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1 June, 2012 - 15:55 By News Desk

Employment Law Guide – Romania


1. Do the main laws that regulate the employment relationship apply to:

1.1. Foreign nationals working in your jurisdiction?1.2. Nationals of your jurisdiction working abroad.The main employment law in Romania is Law 53/2003, this is the Romanian Labour Code as updated (the “RLC”). This mainly refers to Romanian individuals who work abroad. In this respect, the RLC is completed by Law 156/2000 regarding the protection of Romanian individuals who work abroad. Additionally to the RLC, with regard to foreign nationals working in Romania, Government Emergency Ordinance 56/2007 regulates the employment and secondment of foreign citizens in Romania.

2. Are there any age or nationality restrictions on managers or company directors? If so, please give details.No, there are no such restrictions under Romanian law. However, there is a provision stipulating that individuals who fulfil conditions for retirement have the obligation to choose between either commencing the retirement procedure, or continuing work (they are not able to continue to work whilst in retirement).

3. Are any grants or incentives available for employing people? If so, please give detailsLaw 76/2002 regarding the unemployment insurance system and employment stimulation provides as follows:

• The employers who hire graduates from educational institutions for an unlimited period of time, are exempt from paying the contribution to the unemployment insurance budget (relating to the graduates employed) for a period of 12 months, and they receive monthly for each graduate an amount representing a percentage from the social indicator of reference.

• The employers who hire graduates from educational institutions are obliged to maintain the employment relationship for at least 3 years from the date of the conclusion of the individual labour contract.  If during this period, an employer terminates such individual labour contract, the employer has to pay the amounts received for each graduate, back to the competent authorities and also the legal interest as determined by the Romanian National Bank.

• An employer who maintains such an employment relationship 2 years after the expiration of the above-mentioned 3 year period, is exempt from the payment of social insurance contribution, the contribution of insurance for work accidents and occupational diseases, the contribution for health insurance and unemployment insurance contribution during the additional 2 year period of time.

• An employer who hires unemployed individuals of over 45 years of age, or single parent unemployed individuals for an unlimited period of time, is exempted for 12 months from the payment of the contribution to the unemployment insurance budget, for each unemployed person, and receives each month during this period, an amount equal to the reference value of the social indicator. The employer has the obligation to maintain the employment relationship for at least 2 years.

4. What permits do foreign nationals require to work in your country? Foreign individuals who may want to work in Romania need to obtain a residence permit.

4.1. Please explain how these permits are obtained;• 1st step:   The employer obtains the work permit for the future employee;• 2nd step:  The work permit obtained by the employer will be given to the future employee who needs to obtain the long stay visa from the competent national authorities in her/his country of origin. The long stay visa must be obtained in 30 days from the date when the work permit was issued;• 3rd step:  When the future employee comes to Romania (based on a long stay visa), he/she has to obtain the residence permit from the Romanian authorities. This document must be obtained at least 30 days before the expiration of the stay granted by the long stay visa.

4.2. Please explain how much they cost;• To obtain a work permit, the employer will pay €200;• To obtain a long stay visa, the future employee will pay €120;• To obtain a residence permit, the future employee shall pay a consular tax of €120 together with a fee for the residence permit itself, of 240 Lei (approximately €58).

4.3 Please explain how long the process takes.The entire procedure lasts approximately 3 months.

5    What terms govern the employment relationship? In particularThe RLC regulates the main terms of the employment relationship

5.1. Is a written employment contract or statement of employment terms required?Before concluding or amending the individual labour contract, the employer shall inform the person selected for employment or, as appropriate, the employee, of the essential conditions it intends to introduce in to the contract or to amend the contract with.

