PwC: New Labor Code To Generate Opportunities For Fast Growing Companies, Skilled Staff

04.20.2011 By Ioana Tudor

Romania’s new Labor Code will generate new opportunities for fast growing companies and for skilled and resourceful employees, although, on the short run, it will not lead to massive job creation, Peter de Ruiter, partner PwC Romania, said in a press release Wednesday.

Romania's new Labor Code will generate new opportunities for fast growing companies and for skilled and resourceful employees, although, on the short run, it will not lead to massive job creation, Peter de Ruiter, partner PwC Romania, said in a press release Wednesday.

The new labor laws, which were pushed through the Parliament through a vote of confidence, will take effect on April 30.

"What we are witnessing is a major step towards a more balanced distribution of power on the labor market, a law that protects both the employee's rights and the employer's interests.

Although we don't anticipate massive job creation in the short term, it is clear that on the long run the current law will generate new opportunities for fast growing companies and for skilled and resourceful employees", said de Ruiter.

According to the new Labor Code, professional performance, and not the employee's social situation, will be the main criteria considered in case of collective layoffs made due to the economic situation of a company.

Limited period work contracts will be concluded for 36 months instead of 24, which will stimulate companies to hire more employees project-based, without fear that the additional staff will become financially burdensome once the projects have been completed, said PwC.

According to the new Labor Code, in case a company is faced with reduced demand and harsh economic circumstances, it can unilaterally decide on reducing the work schedule from five to four days per week, thus reducing staff costs with up to 20%. The measure will help protect the existing jobs in Romania, reads the press release.

Companies will also benefit from an increase of the probation period for recently hired employees, of up to 90 days for executive positions and 120 days for management positions. Moreover, the period in which companies have to compensate the overtime of their employees grew from 30 to 60 days, which is an interval better adapted to current business cycles, according to PwC.