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07. Termination of Employment Contracts

Grounds for Termination

Under Romanian law, the employment contract may terminate de jure, by mutual consent or by notice given by one of the two parties. The grounds for dismissal must be real and serious and there are two types of valid grounds: objective grounds and economic grounds.

Objective Grounds

  • the employee has committed a serious or repeated disciplinary offences related to the Labour discipline rules or the rules within the individual employment contract,
  • applicable collective labour agreement or rules of procedure, as a disciplinary sanction;
  • the employee has been taken into preventive custody for more than 30 days, under the terms of the Code of Criminal Procedure;
  • by decision of the competent medical examination bodies, a physical and/or mental inability of the employee is found, not allowing him/her to fulfill the duties corresponding to the position held;
  • poor performance or unsatisfactory professional skills.

Economic Grounds

The dismissal for economic grounds may be individual or collective. A dismissal for reasons not related to the person of the employee, is the termination of the individual employment contract determined by the cancellation of the employee’s position, for one or several reasons, which are not connected to the employee’s person. The cancellation of the position must be effective and have a real and serious cause.

Collective Dismissals

The collective redundancy is the dismissal, within a timeframe of 30 calendar days, on economic grounds, of:

  • at least 10 employees, out of a total of between 20 and 100 employees;
  • at least 10% of the employees, out of a total of between 100 and 300 employees;
  • at least 30 employees, out of a total of more than 300 employees.

When the employer intends a collective redundancy, it shall initiate, in reasonable time and with a view to reaching an agreement, under the terms provided by the law, consultations with the trade union or, as the case may be, with the representatives of the employees.

During the consultations, the employer provides the trade unions or the employees’ representatives with the relevant information related to the redundancy. The employer must forward a copy of the notification to the Territorial Labour Inspectorate and the local public employment office on the same date it has been forwarded to the trade union or, as the case may be, to the representatives of the employees.

The trade union or the representatives of the employees may propose the employer measures to avoid the dismissals or to reduce the number of dismissed employees, within 10 calendar days after receiving the notification. The employer must give a written and grounded answer to the proposals within five calendar days from their reception of the employee’s proposals.

When, following the consultations with the trade union or the representatives of the employees, the employer decides to apply the collective redundancy measure, he notifies in writing the Territorial Labour Inspectorate and the local public employment office, at least 30 calendar days before issuing the dismissal decisions.

If, in 45 calendar days since the dismissal date, the activities whose interruption led to the collective redundancy are resumed, the employer must send the dismissed employees a written communication for this purpose and reinstate them in the same workplace as before, without any examination, contest or probationary period. The employees have a deadline of maximum 5 calendar days from the notification of the employer to express their written agreement on the proposed workplace. If the employees that are entitled to be reinstated, do not agree in writing within the deadline or refuse the workplace provided, the employer may employ new personnel for the vacant positions.

Individual Dismissals

For the objective grounds dismissal, the employer must respect the specific procedure stipulated by the Labour Code. In case of dismissal for disciplinary reasons, the employer must follow the preliminary investigation, in order to establish the breach of the employment contract’s provisions or of the internal regulations. In case of dismissal for poor performance, the employer must first establish the grounds by the evaluation procedure.

In all cases, the employer must issue the dismissal decision within 30 calendar days from the date the employer acknowledged the cause of the dismissal.

Is Severance Pay Required?

Severance pay for individual dismissals is to be paid only if it is agreed as such in the individual or collective employment agreement. The only time that the Labour Code states that a severance payment (not specifying the amount) should be negotiated is for physical and/or mental unfitness to perform the activity required by the job description. The Labour Code only states that such compensation should be negotiated in the collective employment agreements, meaning that in the absence of such an agreement, the employer cannot be made to pay the employee any amount upon his termination.

Separation Agreements

Is a Separation Agreement required or considered best practice?

A separation agreement is neither required nor considered best practice in Romania. There are no specific legal provisions on separation agreements. Usually some form of separation agreement can be found when both parties agree to terminate the working relationship and they need to make clear the conditions of the termination. However there are cases when the employee violates the terms of the separation agreement, especially when it is stated that the employee will not bring any claim in front of the courts. Such a provision included in the separation agreement will not result in the court dismissing, ab initio, the employee’s claim.

What are the standard provisions of a Separation Agreement?

As such agreements are not commonly used in Romania, there are no standard provisions for separation agreements. However, all clauses must be in accordance with imperative legal provisions. Also, they must include a moral cause, as in all civil agreements.

Does the age of the employee make a difference?

The age of the employee usually does not affect the working relationship, apart from the case of reaching the legal pension age, when the individual employment agreement ends de jure, if the employee does not request to continue his/her employment and/or the employer does not agree to the continuation.

Employers cannot restrict the right of women who have reached the standard retirement age for women, to continue their employment until they reach the standard retirement age for men (the process of equalising the retirement age for men and women is ongoing).

Employees 18 years of age or younger, can enter into a separation agreement under the same set of rules used to enter into a legally enforceable employment contract, meaning that if the employee is younger than 16, parental consent is needed.

Remedies for Employee Seeking to Challenge Wrongful Termination

Employees seeking to challenge wrongful termination can file a claim in court against the employer. The Tribunal as first instance court will analyse the cause for dismissal, the form of the dismissal decision and the correct observation of any mandatory legal procedure. If the Tribunal finds that the dismissal decision is not legal or has no grounds (this being a rarer motif for the annulment of the dismissal decision), a court ruling annulling the dismissal decision is issued. The employee will be reinstated (automatically if he/she asked to be reinstated and the dismissal was found illegal or without grounds) and is entitled to payment of all financial rights he/she would have obtained if he/she were not wrongfully dismissed. The Tribunal decision is subject to an appeal. However the decision of the Tribunal is enforceable meaning that in some cases if the employee wins in first instance and loses on appeal, the employer has to take additional measures in order to obtain the amounts already paid.

Whistleblower Laws

Only whistleblowing within public institutions, and the protection of employees and public servants in public institutions, is legally regulated in Romania. The whistleblower has to act in good faith and for the general interest in order to be protected. For the private sector, customary rules have to be used when considering the protection of an employee in whistleblowing cases.

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