Romanian Employment Regulation
An Executive Summary
Employment relations in Romania are mainly governed by the Labor Code and Law no. 62/2011 regarding social dialogue. The Labor Code contains mandatory provisions for the basic rights of the employees, which must be observed, as minima, by each employer. More favorable rights may be granted to employees pursuant to collective bargaining agreements, internal regulations or individual employment agreements. Also, the employer has several declaratory obligations towards the labor authorities.
In addition, a wide array of laws and secondary norms provide specific mandatory provisions with respect to the occupational safety and health measures, remote work, maternity protection, equality of opportunity & fair chances, prevention of harassment & discrimination, collective negotiation, secondment to and from Romania et alia that must be observed by the employer.
It is important to note that employees enjoy considerable rights and Romanian courts have no hesitation in upholding employee rights to the detriment of their employers. As such, there is a focus on procedure when it comes to respecting their rights. Failure to follow procedure to the last detail can lead, not only to fines (which generally are immaterial), but also the employees dragging out disputes for a long period of time.
The employer may be either a legal or a natural person and individuals can be hired only if they turned 16, or 15 but with parental consent.
There are limited provisions on hiring requirements out of which the most significant is that the candidate has to be informed on the essential clauses of the individual employment agreement. Also, there is little room for background check, namely the employers may require information from the candidate and from previous employers, as well as (if justified) a criminal record.
Companies are free to set up the recruitment process as they see it fit or may outsource it to specialized recruitment third parties. All the way through the hiring process the employer must observe the equality of opportunity and fair chances principles and anti-discrimination legal provisions and it is, however, clearly forbidden to ask for negative pregnancy tests. In this respect it is advisable that the questions asked during the interview are not too personal or in connection to a situation that may stand for discrimination criteria (ethnicity, sexual preferences, medical record, political views etc.).
Also, the company is required to comply with the principles and limitation regarding personal data protection as stipulated under GDPR and local laws. PrivacyON
Prior to employment it is mandatory for the candidate to present a medical certificate approving that he/she/they is fit for the work to be performed.
Hiring foreigners is allowed in Romania both from the EU States and outside EU but is subjected to special legislation and following certain procedures.
- Registration with labor authorities
Each employer has the obligation to set up a general record of employees (REVISAL), comprising all the individual employment agreements active or terminated. The events registered in REVISAL are the conclusion, amendment, suspension or termination of employment agreements.
All employers have the obligation to fill in the data in the REVISAL system using the software application distributed by the Labor Inspectorate free of charge or through their own software applications (that correspond to the criteria provided for by the law).
Employers may outsource the service of filling in and delivery of REVISAL data by entering into services agreements with the providers duly registered with the territorial labor inspectorate, having the obligation to inform the relevant territorial labor inspectorate with respect to the conclusion of such agreements, in writing.
All registrations must be performed by observing specific deadlines provided under the law, and a new agreement should be registered at least 1 day prior to the first day of work.
- Employment Agreement
The template of the individual employment agreement is established by law, providing the minimum mandatory clauses and there is little possibility for the employer to adjust it. However, the parties may negotiate and add special clauses such as non-compete obligation for the employee, IP rights transfer, non-solicitation clause, mobility clause, confidentiality clause.
The employer is responsible for executing the employment agreement in written form and as a general rule, the individual employment agreement must comprise the job description as well.
For remote work, part-time work and temporary employees there are additional specific mandatory clauses to be provided in the agreement, as well as specific obligations to be observed by both employer and employee, while the employer is bound to make a special registration with REVISAL in this respect.
The employment under Romanian law is, as a rule, concluded on unlimited time period and only exceptionally for specific reasons provided by the Labor Code, it can be concluded for a fixed term. Also, there is a limit (i) on how may subsequent fixed term agreement may be concluded with the same employee – maximum 3, and (ii) on the maximum time period – maximum 36 months.
Trial period is allowed and customary but not mandatory. The maximum length for the trial period is (i) 90 days for standard roles and (ii) 120 days for managerial roles. The employment agreement may be terminated by either party without any procedure, anytime until the last day of the trial period.
