The Romanian labor
relations are mainly regulated by the Labor Code as framework legislation, to be
implemented by means of secondary normative acts. The current Labor Code (Law no 53/2003)
came into force on March 1, 2003, and gathering under the same umbrella the principles of
employment relationship, employment contracts, labor and rest, labor protection and
health, as well as those related to trade unions, employers’ associations and labor
conflicts. The Labor Code has been amended in 2005 by Emergency Ordinance no.
65/2005, approved by Law no. 371/2005.
Labor Conditions
Salaries
Starting January 2006, the minimum gross wage has been set-up at an amount of RON 330 per
month for a full-working program (about 169 hours/ month) and the gross average salary is
of 1100 RON and net average salary is 826 RON.
Working
hours
The standard working time, for full-time employees, is of 8 hours a
day and 40 hours a week. Overtime is allowed upon employer’s obligation to compensate
with paid days off to be ensured in the following 30 days or, if not possible, with
supplementary payment to be negotiated (not less than 75% of the basic salary). The
duration of work cannot exceed 48 hours per week (including overtime), or an average of 8
hours per day including overtime.
Exceptionally, the working time may be prolonged to over 48 hours a
week, which includes also the overtime, on condition that the median working time,
calculated for a reference period of a most one month, does nor exceed 48 hours a week. It
is stipulated for each 12-hour day to be followed by 24 hours of rest and irregular work
duration is permitted upon the individual labor contract expressly mentioning as such.
Holidays
There are seven statutory holidays, although additional holidays can
be granted for religious reasons and also others can be legislated on a year-to-year basis
(e.g. the Monday after Christmas, if the statutory holiday falls on a weekend).
Any full-time permanent employees must be granted a minimum of 20
days paid holiday per year apart from the free days aforementioned. The right to annual
leaves may not be subject of any waiver, assignment or limitation, nor can be transformed
in money. There are other paid leaves for certain family events, for employees working in
special conditions, or for other particular situations.
Maternity
leaves and paid nursery leave
Women are entitled to 126 days of maternity leave regardless of
their tenure with the company. During this time they are paid 85% of the average salaries
earned in the 6 months before the maternity leave. Upon request, any of the two parents is
allowed further paid nursery leave to take care of the child under two years old, or 3
years old for children physically or mentally challenged. This leave is paid from the
state budget. During these leaves the employee cannot be dismissed.
Individual labor contract
The individual labor contract shall be concluded based on the
parties’ consent, in written form, in the Romanian language. The obligation to
conclude the individual labor contract in written form belongs to the employer. Employers
who are legal entities, certified self-employed natural entities as well as family
associations shall be under the obligation to conclude the individual labor contract in
written form prior to the commencement of the labor relations.
Prior to the conclusion or alteration of an individual labor
contract, the employer shall have to notify the person selected to be employed or, as
appropriate, the employee about the general clauses that are to be included in the
contract or to be modified.
At present, the Labor Code provides for two main categories of
clauses that may be inserted in the individual labor contract: mandatory provisions and
specific provisions
Mandatory provisions, such as: the identity of parties, the
work place, the employer’s headquarters, the position of the employee within the
company and the job description, the specific risks of such position (if any), the time of
entering into force of the labor agreement, the term (if concluded for a determined
period), the annual leave, the notice, the amount of the wage and the payment date, the
daily and monthly work extent, indication of the collective labor contract regulating the
work conditions for the employee, the length of the trial period.
Termination of ILC has to be preceded by a termination notice to be
set up by ILC and/or by the collective labor agreements. The termination notice period by
the employee cannot be less than 15 days.
A trial period is allowed up to 30 days for executive positions and
90 days for managing positions.
Usually, the ILC is concluded for an undetermined period, but it can
be also concluded in the following types: as an ILC for a determined period of time, a
temporary labor contract, a part–time ILC, an ILC for work at home.
ILC for Determined Period
The ILC for a determined period cannot be concluded for more than 24 months. Three
successive individual labor contracts for a definite term, at the most, shall be allowed
to be concluded between the same parties, but only within 24 months limit.
Individual labor contracts for a definite term concluded within 3 months after the expiry
of a prior definite –term labor contract shall be considered successive contracts.
When the third successive labor agreement concluded for a
definite period of time is over, the job shall be offered to an employee under an
indefinite – term labor contract
This contract may be concluded for a determined period of time in
some specific cases provided by the Labor Code:
to replace another employee;
the employer’s activity is temporarily increased;
in case of seasonal activities;
it is concluded on the basis of legal provisions issued in order to
temporarily favor certain categories of unemployed persons.
hiring a person less than 5 years before the retirement age
hiring pensioners
A trial period is allowed for a period between 5 and 45 days
depending on the ILC term. Upon termination the employer must inform the employee on any
vacancy existing in the company.
