Employment 2019 Second Edition

Last Updated August 06, 2019

Romania

Law and Practice

Authors



DLA Piper Dinu SCA has supported clients since its office was set up in Bucharest in 2008, currently with a strong team of over 50 internationally trained Romanian lawyers and tax consultants, covering all practice areas. Uniquely positioned in the Romanian legal market – probably the only international law firm with a standalone Romanian employment practice, exclusively handling employment work and covering the full spectrum of employment law on a day-to day basis – the employment team includes a core senior team of four highly skilled and employment-exclusive professionals, who have worked together for more than ten years in great cohesion, and two more junior colleagues. The firm takes on any employment assignment, holding hands with its clients when dealing with employment contracts, localisation and harmonisation of global organisational rules, employee mobility, flexible work and alternative employment arrangements, employment equality and high-end employment transactional matters, across virtually all sectors, with a key focus on technology, life sciences, aviation, energy and media.

Romanian employment law strictly regulates the terms and conditions to be agreed upon in the individual employment agreement (IEA) and to be applied to the employment relationship, these, as a rule, being generally applicable to all employees.

The only distinction made by the Romanian Labour Code between employees is based on whether they hold a management or a non-management position. Otherwise, concepts like blue-collar and white-collar employees are not defined in Romania.

Also, based on the employees' roles, certain distinctions in the employment terms are expressly allowed by law, including in terms of (i) minimum monthly gross base salary that should be observed by the employer and which varies depending on (a) the sector of activity – for example, for year 2019 only, in the construction sector, this is RON3,000 (approximately EUR640), (b) level of education required for the job position, and (c) the employee's length of service in a position requiring superior studies; (ii) notice period in the event of resignation, which is a maximum of (a) 20 working days in the case of non-management positions and (b) 45 working days in the case of management positions; or (iii) trial period, which (in the case of indefinite IEAs) is a maximum of (a) 90 calendar days in the case of non-management positions and (b) 120 calendar days in the case of management positions.

In Romania, work performed for and under the subordination of a legal entity must be carried out under an IEA, using any other types of contractual arrangements (such as using freelancers/independent contractors) being allowed in specific cases only.

By law, as a validity requirement, the IEA must be executed in writing and in the Romanian language; a bilingual version including Romanian (as prevailing) being also acceptable. In addition, the IEA must (i) include the minimum content imposed by law and (ii) be registered with the general registry of employees (REVISAL) (an electronic registry that must be set up by each employer and sent to labour authorities) at least one working day prior to the employee's first day of work.

In terms of statutory minimum content of the IEA, this is expressly regulated and must include the duration of the IEA, the working time duration (full-time/part-time), the employee's place of work, the duration of the trial period (if applicable), the amount of the monthly gross base salary (in RON currency), the duration of the notice period both in the case of resignation and dismissal, the duration of the annual leave and the individual evaluation criteria, etc.

Not observing the legal requirements for executing an IEA may trigger the employer's liability (including administrative and patrimonial). In addition, other implications should be considered (for example, from a tax or immigration perspective).

In terms of pre-IEA formalities, the employer is obliged to inform the candidate on specific and essential elements of the future employment. However, such information obligation is deemed fulfilled upon the employee signing the IEA (which would explicitly reference such elements).

As regards IEA duration, the Romanian employment system imposes that the IEA be executed for an indefinite period of time. Only in exceptional and strict cases (exhaustively listed by the Romanian Labour Code) may fixed-term IEAs be concluded; for example:

  • for replacement of an employee whose IEA has been suspended, unless this is for the employee joining a strike;
  • due to a temporary increase and/or modification of the employer's activities;
  • due to performance of a seasonal activity; and
  • for the duration of a project.

In the case of fixed-term IEAs, specific employment rights and obligations are set out for the employer (including with respect to the employment terms to be agreed in the IEA; for example, only a shorter duration of the trial period – depending on the term of the IEA and the employee's job position – may be agreed upon by the employer and the employee). As a rule, the maximum duration for which a fixed-term IEA may be executed is 36 months, the possibility of (i) executing successive fixed-term IEAs (as legally defined) and (ii) extending an existing fixed-term IEA being also set forth by the law.

It is also key to note that employees employed under a fixed-term IEA benefit from the same employment terms and working conditions as employees performing the same work, in the same unit and taking into account professional qualifications, but hired based on permanent IEAs, unless a different treatment is based on objective reasons.

For full-time employees, the standard duration of the working time is eight hours per day and 40 hours per week; anything below these thresholds qualifying as part-time employment. In the case of employees younger than 18 years of age, the standard duration of working time is six hours/day and 30 hours/week.