- Personnel files
The employer is obliged to keep for every employee, a personnel file comprising of certain mandatory documents relevant to each employee. The employee personal file contains at least the following documents: papers required for employment, individual employment agreement, addendums and other documents regarding the amendment, suspension and termination of individual employment agreements, graduation documents/qualification certificates, as well as any other documents certifying the legality and accuracy of the information recorded.
Such records must be kept at the work place of the employee.
- Salary, Salary Rights, Income Tax and Social Contributions
According to the Romanian law, the employers are bound to pay the employees a monthly salary, in RON, that cannot be set below a minimum threshold established yearly by government decision. The employee may as well receive in-kind benefits such as meal tickets, gift tickets, gym and medical subscription, company car, housing, access to private pension funds etc. but these are all subject to the parties’ negotiation. The employer must, however, mind the tax and accounting laws regarding such benefits, since some of them might be subjected to certain taxes. Tax Practice
Pursuant to the national tax legislation any employer is obliged to calculate, withhold and transfer to the state budget the income tax and social contributions owed by the employees, and in this respect the employer submits with the tax authorities a monthly fiscal statement, that is considered to be writ of execution against the employer.
- Working time, Overtime & Working Hours
The legal working week for full-timers is 40 hours, with 8 hours daily, from Monday to Friday with 48 consecutive hours off during week-ends.
Any time performed on top is considered overtime and can only be performed upon the employer’s request and with the consent of the employee that should be expressed in writing if the employee works remotely.
Overtime cumulated with the normal working time must not exceed 48 hours/ week and must be compensated with free time within the next 90 days or, if this is not possible, with a salary bonus of at least 75% of the gross base salary (by negotiations and internal policies the bonus may be higher – customary is 100%).
Overtime is forbidden in the cases of employees under the age of 18 and part-timers.
Working during legal holidays is as a rule forbidden, but when exceptionally allowed it must be compensated with free time during the next 30 days or, if not possible, with a salary bonus of at least 100% of the gross base salary.
It is considered to be night-employee the one who works at least 3 hours/day or 30% of the monthly working time during the hours 22:00 – 06:00, and he/she/they are entitled to a reduction of 1 hour of the daily working time or with the salary bonus of 25% of the gross base salary.
There are special limitive provisions allowing (i) for the maximum working time to be extended but also within certain limits, (ii) for uneven working schedule or (iii) tailored working schedule.
According to the Labor Code, the employer must keep at the working place a daily record/logbook of the working hours performed by each employee, mentioning beginning and ending hours of the effective working program and produce this record/logbook to the control of the labor authorities, whenever this is requested.
- Rest time & Leaves
The rest time between two working days is at least 12 consecutive hours. As an exception, it can be lowered to only 8 consecutive hours for employees working in shifts.
The weekly rest time is, as a rule, during the week-ends (Saturday and Sunday), for 48 hours consecutively. If this rest time cannot be awarded during week-ends and it is decided to be in other days of the week, the employee will benefit from a salary bonus, which must be determined in the employment agreement.
The minimum annual leave is of 20 working days and it does not include legal holidays and paid time off which may be provided under various legal provisions. Certain categories of employees benefit of extra 3 days of annual leave (employees with disabilities, the ones working under hazardous conditions or under 18 years old).
The yearly leave may be reported for the following 18 months calculated from the moment the right to the annual leave was born, but only if the employee cannot take the leave during that year for justified reasons.
Financial compensation in lieu of the yearly leave is forbidden, except in case of termination of employment, when the employer is bound to pay the employee the value of the unused leave days.
Other types of leave include professional training leave (paid or unpaid), unpaid leave for personal reasons and paid time off during legal holidays (approximately 15 days/year but subject to change by Government decision). Special laws regulate certain types of leave when the employee is entitled to an indemnity paid by the State (with some exceptions) which is usually raging between 75% and 100% of the base salary: such as maternity leave, parental leave, paternity leave, sick, disability, quarantine leaves.
- Professional Training
The provisions of the Labor Code set forth the obligation of employers to organize professional training at least once every 3 years for companies with less than 21 employees and every 2 years for more than 21 employees. Breach of this obligation entitles the employees to a leave for professional training, paid by the Company, for maximum 10 days or 80 hours.