The selected candidate or the employee, as the case may be, as a minimum, shall be informed of the following:• identity of the parties;• workplace or, in the absence of a permanent workplace, the possibility of  working in several places;• headquarters or, as appropriate, domicile of the employer;• job title/occupation according to the Classifications of Occupations in  Romania or other legal provisions, as well as the job description specifying the job duties;• job-related specific risks;• date when the contract comes into force; in the case of an  individual labour contract of limited duration or of a temporary individual labour contract, the specific duration of the contract;• length of paid leave;• conditions and duration of notice;• basic salary, other salary-related essential elements and payment frequency;• normal working time, expressed in hours per day and hours per week;• reference to the relevant collective labour agreement governing the employee’s working conditions;• length of the probation period.

Also, the RLC provides that the written form of the individual labour contract (the “ILC”) is mandatory.

5.2. Are there any terms implied by law into the employment contract (in addition to the terms referred to in Questions 1)?According to the RLC, the information provided above shall also be included in the ILC.

5.3. Are collective agreements with trade unions or employee representatives common (generally or in specific industries)?In Romania, trade unions or the employees’ representatives, as the case may be, are regulated by the provisions of the RLC completed by Law 62/2011 (i.e. “The Law for Social Dialogue”).  The provisions of the above mentioned law are general, being applicable in all industries. Additionally, some of the specific industries have established their own collective agreements.

6. Is there a minimum wage? If so, please give us details, in particular whether it applies to all employees, regardless of their age and experience.In Romania, the minimum salary is an amount of 670 Lei per month for an 8-hour day (approximately €160) and this minimum salary is applicable to all categories of employee.

7. Are there restrictions on working hours? If so, please give details.The maximum duration of working time shall not exceed 40 hours per week, including overtime.

By way of exception, the duration of working time, including the overtime, may be extended beyond 48 hours per week, provided that the average work hours, calculated over a reference period of 4 calendar months, does not exceed 48 hours per week. Overtime work may not be performed without the agreement of the employee, except for acts of God or urgent works intended to prevent or to eliminate the consequences of an accident.

8. Is there a minimum holiday entitlement? If so, please give details. How many public holidays are there in a year and are they included in the minimum holiday entitlement?In Romania, employees are entitled to receive a minimum paid holiday leave of 20 working days. Also, there are 11 public legal holidays which are not included in the annual paid leave.9. What rights do employees have to time off in the case of illness or injury? Is that time off paid? Can an employer recover from the state sick pay granted to its employees?The ILC is suspended by law during an employee’s temporary sick leave. The duration of temporally sick leave can be up to a maximum of 183 days per year. The employee will be entitled to a monthly allowance of 75% of his average salary over the past 6 months in relation to leave caused by normal illness or injury, and 100% of his salary in the case of a contagious disease or urgent surgery.

The allowance corresponding to the first 5 days of the temporary sick leave is borne by the employer, while the National Health Insurance Fund is responsible for the payment of the allowance corresponding to the rest of the duration of the temporary sick leave.

10. What are the statutory rights of employees who are parents or careers (including those of disabled children and adult dependants)? How is employee’s pay affected during periods of leave?Under the RLC, employees are entitled to parental leave for child care purposes up to the point when the child is 2 years of age, and in the case of a disabled child this is extended until the child is age 3. The ILC is suspended during the parental leave and the employee is entitled to a monthly allowance of 75% of their average salary over the last 6 months, which is paid by the National Health Insurance Fund.

Additionally, pursuant to special relevant legislation, employees are entitled to parental leave in the case of a disabled child of up to 18 years of age.  In this case too, the ILC is suspended and the employee is entitled to a monthly allowance of 85% of the average salary of the past 6 months. Such an allowance is also paid by the National Health Insurance Fund.

11. Does a period of continuous employment create benefits for employees?Romanian legislation does not provide any benefits for long term continuous employment. However, although there is no relevant legal framework, there are many companies which, based on their internal rules, grant to their senior employees certain benefits (e.g. higher entitlement to paid holiday leave).

11.1. If individual employees are transferred to a new entity, are they deemed to retain their period of continuous employment?Employees are transferred to a new entity together with all their rights and obligations contracted before the transfer. Therefore, they are deemed to retain their period of continuous employment.

12. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees?Generally, according to the RLC, temporary employees and agency workers are entitled to the same rights and benefits as permanent employees.