As a rule, the 40 hours per week are equally divided into eight hours per day, Monday to Friday, followed by a weekly rest of 48 consecutive hours.

For part-time employees, standard working duration and relevant allocation must be agreed between the employer and the employee, and included in the IEA.

Employees are entitled to a daily rest period of no less than 12 consecutive hours between two working days, except in the case of shift work, when the daily rest must be at least eight hours between shifts. Any 12-hour daily working time period must be followed by a 24-hour rest period.

Flexible working schedules are also allowed, in particular (i) an unequal working schedule and (ii) an individualised working schedule. An unequal working schedule consists of an unequal distribution of the weekly working duration and may be implemented provided that this was agreed by the employee in his or her IEA, whereas an individualised working schedule may be established by the employer only with the consent or upon the request of the relevant employee. In such case, the daily duration of the working time is divided as follows: a fixed period during which all employees must be at their workplaces, alongside a variable, mobile period in which the employee in question decides his arrival and departure times.

As a rule, the maximum duration of working time cannot exceed 48 hours per week, including overtime; thus, as a rule, up to a maximum of eight hours of overtime per week is allowed. Exceptionally, the duration of the working time, including overtime, may be prolonged over 48 hours per week, subject to the average working hours, calculated on a four-month reference period, not exceeding 48 hours per week on average. The reference period may be extended up to six or even twelve months in specific cases (for example, for specific activities based on a company-level collective bargaining agreement).

Work performed outside the normal working time of 40 hours per week or eight hours per day is considered overtime. Overtime may be performed upon the request of the employer and, as a rule, only with the consent of the employee, save for force majeure cases or urgent works aimed at preventing accidents or eliminating the consequences of accidents. Part-time employees and employees under the age of 18 are not allowed to perform overtime work, except in the specific circumstances mentioned above.

Irrespective of the employee's position, overtime must always be compensated with paid time off within the next 60 calendar days after the overtime has been performed or, if this is not possible, in the following month, with payment of an additional bonus on top of the monthly salary due for the respective month; the statutory minimum for this being 75% of the hourly base salary for each overtime hour. If overtime is performed during weekly rest periods and/or days of legal/public holiday, different (higher) compensation must be granted, to also cover the fact that the employee has been deprived of their rest period.

Working time regulations are generally applicable to all employees (irrespective of holding a management or non-management role). Infringement of working time regulations exposes the company to administrative fines, but also to claims for the employees' side (for example, for not properly being compensated or for damages they incurred based on such employer's breach).

Part-time IEAs are expressly regulated and permitted in Romania in the case where the employee's number of working hours per week or as a monthly average is lower than the working hours corresponding to a full-time IEA – as anticipated. Currently, there is no minimum number of working hours that should be performed by the employee (as used to be the case, when Romanian employment law expressly provided that part-time IEAs must be executed for a minimum of two working hours per day).

In the case of part-time IEAs, in addition to the minimum legal content of a regular IEA, by law these must also contain certain specific provisions (for example, distribution of the working hours, overtime work prohibition, etc), otherwise the IEA is deemed as executed for a full-time position. No other limitations in terms of using part-time employees are set forth by Romanian employment law.

Part-time employees are entitled to the same rights as full-time employees, according to the law and the applicable collective bargaining agreement. Nevertheless, in terms of salary rights, these are calculated on a pro rata basis, based on (i) the working time performed by the part-time employee and (ii) the corresponding salary rights for an (otherwise comparable) full-time employee.

The Romanian employment system is based on minimum gross base monthly salary approved at national level by means of a government decision, which, based on recent years' experience, changes quite frequently (even on a yearly basis). Setting up a higher gross monthly base salary above the statutory minimum is at the discretion of the employer or, as the case may be, parties' negotiations (via the IEA or collective bargaining agreement).

As of 1 January 2019, the minimum monthly gross base salary at national level (exclusive of any bonus or allowances) is set at RON2,080 for full-time employees. However, as anticipated, certain exemptions apply, as follows:

  • the minimum monthly gross base salary at national level is RON2,350 in the case of employees (i) occupying positions requiring higher-level studies and (ii) having at least one year's length of service within the respective position; and
  • the minimum monthly gross base salary at national level is RON3,000 for the construction sector and for the year 2019, only.