Labor by an agent of temporary
labor
The labor by an agent of temporary labor is supplied by a temporary
employee. The temporary employment agreement is to be concluded by the user with an
outsourcing agent, commercial companies authorized by the Ministry of Labor, Social
Solidarity and Family. It is an obligation for the user to resort solely to outsourcing
agents for temporary labor assignments.
The outsourcing agent is required to pay the employee’s salary
evaluating and withholding the whole taxes and contributions the temporary employee is
compelled to pay. The salary cannot be any lower than the usual one paid by the user to
its own employees for a similar job. In between assignments, the temporary employee is at
the outsourcing agent’s disposal and is entitled to a salary which value should be
minimum the gross salary set up at a national level. In cases when the outsourcing agent
does not comply with all conditions regarding salary payment or contributions and taxes,
such responsibilities incur to the user, within 15 days as of the due terms, upon the
employee’s request.
The temporary employment agreement should be concluded for a defined
period to be expressly provided thereby, not exceeding 12 months. Exceptionally, it may be
extended once up to maximum 18 months. At the termination of this special arrangement, the
employee can continue working for the same employer, under a normal ILC.
Part-time ILC
Part-time ILC is also allowed. The labor duration cannot be less
than 10 hours per week, respectively minimum 2 hours a day. In such terms, a part-time
employee is forbidden to work extra-hours, save for a major force situation. A part-time
employee benefits from the same rights as any other employees, proportionally with the
time effectively worked. The employer must inform in due time (by a notice posted at its
premises) the vacation of any part-time or full-time jobs, in order to ease the transfers
from full-time jobs to part-time jobs and vice versa.
ILC for work at home
The ILC for work at home implies the performance by the employee of
his/her specific work tasks at home, having the right to establish his/her own working
timeframe and the employer having the right to check the employee’s activity,
according to the terms stipulated under the ILC.
Special clauses under ILC
The parties may negotiate certain specific clauses to be inserted in
the individual labor contracts, such as the professional training clause, non-competition
clause, mobility clause or confidentiality.
Such specific clauses may be included into the individual labor
contract, by mutual agreement between the employer and the employee. The absence of such
provisions does not affect the validity of the labor contract.
The
non-competition clause
Upon concluding the individual labor contract or during the
execution thereof, the parties shall be able to negotiate a non-competition clause
and include it in the contract, under which the employee is held not to perform, after the
termination of the contract, in his own interest or the interest of a third party, any
activity that is in competition with the activity performed by his employer, in exchange
for a monthly benefit that the employer undertakes to pay him throughout the
non-competition period.
The non-competition clause shall produce effects only if the
individual labor contract specifically mentions the activities the employee is prohibited
from undertaking after the termination of the contract, the amount of the non-competition
benefit, the period during which the non-competition clause applies, the third parties in
favor of which performance of the activity is prohibited and the geographical area where
the employee can be in real competition with the employer.
The benefit to be paid to the employee is not of salary nature,
shall be negotiated and shall amount to at least 50% of the average gross salary in the
last 6 months before the termination of the individual labor contract, or, in the case in
which the duration of the individual labor contract was less than 6 months, of the average
gross salary received on the duration of the contract.
The non-competition indemnity represents an expense made by the
employer, is deductible from the calculus of the taxable profit, and is taxed to the
beneficiary natural person, according to the law:
The non-competition clause shall produce effects for a period
of at most 2 years after the termination of the individual labor contract.
Vocational
training
Special provisions regard the beneficiary of vocational training
paid by the employer. the employers are compelled to ensure periodical access of all their
employees to vocational training, as follows: at least once in two years, if they have at
least 21 employees and at least once in three years, if they have less than 21 employees.
The costs of participating in the vocational training schemes provided under these
conditions shall be covered by the employers.
The employees who had taken courses or stages of vocational training
exceeding 60 days are not in the position of requesting to end the individual labor
agreement for at least 3 years since they graduated. If the terms of such clause are not
observed, the employee has the obligation to bear all costs for professional training. The
same rules applies in those cases when the employees are fired on disciplinary grounds or
as a Court Decision related to a professional crime or to the interdiction to perform
their profession.
Employment of Foreign Citizens
Foreign citizens may work in Romania, provided that they obtain
a work permit issued by the Office for Labor Force Migration within Ministry of Labor,
Social Solidarity and Family.
The work permit may be issued, upon request, to foreigners who meet
the employment requirements provided by law, and whose border crossing documents bear a
long-term visa either for employment or for other purposes.
