislation which, after many changes and improvements over time, has led to a balance between the two co-contractors, so that the employee receives the protection they need, considering that the employment relationship is one fundamentally of subordination of the employee to the employer;
  • Constant and conditional salary – The employment contract is conditioned by the threshold of the minimum wage in the economy;
  • Tax coverage – in Romania, the gross salary includes the related taxes (and in practice the employer takes care of this aspect);
  • Annual leave entitlement – every employee is entitled to a minimum of 20 working days of paid vacation per year;
  • Occupational Medicine – the employee will periodically undergo occupational medicine services, the costs being covered by the employer;
  • Leave days for special occasions – the Romanian Labor Code refers to art. 152 that in case of special family events, employees have the right to paid days off;
  • Paid medical leave;
  • Access to the pension fund.

Of course, in addition to these, there are many benefits that can be granted to the employee, provided by the Labour Code or other special laws: overtime pay, uniform or work equipment, weekend bonus, night bonus etc.

Recently, more and more employers offer additional benefits, which they are not obliged to: meal vouchers, private health insurance, vacation or holiday premiums, etc.

Although the benefits are many, there may also be some obligations and perhaps some less happy parts for employees. Thus, unlike the PFA collaboration, in the case of CIM it is noted:

  • An increased level of control exercised by the employer; the employment contract establishes a work schedule and regime (telework regime or only physically);
  • Monitoring and management of the employee’s work through various methods established by the employment contract or by the company’s internal regulations, for example periodic evaluations of the employee;
  • The difficulty of having and managing more individual employment contracts;
  • The obligation to have a loyal and faithful conduct towards the employer and its business;
  • The obligation to respect and have a work discipline imposed by an Internal Order Regulation, the job description, the employment contract per se, but also the verbal/written provisions given by the employer.

b. From the employer’s perspective

The benefits for the employer who maintains employment relations based on a CIM are intertwined to a certain level with the disadvantages of the employee:

  • The employer’s control over the work schedule and regime;
  • Monitoring of the employee’s work;
  • Expenses with extra benefits offered to employees are, in most cases, deductible for the employer.

At the level of arguments against, from the employer’s perspective, we discuss:

  • Termination of the employment relationship with employees, which is slightly complex, in the sense that there is no concept of unilateral denunciation by the employer and the termination decision must not be discretionary and unfounded. We have discussed in previous articles about dismissal for reasons related to the employee – in two parts, the first about individual dismissal and the second about disciplinary sanctions procedure – about employee layoff and collective redundancy, which remain current;
  • The employer must draw up and apply and respect clear and specific procedures in all the steps it undertakes in the relationship with the employee (periodic evaluations, annual medical check-up, prevention of work accidents etc.);
  • The employer must ensure the working conditions and infrastructure;
  • Payment of salaries for the annual leave and for medical leave (up to five days) is the responsibility of the employer;
  • Monthly costs, as a rule, are higher than in the case of PFA collaboration – it is already well known that salary taxes are very high and, for example, to ensure an employee a net salary of 5000 Lei (approx. 1000 Euro), the taxes that will be transferred to the state budget are 3500 Lei (approx. 700 Euro); so in this example, the gross salary would be 8500 Lei (1700 Euro).


The authorised person or professional (PFA) represents the economic enterprise, without legal personality, organised by a natural person who uses, mainly, their labour force.

If we have seen what the pro and con arguments are at the CIM level, it is important to see which are those related to the PFA collaboration or service agreement.

Again, I will approach the situation from both perspectives, that of the enterprise seeking such a collaboration as well as that of the authorised natural person (the PFA).

a. From the perspective of the PFA

PFA collaboration naturally offers a number of benefits for the authorised natural person, among which we mention:

  • Flexibility regarding the work schedule;
  • High degree of independence from the perspective of monitoring and work management by the counterparty;
  • The costs of PFA collaboration are usually lower than in the case of employment – for various reasons – either they only provide certain services (periodic or not, maybe sporadic) and then only those services are paid (in the case of a CIM, if there are periods weaker or of a slower pace, the wage according to the CIM must be paid);
  • Less bureaucracy – as a rule, a simple contract of collaboration/services etc. will suffice, without further visits to the occupational medicine doctor, without trips to the ITM etc.;
  • Freedom for the PFA to carry out the same activity for several clients (business enterprises).

In addition, according to Law no. 125/2022 for completing Government Emergency Ordinance no. 44/2008, the period during which an authorised natural person carries out economic activities constitutes seniority.

At the level of negative aspects, authorised natural persons are exposed to:

  • Collaborations based on contracts limited in time and without the privilege of employee status protection;
  • The use of one’s own patrimony for the activity it carries out;
  • Assuming the risks inherent in the activity falling under the responsibility of the PFA;
  • Termination of the collaborative relationship which will be subject to the terms and conditions of the contract;
  • For the establishment of a PFA, it is mandatory to submit documents attesting to training and professional experience;
  • The authorized natural person will not benefit from any advantage provided as mandatory for employees: annual leave, paid days off, increments etc.;
  • The amounts related to income tax and social contributions are determined and paid by the PFA, by completing and submitting the Annual Declaration.

b. From the perspective of the PFA collaborator

The positive sides of concluding a collaboration contract with a PFA are:

  • Possibility of rights and obligations and limitation of contractual liability;
  • Negotiating the price of services and, usually, they are lower than in the case of CIM;
  • If it is provided in the contract, the possibility of unilateral termination of the contract;
  • The possibility of negotiating the bearing of the expenses of the provision of services by PFA etc.

These are just some of the arguments in favour of concluding a collaboration contract with a PFA and, as can be seen, it is in a very close connection with the fact that the parties have the freedom to negotiate and establish by themselves the contractual clauses, rights and obligations that they belong to each, while in the case of the CIM we have rights and obligations derived from the CIM, which is supplemented by both the Labour Code and many other mandatory rules for the employer, they being non-negotiable.

On the other hand, the arguments against concluding a collaboration with a PFA are related to the fact that you cannot control the activity and you cannot impose to the PFA a prioritisation of your project over someone else’s project (in any case, it is advisable that the contract also have a clause regarding the term of execution of the services), you cannot actually control the quality of the services (you can only make sure through the contract that there are some clearly established quality standards) etc.

Of course, the biggest risk regarding the conclusion of a collaboration contract with a PFA is that, following a control from the Romanian Fiscal Authority (ANAF), the activity of the PFA (which the parties have established as collaborative and independent), the body of control decides to requalify it as a dependent activity (dependent to the business enterprise). We will discuss the criteria for establishing this activity and what it means per se in a future article.


Both for the business enterprise and for the PFA, a thorough analysis of the pros and cons in case of opting for an employment relationship based on the CIM or a PFA service agreement, is extremely important.

Both the business enterprise and the PFA are not exempt from making a documented and justified decision regarding whether to opt for an employment relation or a collaboration relation (i.e. service agreement). Of course, all decisions of this kind shall be made and related to the specifics of the activity, the frequency of interactions with the professional with whom we want a collaboration, etc.


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