Granting bonuses to the employees (on top of their monthly gross base salary as agreed in the IEA) is provided as a statutory requirement for employers only as compensation in certain specific cases provided (for example, overtime, work on public holiday, during weekends, in consideration of a mobility undertaking). In addition, the employer may decide to offer non-statutory bonuses (in cash or in kind), including with the aim to motivate and incentivise its employees (for example, performance, seniority bonus, share option plans). The 13-month salary is not provided by law; however, this may be granted either at the absolute discretion of and under the conditions unilaterally established by the employer or, as the case may be, based on parties' negotiations (via the IEA or collective labour bargaining agreement).

In Romania, employees (full-time or part-time) are entitled to receive a statutory minimum annual vacation of 20 working days. Bank (legal/public) holidays are granted on top of the statutory minimum annual vacation; currently, there are 15 days of bank holiday during a calendar year (two of them falling always on a Sunday).

Where the employee commences employment part way through a holiday year or where he or she ends the employment during the year, annual vacation will be accrued on a pro rata basis.

The annual vacation is taken according to the planning made by the employer, the vacation year running from January 1st to December 31st. If the annual vacation is taken in part, the employer must ensure that the employee will take at least ten consecutive working days.

The rule is that vacation must be taken each year, cash compensation being permitted only upon termination of employment. If this is not achievable due to objective business reasons, with the employee's consent, the employer will grant the unused vacation within 18 months, starting with the year following the one when vacation has been accrued.

Employees benefit from a vacation indemnity, which must be no less than the base salary, indemnities and permanent bonuses for the respective period, provided in the IEA. The vacation indemnity is calculated as the daily average of such salary entitlements in the last three months prior to the one in which the vacation is taken, multiplied by the number of vacation days. The vacation indemnity is paid by the employer at least five working days before the employee takes the vacation.

In Romania, employees may also benefit from other statutory paid leaves provided they fulfil all eligibility conditions (including in terms of contribution stage to the State budget), such as the following.

  • Medical leave – granted based on a medical certificate issued by the doctor (for non-work accident incapacities). The maximum period during which such medical indemnity is granted is 183 days within a one-year interval, calculated from the first day of sickness (starting the 91st day of medical leave, this may be extended up to 183 days only if approved by competent authorities). However, such period may be longer in the case of certain diseases. Employees also receive an indemnity, which is covered by the employer, from the first to the fifth day of medical incapacity and from the national fund for medical social insurance for the remaining period. During the medical leave, the employment is suspended by operation of law.
  • Maternity leave – female employees are entitled to maternity leave of 126 calendar days and a corresponding indemnity granted for the entire period (paid by the employer, but recovered from the State budget).

The maternity leave is generally divided in two parts, with 63 days as pregnancy leave and 63 days as post-birth leave. Such parts may be different (based on medical recommendation and employee's choice), as long as the employee takes at least 42 calendar days' maternity leave post-birth. During the maternity leave, the employment is suspended by operation of law.

  • Paternity leave – in the first eight weeks after birth, father employees are entitled to a paternity leave of five working days that may be extended once (irrespective of the employee's number of children) by an additional ten working days, in the event that the father employee has undertaken a childcare course. Paternity leave is paid by the employer and is equal to the employee's base salary corresponding to the period of the paternity leave. During the paternity leave, the employment is suspended at the employee's initiative.
  • Parental leave – to be taken by any parent (however, at least one month of parental leave must be taken by each parent) until the child reaches the age of 2 or 3 (in the case of a child with disabilities). During the parental leave, the employee is entitled to receive a monthly indemnity that is paid and covered by the State budget. During the parental leave, the employment is suspended upon the employee's initiative. While on parental leave, the employee is entitled to return to work at any time; however, based on quite recent amendments to the applicable law, the employee is obliged to inform the employer at least 30 days in advance if he or she intends to be back to work more than 60 days before the child reaches the age of 2 or 3 in the case of a child with disabilities.

During the above-mentioned leaves, the IEA is suspended. However, there might be rights and obligations of the parties that still apply (for example, confidentiality and loyalty obligations) if these are regulated by law, collective labour bargaining agreements, internal policies and/or the IEA.

Confidentiality and loyalty undertakings are expressly, but rather generally, regulated by Romanian legislation.

In Romania, during employment, all employees must observe a so-called loyalty obligation that, in practice, was developed in the sense that this requires the employee to refrain from any deed or action that would harm the interests of the employer (including not competing with the employer). One may construe that non-disparagement may also fall within this scope. Loyalty obligation may apply only during employment and is not subject to any additional payment. Post-termination non-disparagement is also possible, the prudent approach typically being for it to be expressly agreed by the employer and employee, as otherwise (for example, if employment termination is not mutually agreed), general principles of civil law and/or on unfair competition might need to be relied upon.

