InfoBusiness Romania - online guide
Employment legislation and social securities
In Romania social employment relations are protected by means of an impressive group of regulations at the core of which stands the Labor Code, as a normative act that sets out the minimum general conditions for conducting relations among the participants on the employment market. On March 1st, 2003 came into force the new Labor Code, adopted through the Law 53/2003.
The provisions of the Labor Code are supplemented with the provisions of other normative acts that regulate specific domains and institutions included within the framework of social employment relations, the most important of which are Law no. 130/1996 (as republished) regarding the collective employment contract and Law no. 130/1999 as further amended regarding certain measures for the protection of employees, as well as the provisions of the Collective Employment Contract concluded on a National Level.
Employment legislation is closely connected to the legal norms regarding social security. The normative act that regulates the organization and functioning of the current social security system in Romania is Law no. 19/2000 as further amended regarding the public system of pensions and other social security rights.
Individual employment contract
Most of the work relations carried out in Romania are established on the basis of the individual employment contract concluded between the employee the person who renders the work, and the employer the individual or legal entity for the benefit of whom/which the work is rendered.
The law solely provides for two situations in which the work may be rendered in the absence of concluding an individual employment contract:
- in the case of the members of the boards of administration, censors, local and county counselors, experts, arbitrators, mediations and other persons who perform various services on the basis of special laws, as said persons are paid on the basis of such special laws;
- in the case of persons who carry out works for which they receive copyrights.
The individual employment contract must be concluded in compliance with the provisions of the Labor Code and the clauses of the collective employment contracts concluded on a national level, on a branch level and on a unit level, as the case may be.
The new Labor Code brings a series of new regulations out of which we will try to enumerate the most important ones.
The new Labor Code preserves the rule of carrying out a work pursuant to the ILC (Individual Labor Contract) for an undetermined period of time, concluded in a written form, and also regulates a series of variations of the ILC (1) ILC for a determined period of time, (2) work by a temporary labor agent, (3) ILC with limited working hours and (4) work carried out at home.
The obligation to conclude an individual labor contract in a written form is the employer's responsibility.
Pursuant to the Labor Code, providing employment for a person for whom no individual labor contract was concluded is sanctioned with a fine that range between ROL 20,000,000 up to ROL 50,000,000.
Variations of the ILC
A. ***ILC for a determined period of time***
The ILC for a determined period of time is concluded only in written form(if the ILC not concluded in a written form it is considered to have been concluded for an undetermined period of time) and only in the following situations:
A. in order to replace an employee in case of suspension of the ILC, except for the situation when the respective employee takes part in the strike;
B. temporary increase in the activity of the unit;
C. in order to carry out seasonal activities;
D. in case it is concluded pursuant to certain legal provisions issued in order to temporarily favor certain categories of unemployed persons;
E. in other situations expressly stipulated under special laws.
The determined period of time for which an ILC can be concluded cannot exceed 18 months.
B. ***Work by a temporary labor agent***
It refers to the work carried out by a temporary employee who, under the authority of the temporary labor agent, carries out work in favor of an employer named user in the Labor Code. The temporary labor agent can be that company authorized by the Ministry of Labor and Social Solidarity that provides for the user, for a temporary period of time, qualified personnel to be employed and paid for this purpose.
A user can refer to temporary labor agents only for the execution of a precise task of a temporary nature, named temporary labor mission, and only in the following situations:
- in order to replace an employee whose ILC is suspended, for the duration of the suspension;
- in order to carry out seasonal activities;
- in order to carry out specialized or occasional activities.
Pursuant to the provisions of the new Labor Code, the parties are allowed to include in the ILC different clauses, as follows:
- the clause referring to professional training;
- the unfair competition clause according to which the employee, in exchange for a monthly compensation, in a quantum of at least 25% of his/her salary, is bound not to carry out any activity which is in competition with the one carried out for his/her employer;
- the mobility clause for the situation in which, due to the specific of the work carried out, the employee cannot fulfill his/her work obligations in a fix working place, the employee receiving in this case benefits in kind or in cash meant to compensate the supplementary effort;
- the confidentiality clause.
The execution of the ILC
During the execution of the ILC, both employee and employer are bound to comply with their obligations under the ILC, the collective labor contract, the branch level collective labor contract, national collective labor contract and the labor legislation.
Each employer has to pass an internal Regulation within 60 days as of March 1st, 2003, the date of coming into force of the new Labor Code. The Internal Regulation mainly includes aspects regarding the labor conduct/discipline, provisions referring to conduct violation and corresponding sanctions, the disciplinary procedure, employer's and employees' the rights and obligations, the application method of other legal or contractual provisions, etc.
Also, until December 31, 2003, each employer is bound to establish a general employees' record (the "Register") that will be registered with the Labor Inspectorate in the jurisdiction where its headquarters/domicile lies.
The Register includes identification elements of all employees, the conclusion date of the contract, the activity starting date, the modification or suspension of the contract, its duration, the work duration in hours/day, the occupation (the position and/or trade), the basic salary stipulated upon the conclusion date of the contract, the date and the legal foundation pursuant to which the contract is terminated.
The Register is kept at the employer's headquarters/domicile and shall be made available for the labor inspector or for other public authorities, upon their request, under the law.
