New rules on registration of employees

Download article in original language : RO0602102FRO.DOC

New rules on the obligation of Romanian employers to maintain a general employee record-keeping register will come into force in 2006 The changes aim mainly to simplify procedures, cutting bureaucracy and preventing fraud.

The current Labour Code, adopted in 2003 and amended by Government Emergency Ordinance in 2005, stipulates the obligation of employers to establish and maintain a 'general employee record-keeping register'. The establishment of the register is regulated by Government Decision issued in March 2003, subsequently amended and completed in 2003 and 2004. A new regulation is soon to be passed to replace this decision.

Background to new regulation

The purpose of the general employee record-keeping register is to prevent illegal work, and to support the collection of employers’ and employees’ contributions to the pensions scheme, unemployment and health insurance funds. On a more general level, the data and information kept in the register is useful for labour market research and may serve to resolve disputes and difficulties related to employment, licencing, wages, retirement or access to the health and safety system.

The objectives negotiated with social partners when amending the Labour Code in 2005, through Government Emergency Ordinance no. 65/2005 (RO0507102F), included the simplification of employee registration procedures by means of an official decision regulating the mode of filling in the general register, with the aim of eliminating bureaucracy and corruption and preventing employment relationships from sliding into a 'grey area'.

Content of the register

Keeping a general employee record-keeping register is mandatory for all legal entities, including branches, agencies or representative offices set up by such entities. It is not compulsory in the case of diplomatic missions, foreign consular offices located in Romania and representative offices in Romania of foreign companies or firms employing Romanian citizens whose individual employment contracts are registered with local employment inspectorates.

The register is now to be compiled in the form of an electronic document and should include the following: surname, name and individual numerical code of each employee; date of employment; position/job according to official specifications; type of individual employment contract; and date and reason of termination of the individual employment contract.

According to the current regulation dating from 2003 (with its subsequent amendments and completions in 2003 and 2004) employers have been required to keep a standard register by filling in pre-printed forms handed out by the local employment inspectorates. In addition to the content of the new register, the previous format required information on: duration of employment contract; length of working time (hours/day); length of trial period; place of work; basic wages at the date of employment and changes thereafter; and any suspension of the individual employment contract (with the specification that filling in the register was to become mandatory starting 1 January 2007).

The register, bearing the signatures of the employer, are now to be transmitted on-line by e-mail or submitted in electronic format to the local employment inspectorates; the records and the data therein make up a Labour Inspection database. The register must be submitted within 20 days from the date of employment of the first employee - employers that already have employees at the date of enforcement of the new decision must submit the register within 30 days. Subsequently, employers will notify the inspectorates of any intervening changes in the content of the register within five days of such modifications occurring.

According to the current rules, employers have been obliged to submit the amended register only on the date of conclusion or termination of an employment contract.

In addition to sending the information to local labour inspectorates, employers must now also keep the register in electronic form and compile an individual employment record file for each employee. Employers must keep the electronic register and individual files of employees safely.

At the written request of employees, the employer is obliged to issue copies, certified for conformity with the original by the employer’s legal representative or other empowered person, of the individual employment file, the page/pages in the electronic register containing information regarding the employee concerned and/or a document attesting the employee’s work, length of service on the job or specialisation..

In future, failure to establish a register, to transmit it in due time or in the required format, or to complete it adequately constitutes a contravention and labour inspectors may exact fines ranging from RON 2,000 to RON 5,000 (EUR 550 to EUR 1,390).

Under the current regulation, the penalties for employers have been differentiated. Failure to conclude the individual employment contract in written form, to establish the register and/or submit it to the local labour inspectorate within the specified time limit, as well as refusal to place the register and employment files of employees at the disposal of the labour inspectorate, incurred penalties ranging from RON 2,000 to RON 5,000. The fines for not filling in the register and keeping the documents according to legal provisions in force ranged from RON 1,500 to RON 3,000. The penalty for failure to submit the register to the local labour inspectorate within 15 days from the date of a company closure ranged from RON 5,000 to RON 10,000.

The new official regulation related to the register will be enforced from 1 September 2006. Within in 60 days of the date of publishing the relevant Decision in the Official Gazette, the Labour Inspection must put in place an electronic system for the completion and transmission of the register to employers.

Commentary

The amended employee record-keeping register could prove a highly useful tool for regulating various malfunctions of a labour market marked by transition, reform and growing scarcity of employment. Economic restructuring and successive and almost continuous waves of redundancies have generated a weakening and deterioration of the sustainability of social protection budgets and systems. Wage costs are on an upward trend, especially owing to employers’ contributions and taxing of income rather than to any increase in the net income of employees. Over 30% of employees earn minimum wages and illegal work is likely to spread. The introduction of the new regulations on registration and employee record-keeping could have a positive impact in terms of employment relationships' rigour and transparency. (Constantin Ciutacu, Institute of National Economy)