The parties may also agree upon a confidentiality obligation aiming to protect the employer's/business-related information or data obtained by the employee in relation/during the course of the employment relationship. The confidentiality provision would typically detail the scope of the confidential information covered, as well as whether the confidentiality obligation should apply post-termination (bearing in mind that the confidentiality obligation is applicable post-termination of the employment only if expressly agreed by the employee in his or her IEA). The confidentiality obligation is not subject to any specific payment (irrespective of whether this applies both during and post-termination of the employment) either.

In the case of failure to comply with the loyalty and/or confidentiality obligations, the employee's disciplinary liability may be triggered during employment and/or the employee may be held financially liable by paying damages caused to the employer (as proven in court). Penalty clauses (in the sense of anticipating and setting up from the very beginning the amount to be paid by the employee in the event of breach of his or her loyalty or confidentiality undertakings) are not permitted under Romanian employment law.

In Romania, the freedom of work is regulated as a fundamental right of the employee. Consequently, restrictions or limitations to such right are permitted only in limited cases expressly provided by law. This is the case for non-compete restraints, where specific requirements need to be fulfilled in order to ensure their validity and enforceability, including the following.

  • To be agreed by the employee in writing (in, or also in, the Romanian language) and typically included in the IEA or an amendment.
  • To include the minimum information imposed by law, as follows:
      1. prohibited competing activities (which, strictly by law, should be limited to the activities carried out by the employee based on his or her job description);
      2. the third parties for which the employee is not entitled to carry out competing activities;
      3. the geographical areas where the employee is in actual competition with his or her employer;
      4. monthly non-compete period; and
      5. monthly indemnity.
  • Not to result in the absolute prohibition for the employee to practise his or her profession.

In addition, enforceability of a non-compete obligation depends on the employment termination grounds. For example, if the employee is made redundant, the non-compete obligation is not enforceable.

A non-compete obligation may be agreed for a maximum period of two years post-termination of employment and is subject to payment by the employer of a monthly indemnity, which cannot be lower than 50% of the employee's average total gross salary income in the six months prior to termination.

If the former employee does not observe the non-competition obligation, he or she may be obliged to repay their non-competition indemnity, as well as to pay damages for any prejudice caused to the employer. The employee also risks administrative liability in certain specific circumstances, such as where the violation also amounts to unfair competition.

Romanian law no longer provides express provisions on non-solicitation of employees/former employees; such obligations were repealed out of specific legislation dealing with unfair competition, whereas non-solicitation of customers is only limitedly regulated in specific circumstances (generally mandating it being performed by using trade secrets). In this context, if intending to regulate any of these in the IEA, employment and competition law input should be considered.

Data privacy is tremendously important in the employment sphere – even more so in the General Data Protection Regulation era – and must be carefully considered in virtually all aspects of employment, such as:

  • before embarking on the employment relationship – for example, as regards background checks, use of service providers for the recruitment phase and due qualification of these from a data privacy perspective, and personal data retention for unsuccessful candidates;
  • signing of the IEA – for example, duly identifying the legal ground for each employee's personal data protection (while, of course, being mindful that consent is unlikely/rarely a valid ground for processing);
  • IEA performance – for example, employee e-mail and, more generally, electronic communications (including internet use), monitoring being likely to pose various implementation challenges (especially if relying on legitimate interest for processing); also, careful review of whistle-blower policies might also be needed;
  • termination of employment – for example, to determine the right archiving deadlines; and
  • data protection officer requirements, etc.

Of course, some of these aspects are encompassed in the underlying employee privacy notice that should be duly served. Also, specific rules apply to any employee personal data transfer outside the European Economic Area, aimed at ensuring that appropriate safeguards are provided for such transferred data and that enforceable data subject rights and effective legal remedies for data subjects are available.

Foreign nationals (non-EU, non-Swiss and non-European Economic Area nationals) may enter, stay and work in Romania subject to the foreigner and the Romanian entity benefiting from their work complying with all the immigration requirements. Such requirements vary depending on the nationality of the foreigner and the scope for travelling and staying in Romania.

As a rule, the main immigration documents that may be required in order for a foreigner to enter, stay and work in Romania consist of: (i) visa, (ii) work permit and (iii) residency permit. While the Romanian entity benefiting from the foreigner's work must apply for the work permit, the visa and residency permit are issued upon the foreign national's personal submission of the relevant application.

In addition, when deciding to use foreign nationals, the maximum quota for migrant workers coming from outside the EU that can be admitted to the Romanian labour market must also be considered – as this is approved on a yearly basis. For example, for 2019 the quota is 20,000 workers.

