How Local Employment Laws Can Affect Franchise Operations in Eastern Europe

May 12, 2025

As international franchise brands continue expanding into Eastern Europe, they’re encountering a significant operational factor that can't be overlooked: local labor laws. From minimum wage shifts and employment contracts to hiring restrictions and social contribution obligations, navigating the workforce landscape is becoming a key component of successful franchise management in countries like Poland, Hungary, Romania, and the Baltics.

For both domestic and foreign franchisors, understanding the nuances of these regulations is critical—not just for legal compliance, but also for ensuring cost-effective staffing, smooth day-to-day operations, and a positive brand reputation.

Fragmented Landscape, Shared Pressures

Although many Eastern European countries are EU members, labor laws are largely governed on the national level. This means each country comes with its own set of employment standards, reporting obligations, and labor inspection protocols.

For example:

Poland has implemented stricter overtime tracking rules and now requires electronic timekeeping for many types of employees.
Romania increased its minimum gross monthly wage to 3,300 RON in 2024, with plans for further adjustments tied to inflation and EU wage convergence goals.
Lithuania and Latvia require specific documentation for part-time or student workers, which are popular among franchisees running fast food and retail outlets.

These regional differences can cause headaches for franchisors operating across borders—especially if they attempt to implement a one-size-fits-all staffing model. Misclassification of employees, underpayment, or non-compliance with national labor codes can result in penalties, fines, or even operational shutdowns.

Minimum Wage Increases: A Growing Cost Factor

Many Eastern European countries have been gradually increasing minimum wages to align with EU-wide income improvement goals. While this supports economic development, it also directly impacts franchise operations—particularly in labor-intensive sectors like food service, hospitality, and cleaning services.

Take Hungary, for example. The minimum wage increased by over 15% between 2023 and 2025. This change has led franchises to re-evaluate their staffing models, invest more in employee training and retention (to reduce costly turnover), and even automate certain roles.

In response, franchise managers in cities like Debrecen and Szeged are shifting toward flexible staffing, such as seasonal contracts or part-time arrangements, while ensuring all legal requirements—like mandatory health insurance contributions—are met.

Hiring and Termination Practices: What Franchisors Need to Know

Hiring practices in Eastern Europe are typically governed by strict labor codes that dictate everything from job descriptions to trial periods. In many countries, a formal written employment contract is legally required—verbal agreements or informal arrangements can lead to disputes and liability issues.

Probationary periods are commonly used but are capped (e.g., up to three months in Bulgaria).
Termination often involves detailed documentation, a valid reason, and advance notice—especially for permanent employees.
In Slovakia, employers must also notify labor offices when hiring non-EU workers, adding another layer of complexity for franchises seeking foreign labor.

Failure to comply with these rules can result in complaints to labor inspectorates, which are particularly active in inspecting foreign-owned businesses and franchises. As a result, having localized HR policies and legal support is essential.

Social Contributions and Payroll Compliance

Labor-related taxes and social security contributions are another area of concern for franchise operators. These are typically shared between employer and employee but vary significantly by country:

In Czechia, employers must pay around 34% of the employee’s gross wage in social contributions.
In Romania, the employer contribution rate is lower, but reporting requirements are more rigorous and must be done monthly via the REVISAL platform.
Bulgaria requires regular updates to labor contracts filed with the National Revenue Agency, especially for contract changes or part-time status.

For franchises operating multiple locations across several countries, centralized payroll systems often fail to accommodate these local nuances. That's why many international franchisors rely on local HR software or outsourced payroll providers who understand each country's compliance environment.

Youth and Student Employment: A Popular but Regulated Option

Hiring students and young workers is common across Eastern Europe—especially for quick-service restaurants and retail chains. But each country has its own regulations:

Poland allows 15–18-year-olds to work, but only under strict conditions and with limited hours during the school year.
Estonia permits light work for minors, but requires parental and school approval.
In Romania, student interns must be registered, and unpaid internships are subject to oversight.

While youth labor offers flexibility and cost advantages, it also introduces legal sensitivities. Franchises must ensure contracts are age-appropriate, hours comply with child labor laws, and any occupational safety risks are mitigated.

Best Practices for Franchisors Expanding into the Region

To avoid the many pitfalls associated with employment law across Eastern Europe, franchisors should adopt the following strategies:

Invest in localized legal counsel or a regional HR consultant to interpret country-specific labor codes.
Provide training for franchisees on employment contracts, minimum wage laws, and termination procedures.
Use digital tools that are compliant with local timekeeping, payroll, and reporting standards.
Regularly audit staffing practices at each location to ensure ongoing compliance and prepare for inspections.

Final Thoughts

The bottom line? Labor law in Eastern Europe isn’t overly restrictive—but it is detail-oriented, documentation-heavy, and varies greatly by country. Franchisors who understand these rules, invest in compliance, and support their local operators with the right tools and training will not only avoid legal risk—they’ll also build stronger, more sustainable operations in one of Europe’s most dynamic franchise markets.