Romania: Labour Law Highlights in 2017

16.11.2017

Increase of the minimum gross base salary at national level

As of 1 January 2018, the minimum gross base salary at national level for the full monthly average working time of 166.666 hours is set at Lei 1,900 (approx. EUR 410), which is the equivalent of 11.40 Lei/hour. This is an increase of Lei 450 over the minimum gross basic salary of Lei 1,450 (approx. EUR 313), which is applicable until the end of the year.

According to the Labour Code, employers who pay a minimum gross base salary that is less than the minimum amount at national level are sanctioned with fines ranging from Lei 300 (approx. €65) to Lei 2,000 (approx. EUR 432). The labour inspectors issue the sanctions and apply the fines.

Conclusions: Employers have to increase present salaries that are lower than Lei 1,900 per month to this amount. For this purpose, an addendum to each individual employment agreement stipulating the salary increase to Lei 1,900 per month is to be concluded. Employers have to register the addendum with the Employee Register before the salary adjustment enters into force, meaning before 1 January 2018.

Government decides to urgently derogate from the Social Dialogue Law

On 16 November 2017, the Government issued Emergency Ordinance no. 82/2017 (hereinafter “the Ordinance”) which is applicable from the same date. The Ordinance introduces the obligation to initiate collective bargaining in order to implement the provisions of Emergency Ordinance no. 79/2017, according to which social contributions are borne entirely by employees starting in January 2018.

According to the provisions of the Ordinance, regardless of the number of their employees, all employers have the obligation to initiate collective bargaining with the union or the employees' representatives on the measures to be taken to implement Emergency Ordinance no. 79/2017

Also, if a collective labour agreement has been concluded at the company level, employers have the obligation to initiate collective bargaining to agree on an addendum to the existing collective labour agreement that implements Emergency Ordinance no. 79/2017.

The obligation to initiate collective bargaining for the implementation of Emergency Ordinance no. 79/2017 must be fulfilled between 20 November and 20 December 2017.

The Ordinance also states that the other collective bargaining party consists of the representatives of the employees if there is no representative union affiliated with a representative federation in the sector of activity of the employer.

At the same time, if there is no union at the local unit, the representatives of the employees can participate in the negotiations with a representative of a representative federation in the sector of activity of the employer or of a representative trade union confederation at national level, at the initiative of the employees' representatives.

Conclusions: As for applicable sanctions, if an employer does not initiate collective bargaining, negotiations may start at the written request of a representative trade union organization or the employees' representatives within a maximum of ten calendar days from the communication of the request. An employer's refusal to start the collective bargain procedure is sanctioned with a fine ranging from 5,000 lei (approx. EUR 1,100) to 10,000 lei (approx. EUR 2,150), which is issued by the labour inspectors.

Government decides to urgently modify the Labour Code

On 4 August 2017, the Government issued the Emergency Ordinance no. 53/2017 (hereinafter “the Ordinance”) which is applicable from 7 August 2017. The Ordinance aggravates the conditions and the consequences of undeclared work.

According to the amended Labour Code, the following additional situations are considered to be undeclared work: allowing the employee to work during the period when the individual employment agreement is suspended (e.g. the employee is on medical leave) and allowing the part-time employee to work outside the established working hours.

Moreover, the employer has the obligation to keep at the workplace a copy of the individual employment agreement, as well as the records of the working-time provided by each employee on a daily basis, by highlighting the starting and ending hours of the working programme.

Another change stipulated by the Ordinance resides in the obligation to conclude the addendum to the employment agreement amending the essential conditions of work before the entry in effect of the modifications. Furthermore, the Government aggravated the sanctions provided by the law in case of undeclared work, but at the same time, it permits the contravener to pay half of the applied fine within 48 hours.

Maybe one of the most important new provisions adopted by the Government refers to the possibility of the labour inspector to apply, as a complementary sanction, the ceasing of the activity of the employer at the verified workplace, in case of deficiencies. The activity may be resumed only after the employer pays the fine and remedies the deficiencies that led to the ceasing of the activity (e.g. concluding the employment agreement, the registration of the employment agreement with the General Registry of the Employees etc.).

Conclusions: Due to the high fines we recommend adapting the internal procedures in order to meet the new legal requirements.

Termination of employment ipso jure following a criminal conviction

The Romanian Supreme Court has ruled on the validity of terminating employment by operation of law if an employee is convicted under criminal law.

The Supreme Court ruled on 6 March 2017 in a case brought by Brasov Court of Appeal that the termination of employment based on the provisions of Art. 56(1) f) Labour Code can only be applied if the employee is actually serving a custodial sentence and thus cannot be physically present at work.

Hence the Supreme Court has put an end to the longstanding debate on whether an employment contract is deemed to be terminated by operation of law in the case of a criminal conviction, regardless of the type of criminal conviction or whether the employment contract is considered terminated by operation of law only if the employee serves a custodial sentence and thus cannot be physically present at work.

The Supreme Court’s decision is effective with regard to Brasov Court of Appeal as of the date of the ruling, and for all courts of law as of its publication in the Official Gazette.

Conclusions: If the employee receives a suspended sentence and does not have to stay away from a certain place or person related to the workplace, the employee’s employment contract is not considered terminated ipso jure.