The maximum number of work permits is yearly determined by
Government decision. The number of the work permits can be is amended through
Government’s decision.
For 2006 there has been established a limit of 10,000 work permits,
excluding those granted on the basis of certain international treaties.
The Ministry of Labor, Social Solidarity and Family, through its
Office for Labor Force Migration, will issue the work permits, for 12-month periods, with
the possibility of extension, upon request, for additional 12-month periods. Based on
international treaties signed by Romania, the work permit may be granted, or extended for
periods longer than 12 months.
There are different types of work permits
type A -for permanent workers- gives foreigners the
right to be employed based on individual labor contracts for a 12 months period at only
one Romanian natural or legal person.
type B -for posted workers- gives foreigners the right to
perform work in Romania based on a posting decision of a foreign employer to a Romanian
undertaking for duration of 12 months.
type C -for seasonal workers- gives foreigners the right
to be employed based on individual labor contracts for maximum 6 months in a 12 months
period; this type of work permit can not be extended in order to perform other
professional activities in Romania.
type D- for trainees- gives foreigners the right to be
employed in Romania based on individual labor contracts for a 12 months period. The
duration for the work permit – type D can be extended until the end of the training
period.
type E -for sportsmen and sportswomen- gives foreigners
the right to be employed based on individual labor contracts for a 12 months period at a
Romanian legal person, having sport as main object of activity. This type of work permit
can be extended for other periods of 12 months.
type F –for seasonal activities - gives foreigners
the right to perform seasonal activities at the same employer for whom they worked
previously based on a work permit type C. To be awarded with this type of work permit, the
foreigners involved must have complied with the legislation requirements regarding their
return in the originated countries after the termination of their first seasonal labor
contract.
type G -for frontier workers- gives foreigners the right
to be employed based on individual labor contracts for a 12 months period at only one
Romanian natural or legal person, or a Romanian branch / subsidiary / agency of a legal
person located abroad. This type of work permit is addressed to foreigners pursuing an
activity as employees in the Romanian boarder area and who reside in another state to
which they return as a rule daily or at least once a week.
As
well, starting January 2007, work permits will not be required for the citizens of the
European Union member states, of the states parties to the Agreement on the European
Economic Area, and their family members.
Collective Labor Agreements
The
employer that had hired at least 21 people is bound to initiate collective negotiations.
Collective negotiations are initiated upon the union request or of the employee
representatives. Employer’s failure to meet its negotiation obligation or refusal to
answer the negotiation invitation by the employees represents misdemeanor sanctioned by
administrative fine. The collective labor contract is concluded for a determined period of
time, which cannot be less than 12 months, or for a period corresponding to a determined
assignment.
There
can be concluded collective labor agreements on national level and/or on industry branch
level and/or on unit level. According to the Labor Code, the provisions of ILCs may not be
contrary or grant rights in favor of the employee below the minimum levels provided by the
relevant legislation and by the collective labor contracts.
Social security contributions
Social
security contribution rates are established on an annual basis through the law approving
the national social security budget.
Social
security contributions have to be paid by employer and the employee.
Under
a labor agreement at the individual’s level, the employee owes the following Social
Security Contributions:
Social Insurance contributions - 9.5% of the monthly gross salary;
Health Fund Contribution – 6.5% applied on the monthly gross salary;
Unemployment Fund Contribution – 1% applied on monthly gross salary.
Social
security contributions owed by the employer are as follows:
social insurance contributions: ranging between 20.5 % and 30.5 % (depending on
the work conditions) of the gross monthly income, which is ceiled at the level of five
times the national average salary multiplied by the average number of employees;
Health Fund: 7.75 % of total salary fund;
Unemployment Fund: 2.5 % of total salary fund;
National Insurance Fund for Labor Accidents and Professional
Diseases: the contribution will range between 0.5 % and 4 % of the total salary
payroll;
Labor Chamber commission: 0.25 or 0.75 % of total salary
payroll, depending on whether the company or the Labor Chamber keeps the work books.
No social security
contribution shall be paid with respect to the following amounts:
- social security services
borne from the social security fund or employer’s funds and which are directly paid
by the employer, according to law;
- proceeds paid under the law
upon termination of individual labor agreements, of the mandate or co-operative membership
and upon termination of professional relations of public officers;
- travel and delegation daily
allowances, delegation, posting and transfer allowances, as well as copyright royalties;
- incomes representing
employees’ participation to corporate profit;
- prizes and other rights
exempted by special laws.
The incomes exempted from
the payment of the social security contribution mentioned above shall not be taken into
account when establishing the amount of social security benefits the beneficiary is
entitled to.