2. Re-Characterisation of Independent Contractors as Employees
a. Laws and Guiding Principles
There are no legal provisions that regulate the re-characterization of independent contractors as employees, the individuals that want their activity to be recognized as employment being able to address the court on general procedural rules on the recognition of a state of facts or labour specialized courts asking for the reclassification of their relationship with the beneficiary as being an employment one. In order to determine if an agreement Is an employment one the courts need to analyse the existence of 3 cumulative criteria – the purpose of the agreement is performing work; there is remuneration for the work performed in a form of a salary and the employee is subordinated to the employer during the performing of the activity. The last criteria, is the one that distinguishes between the existence of an employment relationship and a civil one, since the activity of the employees is always subordinated to the control and direction of the employer, while independent contractors are free to chose how to perform the activity in order to reach the agreed upon result.
b. The Legal Consequences of a Re-Characterisation
As mentioned previously, entering into civil agreements with individuals that are not authorized to perform the activity stated in the contract, or entering into a civil agreement with an individual that is authorized, but under similar conditions as an individual employment contract, can be qualified as unlawfully receiving individuals for work, a conduct sanctioned by law.
A legal qualification of a civil agreement as being an individual employment agreement is usually an attribute of the courts, which are commonly addressed by independent contractors that provide activities in conditions similar to an individual employment agreement, but do not enjoy specific protection legally recognized for employees. Another situation that may occur is that of questioning the type of contract that exists between the individual and the beneficiary by the local labour inspection bodies. Following such an inspection, these local bodies can ascertain that the activities provided by the independent contractors are specific to typical work activities performed by employees, without the existence of a legally concluded individual employment agreement.
In this case the beneficiary will receive the sanction for unlawfully receiving individuals for work, which is equivalent to a re-characterization of the legal relationship between the parties, but in order to achieve the effects of the recognition of the employment relationship between the parties, the court must issue a ruling stating this for every individual case. Thus, although the labour inspection bodies ascertain that the activities provided by the independent contractors are specific to typical work activities performed by employees for the period in which the activities were conducted under a civil agreement, the contractors are not automatically granted specific rights of employees and are not provided with specific protections for the employees, unless they address the courts with such demands and obtain a court ruling stating so.
The fiscal authorities can also reclassify the activity performed by an independent contractor into a dependent one (specific to employees) in order to apply the correct fiscal treatment to the income received by the individual.
Regarding the activities performed by individuals exercising specific liberal professions, if the re-characterization of their cooperation agreements as individual employment agreements by the court is not possible, being the fact that these professionals cannot achieve the employee status.
The differences in legal status between individuals having the employee status and the independent contractor status under the Romanian legislation caused by the under-regulation of civil contracts, under which individual contractors perform their independent activities, can lead to situations in which beneficiaries will use different types of agreements that suit their purposes without a proper protection for the individuals providing the independent activities. In order to avoid this, the similar fiscal regime for employees and independent contractors was established.
c. Judicial Remedies Available to Persons Seeking ‘Employee’ Status
As stated, the individual seeking the recognition of his employee status needs to address the court in order to achieve this recognition and to benefit from the specific statute of an employee. The court can recognize the employee status even after the contractual agreement, or the performing of the activity has ended, as the Supreme Court stated in a binding general ruling. After the recognition of the employee status, the individual can benefit from special protection specific to employees (for example in case of unfair dismissal) and can claim employee specific entitlements (for example paid vacation periods, or seniority bonuses).
d. Legal or Administrative Penalties or Damages for the Employers in the Event of Re-Characterisation
Apart from the rights that the individual was entitled to as a result of achieving the employee status by the re-characterization of his contractual relationship, they can also claim financial damages if they can prove that by not having the employment relationship being recognized from the beginning of their activity they suffered damages that cannot be covert by any measure and need to be compensated in a financial matter. The individual has to state the amount and prove that the damages are at the level that they claim.