On the other side, nationals of the EU, European Economic Area and Switzerland have the right to reside and work in Romania, subject to observance of applicable legal conditions and typically subject to obtaining a registration certificate for stays of longer than three months.

On top of the required formalities for obtaining the relevant immigration documents/permits allowing the foreigner to enter, stay and work in Romania, there are also other specific registration formalities to be observed by the employer, such as (i) the generally applicable obligation of registering the employee in the general registry of employees, or (ii) if the foreign national is exempt from obtaining a work permit, the Romanian entity benefiting from his or her services must notify the Romanian immigration authorities about (a) using this national and (b) termination of the contractual relationship within a maximum ten-day term.

Trade unions are voluntary associations established by employees (based on their constitutional right to unionise) to defend their rights and promote their employment, economic and social interests, in their relationship with the employer. Mostly, trade unions are active in negotiating collective bargaining agreements that apply at the level of the employer, in the consultation process in the case of a collective dismissal, in the information/consultation process in the case of a transfer of undertakings, in disciplinary investigations or poor performance evaluations, etc. In addition, trade unions are allowed to represent their members in employment disputes, based on a member's request and subject to the conditions of the law. The trade union may also file court claims in the name and on behalf of its members, based on a relevant power of attorney.

A trade union may be legally established by at least 15 employees working for the same employer. However, certain categories of individuals (for example, employees working in the national defence system and judges) are not allowed to unionise. Depending on the total number of members, the trade union may be representative or not.

In practice, trade unions are established within formerly State-owned companies acting in the energy, oil and gas, and/or manufacturing sectors. There are also five separate trade union confederations at national level, each with a substantial number of affiliated federations, which are actively involved in the normative/regulatory process, in particular regarding proposals to amend Romanian employment legislation.

In terms of specific protection for members, trade union members are protected against both amendment of their IEA and dismissal for reasons related to the employee's membership of the trade union or trade union-related activity.

Employees' right to elect their representative is expressly regulated by the Romanian Labour Code where the employer has more than 20 employees and there is no representative trade union.

It is key to note that electing the employees' representative is a right and not an obligation of the employees, the employer having no right or obligation to intervene in the employees' decision as to whether to elect their representatives. However, if so decided by the employees, the employer should prudently ensure its administrative support in the selection process.

Employee representatives are elected at a general meeting of employees through a vote of at least half of the total number of employees employed by the employer and for a maximum term of two years.

Once elected and assuming they receive a full representation mandate, the elected representatives are then the channel for collective negotiation, information and consultation as well as any other communication between the employer and employees. Nevertheless, unless otherwise agreed internally, elected employee representatives do not have any co-determination rights.

To briefly point out certain areas where the employer is obliged to get in touch with the employees' representative(s), it is worth mentioning that the employer has an obligation to inform and consult elected employee representatives (if no trade union is established at company level) in several circumstances (such as when drafting and implementing the internal regulation mandatory at each employer level, during the collective dismissal procedure, in the case of a transfer of undertaking). The employer's failure to observe its legal obligation to inform and consult employees' representatives may have various implications, ranging from its liability being triggered (administrative or patrimonial; for example, for any damages that impacted employees are able to prove they have suffered as a result of the respective breach) to potential nullity of a collective dismissal procedure failing to involve employees' elected representatives as prescribed by the law, which, in turn, may expose the company to significant (financial) exposure, but also reinstatement, discrimination or other claims.

Elected employee representatives are entitled to paid time off to carry out their duties, the number of hours allocated to the performance of their mandate within the normal working schedule being subject to negotiation with the employer.

Elected employee representatives are protected against dismissal for any reasons related to carrying out their duties during their term of office.

As of 2011, in Romania, collective bargaining agreements (CBAs) may be executed at three levels, namely sector level, group of companies' level and company level. As of that date, a collective bargaining agreement can no longer be executed at national level, although, currently, there are some public debates on the need to re-state the possibility of executing a CBA at national level (which would effectively translate into a collective bargaining agreement ending up as mandatory for all employers in Romania, basically doubling the law, as it used to be).

Currently, collective bargaining agreements are common within companies employing a high number of employees and where trade unions are also established; only a few collective bargaining agreements being signed and applicable at sector level (generally in the public sector).

Employers hiring at least 21 employees are obliged to initiate collective negotiations with the view of executing a collective bargaining agreement. However, the actual execution of a collective bargaining agreement is not mandatory.

A collective bargaining agreement may be executed for a maximum duration of 24 months, the possibility of extending the duration of the collective bargaining agreement being expressly regulated by law. There is no legal obligation to bargaining specific aspects during the applicability of the collective bargaining agreement, any amendments to the collective bargaining agreement being subject to parties' negotiation.

