Labor regulations and employment standards

08.02.2013 ZF English

Relationships between employers and employees are governed by the Labor Code and by collective bargaining agreements. In addition, there are other labor regulations on specific issues such as work protection, the social security system, social dialogue, etc.

Employment documentation

Employment contracts

Generally, work in Romania is performed under individual employment contracts concluded for an indefinite term (with prior notice periods for both parties).

These contracts usually contain clauses setting out duties, work hours, overtime (if applicable), benefits, holiday entitlement etc. The contract also stipulates the base salary and any guaranteed bonuses or incentives. In addition to these clauses, the parties can negotiate and include other specific clauses in the contract, such as: professional training, mobility, confidentiality and non-competition.

Work can also be performed under employment contracts concluded for a fixed term, contracts with a temporary job placement agency (staff hiring), part time employment contracts and work-at-home contracts.  However, such contracts can be concluded only under certain specific conditions. 

Registration formalities

According to Government Ordinance 123/2010, starting from 1 January 2011, individual employment contracts no longer need to be registered with local labour inspectorates. Moreover, under Decision 500/2011, every employer is required to establish and send to the local Labour Inspectorate a General Employees’ Registry and to present it to the labour inspectors, if so required. This Registry is kept in electronic format at the employer’s headquarters.

Specific employees’ data (such as date of employment, position, type of employment contract, etc.) must be entered in the General Employees’ electronic Registry and sent to the local labour inspectorates not later than the day preceding the first working day for a new employee. Otherwise, non-fulfilment of this obligation leads to fines for the employer ranging between RON 5,000 and 10,000 (approximately EUR 1,130- 2,270).

Employers must also have a personal file for each employee, keep it in good condition at their headquarters and present it to labor inspectors, if required.

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Work Permits

Nationals of non-EU/EEA member states can be employed in Romania only based on work permits issued by the Romanian General Inspectorate for Immigration in accordance with Government Ordinance no. 56/2007 on work permits. However, there are certain categories of foreigners who, as expressly provided by the applicable law, may work for Romanian individuals and/or legal entities without obtaining a work permit.

A work permit is a document under which a national of a non-EU/EEA member state is entitled to work in Romania for a specific position, for one employer only, for a twelve-month period and can generally be renewed. Moving from one company to another involves obtaining a new work permit even if the existing one has validity remaining.

There are different types of work permits issued to non-Romanian nationals, depending on their employment structure while in Romania.  Specifically, work permits for permanent employees are issued for indefinite or definite periods of time to non-Romanian nationals who intend to conclude employment contracts with only one Romanian employer. Highly-skilled qualified foreign workers will be granted specific work permits for highly-skilled workers, which grants the right to be employed in Romania in a highly-skilled position. Work permits are also issued for seconded employees who are non-Romanian nationals and are nationals of non-EU/EEA member states, employed by non-Romanian employers and seconded to work in Romania.  This type of work permit is issued for a maximum of one year at a minimum time interval of 5 years based on the secondment agreement between the foreign and the Romanian employer.

If a non-Romanian individual who is a national of non-EU/EEA member states wishes to continue to work in Romania after the initial twelve-month period of secondment, then he or she must obtain a work permit for permanent or highly-skilled employees and conclude a local employment contract with a Romanian employer.

Nationals of EU/EEA member states are not required to obtain Romanian work permits to carry out dependent activities in Romania. 

Also, under current Romanian immigration legislation, individuals who are nationals of non-EU/EEA member states who are employed by EU/EEA-based employers and are assigned to work in Romania are no longer required to obtain work permits, provided that they are issued residence permits in the EU/EEA member state from which they have been assigned to Romania.

The documents required to obtain a work permit include a formal application, original degree certificates/ diplomas, medical certificate, clean police record, travel documents with a long-stay visa for employment or other purposes and numerous other formal documents. Once the filing formalities have been completed, an application for a work permit is normally approved within 30 days as of its registration.

Employment Standards

Employees' rights, i.e. working hours, minimum wages, statutory holidays, paid holidays and paid maternity leave are governed by the applicable Romanian legislation.