The training may be performed (i) either by an independent third party contracted in this respect, or (ii) internally by some employees designated in this respect and by executing a minute of the training. The employer and employee may sign professional training addendums to the employment agreement whereby they agree that the employee is forbidden from leaving the company for a certain time period unless they reimburse the employer with the value of the training.
The employer with more than 20 employees must elaborate and apply annually professional training plans, after consulting the employee’s representatives or the trade union.
- Occupational safety and health
Employers are obliged to ensure the health and safety of employees in all aspects related to work, at their own cost. Under the Romanian law, the employer should provide periodical OSH instruction sessions either directly through certain designated employee(s), or such services may be outsourced to a specialized third party. Also, the employer is obliged to inform the employees on the procedures related to the emergency situations such as fire, earthquakes etc. and provide adequate training and keep a record of work accidents. The safety and health incidents must be reported along with all necessary papers to the competent authorities for investigation.
- Termination of employment
As a general rule the employment is concluded for an unlimited time period and may only be terminated with the observance of certain strict procedures, otherwise the employers run the risk of litigation for unlawful termination and hence, being sanctioned by the courts and being obliged to reinstate the former employee, as well as to financially compensate the employee with an amount equal to the cumulated salaries he/ she/ they would have earned if not terminated, while occasionally moral damages may also be established.
According to Romanian Labor Code there are three (3) ways of terminating the employment agreement by the parties, namely: resignation, mutual agreement, dismissal, and two 2 types of dismissal: with cause (on the grounds related to the employee’s conduct/activity) and without cause (not related to the employee), that in its turn may be individual or collective.
In addition, an employment is considered terminated by law when the fixed period expired (if not renewed), by the death / dissolution of the parties, if the employee (or even the employer natural person) is incarcerated for serving a prison sentence and other specifically provided cases.
When an employment agreement is terminated, the employer is obliged to provide to the employee a certificate attesting the worked period and an excerpt from REVISAL.
- Internal Regulation, Anti-harassment/Non-discrimination Policies
As a general principle, each employer must adopt a set of rules applicable to all employees. Romanian Labor Code sets forth the minimum mandatory clauses of the internal regulation, such as appraisal procedure, misconduct investigation procedure etc. This is not subject to negotiation with the employees but merely subject to consultation.
Employers have specific obligations related to preventing discrimination and harassment at work and ensuring equal and fair treatment and opportunities for all employees. This may include adopting a special internal procedure, raising awareness amongst the employees, implementing an internal procedure on addressing any potential sexual harassment complaints, eliminating any pay gap for equal work. Failure to conduct a proper and transparent investigation in case any harassment claim arises, may result in reputational damages, lengthy litigation and associated costs, damages payable to the victim, specific remedial actions imposed by the national authority in charge with preventing and sanctioning acts of discrimination, as well as administrative fines.
- Unions and Collective Bargaining Agreement
Unions represent the result of the free associations of the employees and in order to set up a union there must be a minimum 15 employees from the same company.
The collective bargaining agreement does not equate to a union. Any company having at least 21 employees must initiate negotiations for a collective bargaining agreement, although there is no legal obligation to conclude it if there are divergences. Irrespective of collective bargaining agreement being or not executed, the employees may choose to unionize.
- Employees’ data processing
Under the EU Regulation 679/2016 – General Data Processing Regulation (GDPR), employers have specific obligation in relation to processing the personal data of their employees. PrivacyON
- Conflicts and Sanctions
Conflicts between employer and employees are frequent and can take up the form of strikes, petitions, complaints addressed to the labor authorities, mediations procedures or even litigation. Individual labor disputes are usually submitted to local tribunal but, alternately they may also be settled amicably with the help of an external consultant specialized in labor law.
Under Romanian law, all companies must keep the Sole Inspection Registry, whereby all and any inspections and investigations conducted by the relevant authorities are mentioned.
Romanian employment and labor laws are subject to constant changes in order to adapt to the market and new employee cohorts need and took a more rapid pace during the recent years, as such, this material is for informative purpose only and under no circumstances will be interpreted as legal advice.