Romania: 2023, Looking ahead
2023 a year of implementing new employment law legislation
In 2023, Looking ahead, we explore the most important trends and developments related to labour and employment law in Romania.
Implementing the updates of the Labour Code
During the last months of 2022 the Romanian Labour Code was extensively updated by Law No. 283/2022 in order to implement EU Directive No. 1152/2019 and No. 1158/2019. The changes regarding the employer’s obligation to inform the employees on the conditions of their employment have led to a new minimum content for the individual employment agreement that is now regulated by a new ministerial order. Starting with the date when the changes were made in the Labour Code every new individual employment agreement that will be drafted needs to include additional mandatory information. In order to comply with the new legal provisions, all employers need to update their drafts for the individual employment agreements. It is not mandatory to update the content of the existing individual employment agreements; however the employer needs to comply with any demand of their employees for information that is covered by the new obligation to inform the employees on the conditions of their employment.
A new type of leave (carer leave) and the possibility to take time off for family medical emergencies are now included in the Labour Code and in the near future, additional rules on how to implement these new legal provisions are expected to be enforced by Government Decision. In order to have functional mechanisms for implementing at Company level specific rules on how these new legal provisions will be applied, employers will have to also update their Internal Regulations and include new provisions in the Collective Labour Agreements that will be negotiated in the future.
In case of dismissal, the employee has the right to ask the employer for additional motivation of the decision if the employee considers that the dismissal was a result of the way in which the employee has exercised specific rights related to his employment, such as the right to be informed or the right to benefit from time off or from carer leave.
At the same time existing legal provisions regarding other types of leave such as paternal leave or the leave for caring for family members that have serious medical conditions have also been updated in order to be in line with EU Directive No. 1158/2019.
As the changes are quite extensive, in 2023 efforts will be made by employers in order to fully comply with the new legal provisions regarding employment law. It is possible to see a change in the way the employees will word their claims in dismissal cases and new types of court cases may appear, regarding the new rights the employees have after the update of the Labour Code.
A new Law on Social Dialogue
At the end of December 2022 a new Law on Social Dialogue, Law No. 367/2022 has been enforced, replacing Law No. 62/2011. The law regulates union and employers’ organizations, collective negotiations and collective labour agreements, the exercise of the right to strike and jurisdictional rules. The new law aims to encourage a larger number of employees to seek collective negotiations and to ensure that a larger number of employees are covered by collective labour agreements.
Collective negotiations are mandatory for all employers that have at least 10 employees (this minimum level used to be at least 20 employees) and at sectorial level. It is not mandatory to conclude a collective labour agreement after the collective negotiations.
A union can be recognised by courts as being representative at the Company level if it has at least 35% of the total number of employees as members. This minimum level for being recognized as representative has also been decreased from 50%+1 employee of the total number of employees. The role of the employees’ representatives has been diminished as priority is given to collective negotiations with unions.
It is also possible to have negotiations at a national level and to have a collective labour agreement at the national level. This was not possible under the previous law on social dialogue.
New rules regarding how and when employees can strike are also included in the new law. A new type of strike – the strike against the social policies of the Government has been introduced.
All existing collective labour agreements will remain in force until the date they expire and all new collective labour agreements will be negotiated following the rules set by the new law. It is expected to see an increase in the number of collective negotiations during 2023.
As a result of the previous law on social dialogue, Law No. 62/2011, being abrogated some jurisdictional rules for individual labour disputes are no longer governed by exceptional rules which may lead, at least for a transitional period of time, to changes regarding what courts will handle this type of cases. It is expected that new exceptional rules will be included in the Labour Code during the first part of 2023.
New fiscal regime for financial advantages provided to employees
Starting with January 2023 a number of financial advantages that can be offered to employees by employers will no longer be considered as taxable income if the total amount of these financial advantages will not exceed 33% of the base salary of the employee. Financial advantages that are granted over this limit will be considered taxable income.
Included in this category are the advantages granted based on mobility clauses; the value of meals provided by the employer (limited to 30 RON/day) for the employees that don’t receive meal tickets from their employers; rent or accommodation costs for employees (limited to 20% of the minimum wage, 600 RON/month); the value of touristic or recovery costs, including travel costs for the employees and their families; the contributions to a private pension fund (limited to 400 EUR/year); private insurance (limited to 400 EUR/year); the amounts granted to employees that work remotely for covering part of their energy costs (limited to 400 RON/month) and the value of a subscription to a sports facility.
None of the advantages mentioned are mandatory for the employer, however granting at least some of these advantages can be a form of salary increase that can be offered – mainly in collective negotiations, in order to cover for the increase in COL, as they have a lower cost for the employees as they are considered non-taxable income.
The employer will decide on the order in which these advantages will count towards the non-taxable limit of 33% of the base salary.
Potential other changes in legal provisions
Romania is yet to implement EU Directive No. 1937/2019 on the protection of persons who report breaches of Union law (“Whistleblower Directive”) and a new law regarding this matter is expected to be enforced during 2023.
Also, as there were important changes in the main employment laws – the Labour Code and the Social Dialogue Law, of which some were made without correlation with existing legal provisions it is expected to have additional changes, mainly in the Labour Code.