The normal working program is 8 hours/day and 40 hours/week. There are 12 legal holidays, although additional days off can be legally granted on a yearly basis (e.g. the Monday after Christmas if the statutory holiday falls on a weekend day). Legal holidays include 1, 2 January, 1 May, Easter Monday (Orthodox), the Monday after Pentecost (normally 7 weeks after Orthodox Easter), 15 August (Assumption Day), 30 November (Saint Andrew), 1 December (National Day), 25 and 26 December (Christmas).

Starting 1 July 2013, the minimum gross base salary is RON 800 per month (approximately EUR 182). This amount is consistent with a full time working program of approximately 170 hours per month, representing RON 4.71/hour. The establishment by the employer of a monthly base salary for its employees under the level provided by Government Decision 23/2013 leads to fines of between RON 1,000 and 2,000 (approximately EUR 227-454)..

Full-time employees over the age of 18 must be granted a minimum of 20 days paid holiday per year.

Occupational health and safety

The regulations on occupational health and safety were issued in 2006 (i.e. Law 319/2006 and the corresponding application Norms), clarifying employers’ obligations to assess the risks posed to workers’ occupational health and safety and to develop a prevention and protection plan.

Under the Labor Code, an employer is legally required to periodically ensure the training of employees in work protection, health and safety. This training is mandatory for new employees, employees changing their place of work/function or for those who begin their activity after a work interruption of longer than 6 months. Under the law, the establishment of an Occupational Health and Safety Committee is mandatory for employers which have more than 50 employees.

For employers with less than 50 employees, the law states that the duties specific to the Occupational Health and Safety Committee should be fulfilled by a person designated for this purpose by the employer.

A number of regulations applicable to specific fields of activity have come into effect. These regulations ensure the implementation of relevant European directives and cover various areas of activities and risks (i.e. extracting industry, fishing, risks posed by chemical agents, risks generated by electromagnetic fields, etc.)

Termination of individual employment contracts

According to the Romanian Labour Code, employment contracts can be terminated only in cases specifically provided by law. The provisions of the Labour Code governing employment contracts restrict the contractual freedom of the parties in certain cases, e.g. termination of agreement by the employer.

If an individual employment contract is terminated by the employer (for reasons other than the employee being deemed physically or mentally unfit or professionally unsuitable), employers are required to give the employee a minimum of 20-working days prior notice. In some circumstances set out under an individual employment contract and/or the applicable collective bargaining agreement, employers may also be required to give the employee additional severance payments. Also, in accordance with the Labor Code, employees dismissed for reasons not pertaining to their individual performance are entitled to benefit from active measures aimed at reducing unemployment

Protective measures for employees subject to collective layoffs

The Labor Code as well as the applicable collective bargaining agreements and secondary legislation provide some specific measures aimed at protecting employees whose individual employment contracts are terminated due to collective layoffs.

In addition, Law 67/2006, in effect as from 1 January 2007, ensures employees’ protection where the undertaking, or a unit or part of it is transferred to another employer.

According to Law 67/2006, a transfer does not represent in itself a valid reason for individual or collective dismissals by either the transferor or the transferee. Also, the rights and obligations arising from the employment contract or employment relationship existing at the date of transfer are transferred to the transferee.

Collective Bargaining Agreements and Trade Unions

Companies with more than 21 employees must negotiate collective bargaining agreements with their employees on an annual basis although they are not required to actually conclude collective bargaining agreements. Collective bargaining agreements can also be concluded at different levels (e.g. unit level, group of units, business sector, etc.).

The criterion for affiliation to a business sector is the entity’s main object of activity, as registered with the Trade Registry,

Usually, collective bargaining agreements set out the mutual obligations and rights in connection with the following issues:

• Salaries.
• Working conditions.
• Social security.
• Dispute settlement mechanisms.
• Protection of trade union leaders.
• Miscellaneous rights and obligations of employers and employees.

Collective bargaining agreements also focus on other benefits, such as ticket/canteen meals and employees’ events.

A collective bargaining agreement is concluded for a determined period of minimum 12 months and cannot exceed 24 months. Upon expiry of the agreement, the parties may decide to extend its term only once within at most 12 months, or may work out an entirely different arrangement. Collective agreements and addendums to these contracts are always concluded in written form and are registered with the local labor authorities. A collective bargaining agreement cannot be unilaterally terminated.

