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Romania: The Impact of Romania’s New Employment Regulations – the Good and the Bad

Romania: The Impact of Romania’s New Employment Regulations – the Good and the Bad

Issue 10.9
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The end of 2022 has brought numerous and substantial updates to employment legislation in various areas, such as adjustments to the minimum content of the internal regulations and to the mandatory template for the employment contract, as well as a whole new piece of legislation regulating social dialogue: Law no. 367/2022 to replace the former Law no. 62/2011.

Some of the most noteworthy amendments brought by the new Social Dialogue Law are the reduction of the threshold at which collective negotiations become mandatory in a given unit from 21 to 10 employees, the reduction of the representativity threshold of unions in units from 50% to 35% of the total number of employees, the newly introduced guidelines on how to conduct the information and consultation process with unions and/or employees’ representatives, as well as the (re)introduced possibility to conclude a collective bargaining agreement at national level.

Whereas the new law brings a series of welcome clarifications for the labor market and former legislative overlaps have been eliminated, there are still some open points for clarification which the legislator should perhaps consider addressing in future updates.

For instance, as far as collective bargaining agreements at a unit level are concerned, the new law expressly gives the initiative of collective negotiation to either of the social partners (i.e., employer and the employees’ representatives/trade union), whereas the former law limited this initiative to the employer.

Nevertheless, the law also institutes an administrative fine for employers who fail to carry out the mandatory collective negotiation process at companies with at least 10 employees (for comparison, the former law only sanctioned employers refusing to start the collective negotiation initiated by the representatives of employees). The current law therefore appears quite inconsistent as regards to the party who must initiate the process despite appearing to have split the responsibility equally between the employer and the trade union/employees’ representatives. Moreover, by extending the sanction to employers who simply fail to carry out negotiations – i.e., including where they fail to initiate the process – the new law seems to place more burden on employers.

A particular discussion may appear where employers have neither representative trade union(s), nor elected employees’ representatives, especially since the law now expressly prohibits employers from intervening in the election process of the employees’ representatives, allowing employers to only facilitate the process at the express request of the employees. Thus, the law now sanctions the employer for its lack of initiative in negotiating the collective bargaining agreement, while, at the same time, drastically limiting the potential involvement of the employer in the election of the employees’ representatives in order to gain a partner for discussions and negotiations.

Lacking elected representatives, one could reasonably argue that the employer is simply not under obligation to initiate any collective negotiation process and could not be subject to the fines applicable by labor inspectors, as it lacks a partner for discussions.

However, in order to accommodate all the provisions of the Social Dialogue Law, the safest and a more practical approach would be for employees to be periodically informed about their right to organize an election process, with an emphasis on the powers the elected representatives have and the employer’s openness to negotiate the collective bargaining agreement. In this manner, employers can demonstrate that they have tried to initiate the collective negotiation in spite of lacking a legitimate partner for negotiation.

Given such situations may arise in practice, there still seems to be room for improvement in the legal framework and we can expect that the so-called “reform” of the labor market is not yet finalized.

By Mihai Anghel, Partner and Co-Head of Employment, Tuca Zbarcea & Asociatii

This article was originally published in Issue 10.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Romanian Knowledge Partner

Țuca Zbârcea & Asociații is a full-service independent law firm, employing cross-disciplinary teams of lawyers, insolvency practitioners, tax consultants, IP counsellors, economists and staff members. It also operates a secondary law office in Cluj-Napoca (Romania), and has a ‘best-friend’ agreement with a leading law firm in the Republic of Moldova. In addition, thanks to the firm’s dedicated Foreign Desks, the team provides the full range of services to international investors seeking to gain a foothold or expand their existing operations in Romania. Since 2019, the firm and its tax arm are collaborating with Andersen Global in Romania.

Țuca Zbârcea & Asociaţii is providing legal services in every aspect of business, covering all major areas of practice: corporate and M&A; litigation and international arbitration; corporate tax; public procurement; TMT; employment; insurance; banking and finance; capital markets; competition; healthcare and pharmaceutical; energy and natural resources; environmental; intellectual property; real estate; regulatory legal services.

Țuca Zbârcea & Asociaţii is a First-Tier law firm in all international legal directories and a multiple award-winning law firm both locally and internationally. It received the CEE Deal of the Year Award (DOTY Awards 2021) and the Law Firm of the Year Award: Romania (IFLR Europe Awards 2021). 

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