Also, there is no minimum collective bargaining agreement content required by Romanian employment law (as used to be the case); however, in practice, the expectation is that it covers topics like salary and benefits, working programme (including rest periods), termination procedures and related severance, and professional training opportunities.

A collective bargaining agreement is legally enforceable as of the date this is registered with the competent territorial labour inspectorate, in the case of an employer's failure to comply with the provisions in the collective bargaining agreement, the employees being entitled to enforce their rights by bringing an employment tribunal claim or claims with the labour authorities that could trigger dawn raids on the specific topic or even on general observance of the Romanian employment law.

Except for normative acts, collective bargaining agreements or other agreements executed between the relevant employees' representative body and the employer (if the case), there are no other collective agreements directly applicable to employers in Romania.

Termination rules are strictly regulated under Romanian employment law, the concept of 'termination at will' not being permitted.

Termination may occur (i) by operation of law – for example, upon the expiry of the term for which the IEA was executed; (ii) based on parties' mutual consent or (iii) following the unilateral decision of the employer (dismissal) or employee (resignation), for each termination case a different procedure needing to be put in place (and, further, developed by the practice of the courts of law).

In terms of termination implemented by the employer, this is permitted by law only in those cases expressly provided by the Romanian Labour Code and which include (i) dismissal for reasons not related to the employees (redundancy – individual or collective), or (ii) dismissal for reasons related to the employee, namely (a) poor performance, (b) serious or repeated misconduct (disciplinary/breach of contract), (c) medical/psychiatric unfitness or (d) arrest of the employee for a period exceeding 30 days.

Failure to comply with the cases and/or procedure stipulated by the law triggers the absolute nullity of the dismissal decision (which may lead to significant implications for the company, as detailed below).

In terms of dismissal for redundancy, this is any dismissal that is due to the removal of the employee’s position for reasons not relating to the employee (the specific reasons are not expressly set out in the law, but mainly cover economic difficulties, changes in business strategy, automation or adding new technology in the activity, etc).

As a validity requirement, the redundancy must be effective (in the sense that the job position is effectively removed from the business and its organisational chart) and must be required for a real and serious cause (not related to the employee's person or his or her conduct/behaviour).

Redundancies can be individual or collective, depending on the number of employees being dismissed for reasons not related to them. Thus, collective dismissal occurs when, within a 30 calendar day period, the employer dismisses based on redundancy (i) ten employees, if the employer hires between 21 and 99 employees; (ii) 10% of the total number of employees, if the employer hires between 100 and 299 employees; or (iii) 30 employees, if the employer hires at least 300 employees. When calculating the collective dismissal threshold, mutual termination must be also considered if there are at least five such cases.

When carrying out collective redundancies, the employer must follow a more cumbersome procedure (with additional steps and clear deadlines), which includes (i) approval of potential implementation of collective dismissal, (ii) consultation of the employees' representative body on the potential collective dismissal (including on the severance payment to be paid to the affected employees), (iii) providing information to the labour authorities (Territorial Labor Inspectorate and the Unemployment Workforce Agency) on the potential collective dismissal, and (iv) approval of the collective dismissal and involving the labour authorities, etc.

In the case of redundancy (both individual and collective), employees are entitled to a notice period of at least 20 working days. However, a longer notice period may be provided for by individual employment agreements or an applicable collective bargaining agreement. For clarity, employment cannot terminate sooner than actual lapse of the respective notice, as no payment in lieu is permitted, as also mentioned below.

Notice periods are mandatory under Romanian employment legislation in the case of dismissal for poor performance, medical reasons or redundancy (individual and/or collective). By law, notice is not required for disciplinary terminations, nor in the case of termination due to the employee being under arrest for a period exceeding 30 days.

When required, the minimum notice period provided by the law in the case of dismissal is 20 working days, which is applicable in the case of both management position and non-management position employees. Longer notice periods may be agreed and set out, for example, in the individual employment agreement or applicable collective bargaining agreement.

The notice period starts to run following valid communication of the dismissal decision to the employee; thus, communication in full accordance with the law is key.

If, during the notice, the IEA is suspended (for one of the cases provided by the Romanian Labour Code), the notice will be suspended as well and, as a consequence, the termination date will be postponed accordingly.

Payment in lieu of the notice period is not possible. In fact, the Romanian High Court of Cassation and Justice has ruled that payment in lieu of notice period is not permitted as it essentially breaches an employee's right to receive a notice period (which is a fundamental legal right). On this basis, if the employee is legally entitled to be granted a notice period, his or her employment cannot terminate sooner than actual lapse of the respective notice period.