Exceptionally, where a temporary/agency worker is employed under an agency contract, the future employer undertakes the obligation to provide the temporary employee with work protection equipment, except otherwise stipulated under the lease contract between the temporary employment agency and the future employer.

The salary received by the temporary employee for each assignment will be established by direct negotiations with the temporary employment agency and cannot be less than the gross minimum salary guaranteed at the national level. The temporary employment agency shall retain and transfer all contributions and taxes owed by the temporary employee to the state budget.

13. What statutory data protection rights do employees have?Each employer must be registered with the Romanian National Supervisory Authority for Personal Data Protection as an operator of personal data and must notify this authority with respect to the transfer of its employees’ personal data to another country in the European Union or outside the European Union.

Each employer has the obligation to inform its employees with respect to the company’s rights to transfer data abroad, and to obtain the employees’ written consent regarding the transfer of relevant data to non-European Union states.  

Such data refers to:• personal information regarding ethnic or racial origin, political, religious or philosophical beliefs or those of similar nature, trade-union allegiance, as well as personal data regarding the state of health or sexual orientation;• personal identification number or other personal data with a general identification function; • personal data regarding criminal offenses committed by the employee or regarding criminal convictions, security measures or administrative sanctions or contraventions applied to the employee.

In case of non-observance of the legal obligation to inform the employees in respect of the processing of their data and data transfer to other European Union countries and outside the European Union, employers risk being fined.

14. What protection do employees have from discrimination or harassment, and on what grounds?Government Ordinance 137/2000 with respect to prevention and sanctions applicable to all discrimination forms provides for the main rules relating to the individuals’ protection. In this respect, said Ordinance provides for rules relating to: (i) public access to administrative and legal services, health services or to any other goods and facilities; (ii) individuals’ access to education; (iii) freedom of movement, freedom of choice of residence and access to public places; (iv) right to personal dignity.

As a general rule, the law sanctions any form of discrimination regarding ethnic or racial origin, political, religious or philosophical beliefs or that of similar nature, trade-union membership, as well as personal data regarding the state of health or sexual orientation.

The RLC also provides that any direct or indirect discrimination against an employee, based on; gender, sexual orientation, genetic characteristics, age, national affiliation, race, colour, ethnicity, religion, political option, social origin, disability, family situation or responsibility, trade union affiliation or activity, is prohibited. This will cover any act or conduct, exclusion, difference, restriction or preference, based on one or several of the criteria referred to above, which has the aim or effect of denying, restraining or removing the recognition, use, or exercise of the rights provided for in the labour legislation shall represent direct discrimination. Any act or conduct seemingly based on criteria other than those referred to above, but which leads to discrimination, shall represent indirect discrimination.

With respect to harassment, although there is no mandatory requirement, employers are advised to create at their unit level a Harassment Committee, capable of solving any dispute in this regard with a view to avoid legal action in a court of law.

15. Do whistle-blowers have any protection? If so, please give details.The concept of “whistle-blower” is not regulated as such under Romanian legislation.

16. What rights do employees have when their employment contract is terminated? Please provide information on:16.1. Notice periods.Upon termination of their ILC due to reasons other than personal ones (e.g. suppression of a position) the employees shall benefit from active measures designed to fight unemployment and may receive compensation under the terms of the applicable collective labour agreement.

16.2. Severance payments.The RLC does not provide for compensations in cases of dismissal.  However, in cases of physical and/or mental disability of the employee, the same is entitled to receive a benefit, under the terms of the applicable collective labour agreement or the ILC, as the case may be.

Under the applicable collective labour agreements (differentiated by industries) each dismissed employee is entitled to certain compensation which may consist of 2 or 3 monthly salaries.

16.3. Any procedural requirements of dismissal.The RLC provides for certain procedures for each type of dismissal.

The most relevant procedure refers to dismissal for disciplinary matters.

