Looking Ahead 2024: Romania
Various changes in employment laws and policies will take effect this 2024 in Romania.
1. Implementing mandatory policies
Over the last year, new legal provisions that include obligations for employers to implement internal policies regarding specific internal matters have come into force. At the end of 2022, Romania implemented EU Directive No. 1937/2019 or the protection of persons who report breaches of Union law (“Whistleblowing Directive”). In December 2023, the provisions regarding setting up internal reporting channels came into force. Starting 17 December 2023, all employers that have more than 50 employees should have set up such reporting channels, drafted appropriate internal policies to make the employees aware of the provisions of these policies, and implemented them. After other important changes were applied to employment law in Romania during the last months of 2022, the whistleblowing legal framework and the necessity to set up functional mechanisms within this framework were relegated to the background by a lot of employers. Some of them have yet to comply with the obligations that are set for them by the law. These employers will have to take the necessary measures in order to set up functional internal channels as soon as possible in order to avoid administrative measures.
Local companies that are part of international groups have been setting up centralized reporting channels and implementing electronic platforms in order to facilitate the reporting process, while smaller companies have tried to implement a variety of channels in order to ensure easy and direct access to at least one reporting channel. All employers that have implemented internal reporting channels are assessing if the resource allocation that was projected is appropriate for their internal needs and necessary adjustments will be one of the focuses for 2024.
The authority that was entrusted with verifying the compliance with the whistleblowing law is the National Agency for Integrity (NAI), a pre-existing authority. NAI did not initiate any control activities at the end of 2023 since the deadline for internal implementation was so close to the end of the year, but during 2024, such actions are expected.
In addition to the obligation of internal implementation of the whistleblowing law, according to a Government Decision in October 2023, employers also have to implement an internal policy on the prevention and fighting of gender-related harassment and moral harassment at the workplace. Government Decision No. 970/2023 also includes a guide that employers can use in order to set up internal policies. However, this guide needs to be adapted in a case-by-case manner in most cases. It should also be noted that the employers already had the obligation to include provisions regarding non-discrimination and prevention of harassment in their internal regulations (an internal document that is mandatory for all employers), but according to the new Government Decision, they should either implement a new comprehensive policy or update their internal regulations in order to comply with the legal provisions. While the Government Decision focuses on gender-related harassment and moral harassment at the workplace, most employers that have already drafted their internal policies choose to address all types of harassment.
It is expected that the labour inspectorates will include checking for the existence of the internal policy on preventing and fighting harassment at the workplace in their control actions for 2024.
2. Minimum wage
The gross minimum wage guaranteed for payment in Romania has increased in October 2023 from RON 3,000 (approximately EUR 600) to RON 3,300 (approximately EUR 660). While there have been discussions of a further increase in January 2024, this additional increase will most likely occur in July 2024, when the minimum wage is expected to become RON 3,700 (approximately EUR 740). Discussions regarding the further increase of the minimum wage have taken into consideration the need to implement EU Directive No. 2022/2041 on adequate minimum wages in the European Union and the projected value of the minimum wage in July 2024 is considered to be close to what could be considered an adequate minimum wage. Further negotiations are expected over the next months as union federations are demanding a higher increase in the minimum wage. The evolution of the inflation, even if projected to be on a descending trend, might also have a different impact on the one that is expected at this time.
3. Changes in adjacent legislation
While 2023 did not bring important changes in employment law, proving to be stable after the extensive changes that have been implemented in the Labour Code and the new law of social dialogue in 2022, changes made in the adjacent legislation at the end of 2023 are expected to have an impact on employment relations this year.
Most of the legislative measures that impact the employment relations are fiscal ones, with mostly employees being directly affected by these measures. In order to encourage the IT sector in Romania for a long period of time, employees in the IT sector were exempted from paying income tax (which in Romania is 10%). This will no longer be the case starting in January 2024. Some of the IT companies have decided to cover at least part of the difference in net income that their employees will experience this year, as such, being indirectly affected by the fiscal measure. Other companies announced that they would not be covering the decrease in net income of their employees, but such conduct might result in a decrease in attraction for employees.
Also, starting January 2024, the amounts that the employers offer the employees that work remotely as teleworkers for partially covering the costs of the resources needed in order to perform the telework are excluded from the amounts that are exempted from income tax and social contributions. Previously, the employees could have benefited from up to RON 400 (approximately EUR 80) a month for working remotely as teleworkers without this amount being considered a taxable income. At this time, employers can still partially cover the costs of the resources needed in order to perform the telework, but these amounts (without any maximum limit) are now subject to income tax and social contributions. An important number of employers have chosen not to continue granting such amounts, and this might, in the future, deter employees from choosing to work remotely as teleworkers.
Other fiscal changes in the manner in which independent contractors will be subject to social contribution might diminish the number of individuals that assume this status, with more of them seeking employee status or choosing to establish small legal entities and to perform commercial activities through these legal entities.
Another important legislative change that is expected to be enforced in 2024 is the implementation of the new retirement law, that should become applicable in September after it has been postponed a number of times. While the new algorithm for the state pensions will have a direct impact on individuals, one change that might prove important for employers is the fact that employees that reach the age of retirement could opt to continue their employment longer than is now permitted, based on the same employment agreement, if the employer agrees to this.
4. Other potential changes
Over the next period, employment legislation in Romania is expected to focus on greater flexibility for both employers and employees. While flexible forms of employment such as on-demand and zero-hours employment agreements are not recognized under Romanian law, small steps in regulating atypical forms of employment were made by setting up a prepaid system of vouchers for household workers.
The new law on social dialogue was already modified in 2023, less than half a year after it was adopted, as both employers and union federations have raised a number of concerns regarding putting into practice some of the provisions in the initial form. Additional changes can also be made over the next period as a result of tripartite negotiations.
Practical point
Even if the government decision only refers to the harassment based on the criteria of sex and moral harassment, it is recommended to extend the internally implemented rules to harassment based on all criteria as defined by the Labour Code. According to the Romanian Labour Code, harassment is linked to the criteria defined for the discrimination (including but not limited to sex), while moral harassment, that is defined by the Government Ordinance No. 137/2000, is not linked to any criteria. In order to have comprehensive internal guidelines regarding the prevention and fighting of harassment, it is advisable to address all types of harassment.