Collective employment contracts
Collective employment contracts may be concluded at the level of units, activity branches and at a national level. Collective employment contracts may not contain clauses that set out rights at a level that is inferior to the one set out under the collective employment contracts concluded on a superior level.
According to the law, a company with more than 21 employees is obligated to initiate the procedure of collective negotiation with the union or the chosen representatives of the employees (in the event that the employees have not established an union or not all employees are union members) in view of
concluding the collective employment contract:
- after at least 12 months following the date of the previous negotiation, which was not followed by the conclusion of the collective employment contract or following the date of entering into force of the collective employment contract, as the case may be;
- a maximum of 30 days prior to the expiration of the collective employment contracts concluded for one year.
The parties do not have any obligation to conclude a collective employment contract, but the law provides for the employer's obligation to initiate the procedure of collective negotiation, and, respectively, the obligation of the employees' representatives to participate in the negotiation in view of concluding the collective employment contract. The infringement of the legal provisions is considered offence and it is punished with a penalty that ranges between ROL 3.000.000 and ROL 6.000.000 (article 5 Law no. 130/1998).
The object of the collective negotiation is to reach agreement on, at least: salaries, the duration of the work period, the work program and the work conditions. Upon concluding the collective employment contract, the legal provisions regarding the employees' rights are of a minimal nature.
Collective Employment Contract no. 1.116/2003 concluded on a National Level for 2003
The main provisions of the Collective Employment Contract concluded on a National Level for 2001-2002 refer to the work period, the work conditions, the waging system, vacation and days off, conditions of conclusion, performance and termination of the individual employment contract, professional training, etc.
Therefore according to the contract, the normal duration of the work period is eight hours per day or 40 hours per week, however, pursuant to negotiation on the level of an unit, to conform the program to the production requirements, one may set out a weekly program of 36 up to 44 hours, provided that the monthly average should be 40 hours per week, and the program set out should be announced one week in advance. In those work sectors where the working regime is influenced by seasons, the duration of the working hours is established by negotiation with the Trade-unions, with the condition that the average number of hours in a week should not exceed 48 hours, including the overtime, and the duration of the daily program should not exceed 12 hours.
Social insurance system
Contrary to the previous social insurance system, which related to the seniority and the wages of the insured, the current public system of pensions and other social insurance rights in Romania is based upon the principle of contributions, according to which social insurance funds are formed on the basis of contributions owed by the individuals and legal entities participating in the public system. Within the framework of said system, social insurance rights are due to the insured under the paid social insurance contributions.
To this effect, the law provides that the records of the social insurance rights and obligations in the public system should be made on the basis of the personal social insurance code to be attributed to each insured person. Notwithstanding the fact that up to the date of drafting this report, the activity of organizing the social insurance records on the basis of the unique registration code has not been implemented, the rearrangement of the method of registration of such records represents an important step with respect to the modernizing of the social insurance system in Romania.
The most important contribution is owed to the state social insurance budget. According to the law regarding the public system of pensions and other social insurance rights, the following categories should contribute to the state social insurance budget:
- the insured that owe social insurance individual contributions;
- legal entities where the insured provided for under article 5 paragraph (1) points II(8) and VI(9) of Law no. 19/2000 carry out their activity;
- the National Agency for Workforce Employment that administers the budget of the Fund for the payment of unemployment support;
- the persons provided for under article 5 paragraph (2)(10) of Law no. 19/2000, which conclude an insurance contract.
Apart from the contribution to the state social insurance budget, one owes contributions to the fund required for the payment of unemployment support, to the health social insurance budget and to special funds (regarding state education support, social solidarity, etc.).
Insurance for labor accidents and professional diseases
Starting with March 1st, 2003, according to the Labor Code, the employer is bound to ensure all employees against labor accidents and professional diseases, under the law.
In accordance with the provisions of the Labor Code, Law 346/2002 (which shall come into force on January 1st, 2004) stipulates that the insurance for labor accidents and professional diseases which is part of the social insurance system and is guaranteed by the State, becomes mandatory for all employees hired with an ILC, the risk being assumed by the employers as beneficiaries of the outcome of the work carried out and the insurer is the Insurance National Fund for Labor Accidents and Professional Diseases (the Fund). Nevertheless, the Fund was to be established on January 1, 2003 and consequently, for the period between January 1, 2003 January 1, 2004 the employer owes a fix contribution of 0.5% referred to the salary fund, destined to financing the organization of the Fund's activity and to the constitution of the initial fund for the functioning the insurance system for labor accidents and professional diseases.
Rights of the insured
The payment of the contributions owed in the conditions provided for under the law allows the insured to benefit from the social insurance rights secured by the public social insurance system.
The most important of these rights is the pension right. The law provides for five categories of pensions: the age limit pension, the anticipated pension, the partial anticipated pension, the invalidity pension and the successor pension.
The insured of the public system may benefit, apart from the pension, from the following:
- Indemnity for temporary work incapacity, caused by usual diseases or accidents not related to work, professional diseases and work accidents;
- Services for the prevention of sicknesses and recovery of the work capacity;
- Maternity indemnity;
- Indemnity for the raising of babies or for tending to a sick child;
- Support in the case of a death.