The RLC provides that no sanction may be applied by the employer before performing a preliminary disciplinary hearing of the investigated employee. Further, the employer shall order the application of the disciplinary sanction through a written decision which must observe certain mandatory requirements. The decision shall be issued within 30 calendar days from the acknowledgement of the misbehaviour, but no later than 6 months from the date of the misconduct.

The decision shall be notified to the employee no later than 5 calendar days from the date of issuance and shall be effective from the date of communication.

17. What protection do employees have against dismissal? Are there any specific categories of protected employees?Romanian law does not provide for any category of protected dismissed employees.  However, the RLC provides that the employees dismissed reasons other than personal ones, shall benefit from active measures designed to fight unemployment and may receive compensation under the terms of the applicable collective labour agreement. To this aim, the employer shall communicate the decision regarding the dismissal for reasons other than personal ones to the Territorial Labour Inspectorate (“TLI”) and to the Local Public Employment Office.

18. What rules apply on redundancies?Under the RLC, employers must apply only one disciplinary sanction for an employee’s misconduct.

As a general rule, the employer’s decision with regard to the applicable disciplinary sanction (including the termination of the ILC) is proportionate to the severity of the misconduct.

In assessing the applicability of one disciplinary sanction or another, the employer shall also take into consideration the following: (i) the circumstances of the misconduct; (ii) the degree of guilt of the employee; (iii) the consequences of the misconduct; (iv) the general conduct of the employee; and (v) the disciplinary sanctions previously applied to the respective employee.

19. Are employees entitled to management representation (such us on the board of directors) or to be consulted about issues that affect them?Employees and/or representatives of the employees or of the trade unions are not entitled to be part of the company’s board of directors or company’s management.

19.1. Is employee consultation or consent required for major transactions (such us acquisitions, disposals or joint ventures)?According to the RLC, the employers are obliged to consult with the trade union or the representatives of the employees with regard to the decisions which might substantially affect their rights and interests.Thus, the employees, the representatives of the employees or the trade unions must be consulted at least in the following situations:• in the case of a temporary reduction of the activity due to economical, technological, structural or similar reasons for a period of time longer than 30 working days, if the employer intends to reduce the work program from 5 days to 4 days per week;• in the case of a collective lay-off, the employer shall consult the employees’ representatives or the trade unions in relation to any proposed methods and means in an attempt to avoid such collective lay-off or in order to reduce the number of employees to be dismissed, with a view to mitigating the consequences of the collective lay-off, by relying on social measures aiming, for example, to re-train and re-employ the dismissed employees;• in the case of determining the work quotas;• in the case of establishing the paid leave schedule for all the employees; • in the case of a business transfer;• in case of preparing the company’s internal rules.

20. What are the remedies that are available if an employer fails to comply with its consultation duties?In cases where the employer fails to comply with its consultation duties, the TLI may apply certain sanctions (i.e. contraventions) based upon the relevant notification registered by any employee with the TLI.21. Is there any statutory protection of employees on a business transfer? In particular:21.1. Are they automatically transferred with the business?A business transfer will usually result in the transfer of all the rights and obligations of the transferred employees.

21.2. Are they protected against dismissal (before or after the disposal)?The business transfer is not a reason in itself (neither for the assignor nor for the assignee) for the termination of the ILC or for a collective lay-off.

21.3. Is it possible to harmonize their terms of employment with other (existing) employees of the buyer?Yes, it is. By way of an agreement between the assignee and the employees' representatives, the provisions of the collective labour agreement, valid at the moment of the transfer may be annually renegotiated, not earlier than one year after the transfer has occurred. As a general rule, the most favourable collective labour agreement (between the assignor’s and the assignee’s collective labour agreement) is the one applicable to the transferred employees.

22. Do employer and/or employees make pension contributions to the state in your jurisdiction? If so, please give details.Under the ILC, both the employer and the employee bear the costs of state pension contributions.

23. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded? If so, please give details.As a general rule, an employer may grant performance bonuses to its employees and they are usually granted based on a provision under the ILC and/or based on employer’s internal rules. There are no specific restrictions/guidelines regarding bonuses.