There is no minimum level of severance payment expressly imposed by law, unless this is otherwise provided internally (by company's policies/decision, employee's IEA or applicable collective bargaining agreement). However, in practice, employers may decide to make a severance payment, especially in the case of dismissal for redundancy. There is no generally applicable benchmark, nor any widely spread custom when employers decide about a severance payment, as they very much depend on the sector in which the employer operates, the scale of the redundancy process, the company's history/practice with compensations, the internal policies or other documents that may apply (even group-level), etc. However, in practice, the employees generally expect that they would receive at least the minimum severance applicable under the former collective bargaining agreement at national level (no longer in force as of 2011), namely one gross monthly base salary.

There are no third-party approvals expressly required by law; however, there is a requirement to involve certain labour authorities (during a collective redundancy dismissal, during a poor-performance or medical unfitness dismissal), including an obligation to provide them with relevant termination-related documents.

As mentioned above, the Romanian employment legislation regulates the termination grounds by reference to reasons related or not related to the employee's person. Thus, the concept of termination for cause is not provided as such in Romania. However, in Romania, an employer may terminate the employee based on disciplinary grounds, namely when the employee committed a gross misconduct or repeated misconducts, respectively he or she breached his or her work-related duties, as these are set forth in the IEA, internal policies, applicable collective bargaining agreement, etc.

In order to protect the employee's right to defence, disciplinary dismissal may be imposed by the employer only upon performing a formal disciplinary investigation, which involves several steps, mainly:

  • the set-up of a disciplinary commission by the employer to investigate the potential misconduct(s);
  • the summoning of the employee to the disciplinary investigation meeting via a written notice (providing for the date, hour, location and subject of the meeting), communicated a reasonable time in advance (in order to allow the employee to prepare his or her defence);
  • the disciplinary investigation hearing, where the employee should present his or her defence/reasons regarding the alleged misconduct;
  • report of the disciplinary commission reaching a conclusion and proposing the course of action to be taken with respect to the employee, namely to impose/not to impose a disciplinary sanction (and, if relevant, the proposed sanction);
  • employer's decision on issuing the disciplinary dismissal decision; and
  • communication of the disciplinary dismissal decision to the employee within a maximum of five calendar days of it being determined – this is key as the dismissal decision will become effective only upon proper communication to the employee.

In terms of timing, the employer may impose a disciplinary dismissal within 30 calendar days of acknowledging the disciplinary misconduct(s), but not later than six months after the date when the deed took place.

By law, notice period is not required for disciplinary terminations.

In the event of a failure to follow the disciplinary process and rules, the dismissal decision is null and void, and the employee may successfully challenge it in court.

Mutually agreed termination is one of the possible employment termination routes expressly permitted by the Romanian legislation.

There are no special formal requirements in respect of this type of termination, except for the fact that the mutual termination agreement must be signed in writing and in the Romanian language (a bilingual version including Romanian being also acceptable). Thus, in the lack of any legal requirements/guidelines for executing the mutual termination agreement, the parties have full flexibility on the exit terms, including on the termination date (which could even be immediately, as no notice period must be observed in the case of mutual termination).

Employers are generally prohibited from dismissing an employee based on discriminatory grounds (for example, based on gender, sexual orientation or age) or for exercising their right to strike or their trade union rights. In addition, employees are protected against dismissal, amongst others, during:

  • pregnancy, provided that the employer acknowledged the pregnancy before issuing the dismissal decision;
  • maternity leave;
  • parental leave and for a six-month term after returning to work;
  • for as long as the employee returning from parental leave receives the additional indemnity paid by the State (namely the return-to-work benefit), if applicable;
  • leave to take care of a sick child;
  • maternity risk leave and for a six-month term after returning from maternity risk leave;
  • temporary work incapacity (medical leave); and
  • annual leave, etc.

In addition, both elected employee representatives and trade union members are protected against dismissal for any reasons related to carrying out their duties during their term of office.

Unlawful/wrongful dismissal claims are usually grounded on the employer's non-compliance with the applicable dismissal procedure (varying depending on the relevant dismissal ground). Challenges of the dismissal decisions are fairly common in Romania, as, by law, employees are not obliged to pay any judicial taxes to bring such a claim and the burden of proof lies with the employer.

If the dismissal decision is challenged in court by the impacted employee, the company's exposure in the case of unlawful dismissal mainly consists in the court:

  • annulling the dismissal decision;
  • ordering reinstatement to the same position from which the employee was dismissed, if requested by the employee;
  • ordering payment of all salary rights the employee would have benefited from if not unlawfully dismissed between the dismissal and the date of the court decision ruling in the employee's favour;
  • ordering payment of damages (including moral damages), if proven by the employee; and
  • ordering payment of trial expenses incurred by the employee (such as legal assistance expenses).

