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Romania

January 28, 2025

By Paul Hastings Professional

Back to International Employment Law

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KEY DEVELOPMENTS FOR 2025

Collective Bargaining Agreement Across the Banking Sector

A Collective Bargaining Agreement (CBA) has been adopted extending to all employees within the banking sector. This is the first CBA applicable to the entire business sector, irrespective of the banks being affiliated or not. The CBA is set to expire in May 2026. It has protections for employees and for employers, a prohibition on strikes until the expiry of the CBA. At the expiry of their internal CBAs (at the level of the entity) all entities in the banking sector should align with the national CBA for the banking sector.

Obligation to Implement an Internal Guideline on Prevention and Combating Moral and Sexual Harassment in the Workplace

With effect from 17 April 2024, all companies became subject to an obligation to implement the provisions of the Government Decision No.970/2023 aiming to prevent and combat harassment based on moral and sexual harassment in the workplace. The guidelines require the organisation of annual employee training on behaviour amounting to harassment, implementing internal procedures for the reporting of harassment and designating specific senior individuals to deal with such reports, to ultimately ensure the protection of the employees. It has been observed that the vast majority of employers do not seem to have implemented such guidelines yet, but with the increased focus put on nondiscrimination and nonharassment of any kind in the workplace, we are expecting to see greater efforts to implement this measures in 2025, not least because the failure to adopt the guidelines leads to an increased risk for employers in cases of non-discrimination or harassment related claims.

The Regulation of Burnout

Currently there is a debate about defining burnout and creating a clear legal framework to assist with the prevention, diagnosis and management of this issue. The proposal also aims to raise awareness amongst employees. Employers will have to implement measures, such as granting access to and/or organizing periodic evaluations of the employees’ mental health by physicians for the prevention and management of burnout and organizing annual sessions to raise awareness about burnout and prevention, financed by the employer or the insurer. This initiative is considered highly necessary and long awaited as burnout will be considered a professional disease included in the category of diseases leading to medical leaves.

With thanks to Alexandra Rimbu, Alina Popescu, Raluca Dumitriu and Gelu Maravela of MPR Partners for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2024

New Rules on Trade Unions and Collective Bargaining

In 2023, a new law on social dialogue was adopted, creating several legislative elements that include changes in the representation of trade unions and in collective bargaining. Firstly, the new law states that in order to form a union, at least 10 employees from the same unit or at least 20 employees from different units, in the same collective bargaining sector, are required. Secondly, the threshold of employees in the unit who must be union members for the union to be representative has been lowered from 50% to 35%; however, employee representatives must still be elected by a vote of half plus one of the number of employees. Thirdly, unemployed persons have the right to join or remain union members; however, the same will not be taken into account when determining the number of trade union members in relation to which the trade union's representativeness is established. Fourthly, collective bargaining has become mandatory for companies with at least 10 employees (the threshold in the previous law was 21 employees). Fifthly, trade unions, even non-representative ones, will have priority for participation in collective bargaining over elected employee representatives. The legal novelties in terms of trade unions and collective bargaining were aimed to promote the conclusion of more collective bargaining agreements. However, the new provisions have already proved difficult to navigate and interpret. Employers have at times been faced with situations where both trade unions and employee representatives have expressed interest in commencing collective bargaining. Given the different representation regimes of the two, employers question the legitimacy of bargaining with one or the other and fear that the newly concluded collective bargaining agreements will not be accepted by the labour authorities.

Reducing Tax Benefits for Employees in the IT Sector

As part of new tax measures aimed at increasing the state budget, the tax benefits formerly awarded to employees in the IT sector have been reduced. Previously, employees engaged in the creation of computer software were exempt from paying income tax (which represents 10% of the gross salary) and private pension contribution (representing 3.75% of the gross salary in 2023 and 4.75% of the gross salary in 2024). These measures were meant to be limited in time, in order to promote the emerging and promising IT industry in Romania. Following the new legislative changes, starting from 1 November 2024, the tax exemption will only apply to gross monthly income up to RON 10,000 (approximately €2,000), and the part exceeding this threshold will be taxed normally. Moreover, the exemption will remain applicable only until 31 December 2028. These changes have already sparked waves of discontent in the IT sector, both from employees and employers, who feel that the field will no longer be as attractive to potential candidates. Following the reduction of the tax breaks, employers will have to calculate the different taxes and contributions applicable to each employee, depending on their income level, as in Romania, the employers have to pay the taxes and contributions on behalf of their employees. Moreover, it is expected that employees in the IT sector will demand increased gross salaries, in order to compensate for the additional taxes and contributions.