Trade unions in Romania can be organized by reference to an industry or an employer, based on the labor union concept, or by reference to jobs classification, organized as craft unions.

Labor disputes

Law 62/2011 on Social Dialogue sets out the procedure to be followed in labor disputes.  According to this law, labour disputes are now divided into collective labor conflicts and individual labour conflicts.

The procedure for solving collective labor conflicts involves three steps as follows:

• When a conflict of interest has been openly declared, conciliation procedures are initiated by a representative of the Ministry of Labor, Family and Social Protection or of the local labour inspectorate.
• If such a conciliation attempt fails, mediation can be sought, subject to the parties' mutual agreement.
• Arbitration can be resorted to at any time during a collective labour conflict, by mutual agreement of the parties.

The first step is compulsory, while the other two are left to the parties' choice. Nevertheless, mediation and arbitration of a collective labor conflict are mandatory if the parties, by mutual agreement, have decided on these issues prior to initiating a strike or during a strike.

A strike (defined as a collective and voluntary work stoppage within a unit), can be declared only if the mandatory procedures provided by law for the settlement of a collective labor conflict have been exhausted, after the initiation of a warning strike and if the starting date of the strike has been communicated to the employer at least 2 working days in advance. According to the law, there are 3 types of strike: warning strike, full strike and solidarity strike.

Individual labor conflicts are settled by the courts of competent jurisdiction.

Employees' demands are assessed under a special emergency procedure (the hearing term cannot exceed 10 days). 

Starting 1 February 2013, the court’s decision is subject only to appeal. Furthermore, the New Civil Procedure Code that entered into force on 15 February 2013, requires the parties’ (individuals or legal entities) to attend a preliminary mediation briefing meeting prior to initiating any action in court. The purpose of this meeting is to inform the parties about their rights and obligations, the advantages of mediation and the legal effects of the mediation agreement.

Social contributions

The components of social security costs, in accordance with Romanian legislation, are outlined below.

According to the Law on the Social Security Budget, social security contribution rates are as follows:

• 31.3% (20.8% paid by the employer and 10.5% paid by the employee) for normal work conditions.
• 36.3% (25.8% paid by the employer and 10.5% paid by the employee) for difficult work conditions.
• 41.3% (30.8% paid by the employer and 10.5% paid by the employee) for exceptionally difficult work conditions.

Employees under 35 years of age must register with a mandatory private pension fund. In 2013, a 4% contribution corresponding to a privately administered pension fund is included in the employees’ social security contribution of 10.5%.

Social Health Insurance System

The current contribution to the health insurance fund is due by both employers and employees. The health insurance contribution is currently 5.2% for employers, whereas the employees’ health insurance contribution is 5.5%.

Unemployment Benefit Insurance

The Romanian government administers a national unemployment insurance system which provides short-term benefits for employees made redundant. Employers contribute 0.5% of the total monthly gross salaries fund and employees contribute 0.5% of their monthly gross salary. Employers are required to collect employees’ contributions and remit them to the State fund on behalf of their employees.

Work Accidents and Occupational Diseases Insurance

Law no. 346/2002 governs a system aimed at covering the risks of loss/reduction of work capacity or death related to work accidents and occupational diseases.

The insurance contributions due by employers or individuals (optional insurance) are set in relation to tariffs and risk categories so as to cover (i) Cost of services rendered; (ii) Expenses incurred for prevention of work accidents and illness; (iii) Administrative expenses.

The contribution rates due by employers range between 0.15% and 0.85% of the gross income, depending on risk category.

Medical Leave and Allowance

The current contribution rate for medical leave and allowances (due by employers) is 0.85% of the salary fund, capped at 12 times the minimum gross salary multiplied by the number of insured employees during the month in question (currently, the minimum gross salary is RON 750). 

Salary Guarantee Fund

To ensure employees’ protection in the event of an employer’s insolvency, Law no. 200/2006 provides for the creation of a fund to be used to guarantee the payment of salary debts. The contribution rate due by employers is 0.25% of the monthly gross income.

 

Source: KPMG - Investment in Romania report (May 2013)