Other claims are not excluded, depending on the particular circumstances of the case.

Discrimination claims can be grounded on discriminatory actions in relation to a wide range of characteristics protected by the law (such as age, disability, HIV status, sex, religious belief, race, nationality, sexual orientation, etc). Several types of discrimination are regulated, such as direct discrimination, indirect discrimination, harassment, sexual harassment, psychological harassment, breach of personal dignity and victimisation. In addition, although not expressly regulated, discrimination acts consisting of bullying, mobbing and moral harassment are prohibited.

Individuals may bring a discrimination claim in employment courts and/or before the National Council for Combating Discrimination (an autonomous State authority responsible for enforcing the anti-discrimination laws), mainly with a view to claiming (i) damages, for which there is no minimum/maximum amount provided by law (but rather the value of the damages is to be assessed by the court to reflect the actual proven prejudice suffered by the individual), and (ii) re-establishment of the situation prior to the discrimination having occurred or annulment of the situation created by the discriminatory conduct (including reinstatement of the employee).

If it is ascertained that the employer is guilty of committing a discrimination deed that created a significant prejudice or has repeatedly violated anti-discrimination legislation, at the individual's request, the court may decide to withdraw or suspend the company's operating (or similar) licence.

In addition, employers may also be (i) liable to pay administrative fines and/ or (ii) obliged to publish, in the mass media, (a summary of) the decision where discrimination was found, thereby also triggering a reputational risk for the employer.

In discrimination-related claims, the burden of proof no longer belongs to the employer/individual against whom the discrimination claim has been made.

Court proceedings in employment disputes are judged by the specialised employment sections of the courts of law (the Tribunal as Court of First Instance and the competent Court of Appeal, as Final Instance) from the plaintiff's domicile or workplace (upon the employee's choice), in urgent procedures.

The concept of class actions is not expressly regulated in Romania, but may be assimilated in practice; for example, (i) if several employees decide to address the court with a collective claim if their rights stem from the same cause or are closely connected, or (ii) if a claim is filed by a trade union on behalf of some of its members, to jointly represent and defend their interests. However, in practice, class action claims are not specific to straightforward employment litigation files.

The burden of proof in employment litigation files lies with the employer.

All applications for settlement of employment disputes are exempt from judicial stamp and stamp duty.

As a rule, in employment litigations, representation of the parties is not mandatory, but only optional. Nevertheless, in practice, it is rather common that the parties decide to be assisted/represented by an attorney. In such case, the party in the favour of which the court ruled is entitled to claim from the other party payment of all legal fees (however, in practice, it is more likely that the court will not award all such costs).

As a matter of Romanian employment law, courts of law have exclusive jurisdiction in respect to employment disputes and, thus, arbitration clauses are not permitted, or are highly debatable, at the very least. This is the more so as, according to the Labour Code, employees cannot waive their rights recognised by the law and any transaction with the purpose of waiving or limiting such rights will be null and void, or under the Romanian Civil Procedure Code, disputes concerning rights over which the parties cannot dispose cannot be settled via arbitration.

Any party that wins a dispute can be awarded, upon request, the legal expenses incurred for the scope of the respective dispute. However, one may construe that the current trend by Romanian courts is to substantially limit the legal expenses granted to a party (employment litigation not necessarily making any exception).

DLA Piper Dinu SCA

Metropolis Center
89-97 Grigore Alexandrescu St.
East Wing
1st Floor
Sector 1
010624 Bucharest

+40 37 215 5801

+40 37 215 5810

bucharest.reception@dlapiper.com www.dlapiper.com
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Law and Practice

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DLA Piper Dinu SCA has supported clients since its office was set up in Bucharest in 2008, currently with a strong team of over 50 internationally trained Romanian lawyers and tax consultants, covering all practice areas. Uniquely positioned in the Romanian legal market – probably the only international law firm with a standalone Romanian employment practice, exclusively handling employment work and covering the full spectrum of employment law on a day-to day basis – the employment team includes a core senior team of four highly skilled and employment-exclusive professionals, who have worked together for more than ten years in great cohesion, and two more junior colleagues. The firm takes on any employment assignment, holding hands with its clients when dealing with employment contracts, localisation and harmonisation of global organisational rules, employee mobility, flexible work and alternative employment arrangements, employment equality and high-end employment transactional matters, across virtually all sectors, with a key focus on technology, life sciences, aviation, energy and media.

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