Teleworking for Employees with Children

As of July 2023, employees with children up to 11 years of age are entitled, at their request, to 4 days of telework per month, except in situations where the nature or type of work does not allow for such arrangements. These days cannot be granted to both working parents at the same time. In the absence of additional legal guidance, it will be in the employer’s responsibility to make sure the actual conditions and procedures are detailed within its internal regulations, and we do also expect these particular arrangements for working parents to make the organisation of work difficult for employers, in cases where working from the office is required. For these scenarios, it will be important to observe how the case law will interpret the legal provisions and also for the employers to carefully tailor the rules for granting such telework days.

With thanks to Alina Popescu, Alexandra Rimbu, and Alexandra Mihailov of MPR Partners for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2023

Protection of the Employees

The Romanian State took a step forward with the aim of protecting the employees and transposed in its Labor Code in October 2022 the Directive (EU) 2019/1152 on transparent and predictable working conditions and the Directive (EU) 2019/1158 on work-life balance for parents and carers. One of the main focus points of the amendments is ensuring that the employees are fully informed on their working conditions and especially on their trial period.

There are new aspects to be observed by the employers as part of their information obligation toward employees. The required new information is to be included in the individual employment agreements. The Labor Inspection is expected to provide a standard template of the individual employment agreements, which will serve to make sure that the bare minimum legally provided clauses are included within such agreements.

In case the employer fails to inform the employee of all the elements provided by the law, the latter has the right to address to the employer’s internal inspection bodies (if the employer has such body within its structure), or to the Labour Inspection. In such a scenario, including when the employer does not make available the internal regulation, the employee is entitled to lodge a claim in court and ask for damages incurred due to the employer’s failure to comply with its information duty.

Employees in labor relationships established before October 2022 will receive from the employer the supplementary information related to the conditions applicable to their employment, at their request, within a maximum of 30 days of the written request of the employees. The lack of such a request does not exclude the application of the minimum rights provided under the employment laws.

New Leaves for the Employees

There have been new categories of leaves for the employees, namely the caretaker leave and the leave of absence for unforeseen circumstances. The caretaker leave is granted to the employee for the purpose of providing personal care or support to a relative (child, parent, spouse) or a person living in the same household, who has a serious medical condition. It is granted at the employee’s written request and it is limited to a maximum of 5 working days within a calendar year unless such duration is not supplemented by special laws or a collective bargaining agreement. The employee’s right to absent from work in case of unforeseen circumstances caused by a family emergency due to illness or accident, which make the employee’s immediate presence indispensable is also expressly regulated, provided that the employer is informed in advance and the period of absence is recovered afterward. The maximum duration of such absences during a calendar year cannot overreach 10 working days in a calendar year.

It will be for the employer’s to make sure the actual circumstances are detailed within its internal regulations. We expect this particular type of excused leave to bring some difficulties in the cases where the employers are looking to apply a disciplinary sanction for unjustified absences. For these scenarios, it will be important to observe how the case law is going to interpret the legal provisions and also for the employers to carefully tailor the rules for absence in case of unforeseen circumstances, while data protection rules will have to be also kept in mind and complied with.

Employee Protection Again Filing Complaints and Dismissal

As of October, supplementary protection measures have been implemented in favor of the employees, both in case of employees filing complaints and in general in case of dismissal. The new amendments provide specific protection against any adverse treatment on behalf of the employer for any employee who files a complaint or follows a procedure to make sure the Labor Code is observed. The employee can address to the courts of law for damages and re-establishment of the previous situation or annulment of the situation, while he/she has only to present in court the facts which trigger the assumption of adverse treatment.

The employer is expressly prohibited to dismiss the employees due to the exercise by the former of their rights provided by the Labor Code, such as the right to be informed, the general rights granted by the Labor Code, and the right to have professional training paid. The employees who consider they have been dismissed for the exercise of their rights can ask the employer to provide supplementary information on the reasons which grounded the dismissal decision.