24. If employees create IP rights in the course of their employment, do the employees or the employer own the rights?Subject to relevant provisions included in the ILC, the IP rights created by an employee under the ILC are considered automatically transferred to the employer (this is generally based upon the payment of the salary).  

25. It is possible to restrict an employee’s activities during employment and after terminations? If so, in what circumstances can this be done?  Must an employer pay its former employees remuneration while they are subject to post-employment restrictive covenants?When concluding the ILC or during its performance, the parties may negotiate and include in the contract a non-compete clause, imposing on the employee, after the termination of the contract, not to perform an activity competing with that performed by the employer. Employees subject to such a non-compete clause are paid a remuneration for the entire non-compete period.

This monthly non-compete remuneration is negotiated between the parties, but must be at least 50% of the ex-employee’s average gross salary over the 6 months prior to the termination of the ILC or, if the duration of the ILC was less than 6 months, the average gross salary of the employee during the ILC.

The non-compete clause shall be in force for a maximum period of 2 years from the termination of the ILC and it cannot limit the right of the former employee to exercise his/her profession.

26. Are there any proposals for major reform of employment law or pension law in your jurisdiction?The RLC was republished on May 15, 2011. The main amendments refer to: (i) probation period, (ii) notice period, and (iii) sanctions applicable to the employers by relevant Romanian authorities in case of non-observance of certain legal requirements.

The new pension law has been lately modified on December 23, 2010 and the main amendments refer to the method of calculation of pensions.

27. Does an employer need to have a subsidiary company, branch or other legal entity to employ people? If so, is there a requirement for a general manager or other key personnel?No, an employer does not need to have a subsidiary company, branch or other legal entity in order to employ people.  

28. Does salary need to be paid in the country in which the work is done?A Romanian employer shall pay salaries in Romania. However, in the case of secondment, the seconded employee shall receive the payment of the salary from the employer where to he/she has been seconded.

During the secondment, the employee shall enjoy the more favourable rights (either from the employer who has seconded said employee or from the employer who receives the employee).

29. Do meetings and documents need to be in your local language even if both parties speak good English?The only requirement related to the language refers to the documents submitted before Romanian public authorities which must be in Romanian language or translated in Romanian from another language and duly notarized.

30. What legal limitations are there on the notice period the parties can agree (for example minimum notice period).The RLC provides that employees dismissed for: (i) physical and/or mental disabilities, (ii) non-qualification for the occupied position, (iii) reasons not related to the employee personally and (iv) in case of collective lay-off, benefit from a notice period which may be of at least 20 working days.

31. What benefits does the employer have to provide in addition to salary?An employer does not need to provide an employee any additional benefits under Romanian law. However, in Romania, salary consists of: basic salary, benefits, extra-pay, as well as other supplements.

32. Are there circumstances where it is possible to engage someone as a consultant rather than employee? If so, what are those circumstances?There are no specific circumstances where it is possible to engage a consultant rather than an employee, they are entirely different. A consultant is a distinct legal entity that provides relevant services.

32.1. Where applicable, what are the advantages and disadvantages of engaging as a consultant rather than an employee?Many companies choose to contract with a consultant rather than hire an employee, in order to avoid the obligation to pay certain contributions to the state budget and to avoid the requirement to comply with strict labour law requirements.

33. What other key issues should a company employing someone be aware of?Generally, an employer should be well informed about the employment record and professional credentials of the future employee, as well as of the state of health, and, in some particular cases, for example, the employer should require the future employee’s criminal record.

For further information please contactRoger JamesDDI: +44 (0) 1223 225286Email: roger.james [at]

This article intended as an overview of the subject area and should not be relied on as legal or other professional advice. You should seek specific legal advice before taking action on any of the issues raised. Taylor Vinters is a trading name of Taylor Vinters LLP. Taylor Vinters LLP is a limited liability partnership registered in England and Wales (registered number OC343503) which is authorised and regulated by the Solicitors Regulation Authority and is authorised and regulated by the Financial Services Authority for investment business. A list of members is available from our registered office.

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