The burden of proof in labor disputes rests with the employer and the dismissal cases are limited and have to observe strict rules. The employers should expect some employees to use the new provisions related to the prohibition of adverse treatment and of dismissal due to the alleged rightful exercise of rights (and the employer’s obligation to give clarifications), just to create a false appearance of wrongful termination or victimization. These interdictions and limitations and the generality of the same seem way too vast in a context wherein the courts of law already rule mostly in favour of the employees at the very little doubt they identify and might lead to very dangerous precedents for the employers.

With thanks to Alexandra Rîmbu, Alina Popescu, Gelu Maravela and Cristina Cretu of MPR Partners for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2022

Action Plan Promoting Gender Equality

In order to help the public and private entities put in place the annual Action Plan with regards to the equality of chances and treatment of women and men, the Ministry of Labour intends to standardize the Action Plan allowing private and public entities to draft the equality policies to be implemented into their organizations in a more coordinated manner. Such policies are part of the Action Plan designated to ensure the equality of chances and treatment of women and men and are designed to target the integration on the labour market, and the training and promotion of women and men.

Employers should continue to monitor this area of law. Once this draft order will enter into force, employers should designate an employee or a team to periodically evaluate the Action Plan. Moreover, employers should draft the Action Plan taking into account the phases described by the Ministry of Labour.

New Requirement for Employees in the Public and Private Health Sectors to Present an Electronic COVID-19 Certificate Evidencing Vaccination Status

In order to limit the effect of the COVID-19 pandemic, for the duration of the state of alert, all employees in the public and private health sector will be obliged to present the EU Digital COVID-19 certificate stating either (i) the complete vaccination status, (ii) the fact that the person had the SARS-CoV-2 infection or (iii) a negative result for SARS-CoV-2 infection to a RT-PCR or rapid antigen test.

In the public health sector, the COVID-19 testing is paid by the employees, except where the employee can prove that they have a medical condition that is incompatible with the vaccination, in which case the costs for testing are paid by the employer. In the private health sector, the employers can decide the conditions under which the costs with COVID-19 testing will be paid for.

Any employee that fails to present the EU Digital COVID-19 certificate (attesting 10 days as of the completion of vaccination scheme / that the person is between the 15th and the 180th day as of the date when it has been found positive for SARS-CoV-2 infection / a negative RT-PCR or rapid antigen test within the periodicity to be established by the Ministry of Health) are prohibited from accessing the workplace and the working relationship is suspended by law for a period of 30 days.

The employers in the private health sector should monitor this area of law in order to be prepared to implement the requirements. Failing to observe the legal requirements represents an offence and it is sanctioned with a fine between RON 50,000 and RON 100,000 (roughly between EUR 10,105 and EUR 20,210). The fine is applicable to the manager of the respective establishment.

KEY DEVELOPMENTS FOR 2021

COVID‑19 Related Measures

Similar to many European states, Romania enacted many legal decrees/measures in order to keep the employment market viable during these unprecedented and peculiar times.

The key measures enacted by Romania are the following:

the implementation of the popular German measure, namely the Kurzarbeit plan; the Kurzarbeit measure offers employers whose activity has been affected by the COVID‑19 pandemic the opportunity to reduce employees' working time and to pay them pro‑rata with their new working hours; the difference between the initial salary and the adjusted amount is borne by the state, to a certain extent;
some additional economic (financial) support for businesses affected by the pandemic, consisting of support for the acquisition of telework related equipment and reimbursement of a certain amount of the paid salaries, where technical unemployment has been implemented (especially during the state of emergency);
health & safety rules with a special focus on the employees who are to perform their activity at their usual work place;
during the former state of emergency and current state of alert, all the collective bargaining agreements would remain in force, as well as for a period of 90 days after the termination of the current state of alert;
telework instructions and recommendations have been enacted by the authorities in order to prevent the spread of the SARS‑CoV‑2 virus and to ensure the health of the employees; and
the period for granting unemployment benefit was extended for employees which became entitled to the same until 30 December 2020; thus, the extension consists of three more months of unemployment benefit.

New Legal Framework Concerning Discrimination

The Romanian legislator kept the focus on implementing and developing antidiscrimination enactments. The main novelty in this regard is represented by the extended definition of the concept of "moral harassment at the workplace."

The extended regulation of the concept, along with the considerable fines imposed by the new legal framework, is expected to raise more awareness on behalf of the employers on the moral harassment phenomenon, that has been increasing over time, and on the necessity to prevent the same.

Regulation of Electronic Signatures and Teleworking

Taking into account the continuous development of the labour market and the need to establish more flexible working relationships, and at the same time ensuring the proper conditions for the development of the business environment, the Romanian Government is planning to regulate the electronic signature of the employment related papers.

Even if current legal framework provides exclusively for the print signature of both the employer and the employees on all the employment related documents, this is expected to change.

In addition, there are some anticipated changes with regards to the telework regime as well, especially related to the elimination of the current requirement for the employees to work from the workplace provided by the employer for at least a certain number of days per month.

The law in force provides that the employee shall work at least one day per month at their usual workplace. However, due to the COVID‑19 pandemic, this prerequisite was almost impossible to accomplish, the authorities being aware of this issue and trying to correct it consequently.

KEY DEVELOPMENTS FOR 2020

Penalty Clauses in Labour Agreements

The Supreme Court of Romania (the High Court of Cassation and Justice) has recently held that penalty clauses in individual labour agreements will now be considered null and void. In addition, the inclusion of a penalty clause may result in the employer being subject to a fine ranging from approximately EUR 420 to EUR 1,050.

Penalty clauses were often used by employers in Romania in order to evaluate the value of damages if an employee were to breach certain obligations, such as their confidentiality obligations.

The New Pension Law

A new pension law will come into force on 1 September 2021, and includes changes that may have a significant impact on individuals.

The most important changes include a gradual increase of existing pensions, an increase in the value of the reference pension point as of 2022, and a change in the way pensions are to be calculated.

In addition, some inconsistencies of the previous system have been addressed and amended in a manner that is more favourable to beneficiaries. For example, the new pension law provides for an earlier retirement for women who have given birth to at least three children and that the time invested in attending masters and PhD programmes will be taken into account at the age of retirement.

Harassment and Equal Treatment of Women and Men

In line with the current social concerns, supplementary regulations have been enacted regarding the harassment and the equal treatment of men and women. Under the new rules, companies are under a specific obligation to have a clear internal policy aimed at eliminating tolerance of harassment whilst embracing anti-harassment measures. A new Government decision has confirmed the structure for the specific internal policy which must include, amongst other things, guiding principles, an indication of the legal framework, and details of the definition of unwanted behaviours and attitudes when referring to harassment in the workplace and sexual harassment.

In addition, employers will have to ensure that they use all possible means of communication (e.g., meetings, communications, e-mails, etc.) to regularly inform employees of their rights relating to equal opportunities and treatment of women and men in employment relationships.

KEY DEVELOPMENTS FOR 2019

Implementation of the EU General Data Protection Regulations (“GDPR”)

The GDPR came into force on 25 May 2018, entailing new aspects in connection with the processing of employees’ personal data.

The employees’ personal data may be processed by employers if (i) the processing is necessary for the performance of the employment agreement, (ii) the processing is necessary for compliance with a legal obligation of the employer or (iii) the processing is necessary for the purposes of the legitimate interests pursued by the employer, except where such interests are overridden by the interests or fundamental rights and freedoms of the employees.

For specific cases where consent would meet the GDPR conditions, the same could also be used as a legal basis for processing employees’ personal data. Nevertheless, since the GDPR provides that Member State law or collective agreements should provide specific rules on the processing of employees' personal data and such local legal enactments have not yet been issued, it is not recommended that employees’ personal data to be processed on this legal basis at present, as it is difficult to demonstrate that consent was freely given, due to the dependency that results from the employer-employee relationship.

The personal data processing practices and rules still represent an on-going process and are expected to be further clarified in 2019.

Internship Rules Introduced

Pursuant to a law which came into force in August 2018, the internship contracts, rules and a stimulation scheme for hiring interns have been specifically introduced in the Romanian legislation. As per the enactment, an internship can be concluded for a maximum period of 6 months. If the employer concludes an individual labour agreement within 60 days of the completion of the internship program, it receives an employment incentive in the amount of RON 4,586 (approximately EUR 1,000) for each former intern employed, provided that the working relations with the former interns are maintained for an uninterrupted period of at least 24 months.

Such enactment represents a step forward which will encourage the companies to hire interns in the years to come.

With thanks to Alexandra Rîmbu, Andreea Dinu, Alina Popescu, Gelu Maravela and Cristina Cretu of MPR Partners for their invaluable collaboration on this update.

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