Faced with the need to reform labour relations in order to stimulate economic growth in the wake of the economic crisis, the Romanian government has put forward a bill to further amend the Labour Code. The amendments, which have been criticised by the social partners, seek to extend the probation period of new employees, the conditions of fixed-term employment contracts, temporary agency contracts, notice periods, working time flexibility and collective dismissals.

Amendments proposed by government

The Romanian government’s proposed amendments to the Labour Code, which have been criticised by the social partners, relate to:

  • the extension of the probation period for newly hired employees;
  • the conditions governing fixed-term individual employment contracts;
  • temporary agency contracts;
  • the notice period for the termination of an individual employment contract;
  • working time flexibility;
  • collective dismissals.

The Government of Romania maintains that the Labour Code, which was adopted under Law No. 53/2003 and has already been amended by 12 other acts and emergency ordinances:

... has hardly been stimulating for economic development due to the rather rigid framework it created for labour relations, which placed a heavy strain on the business environment and on its capacity to develop through investment.

Amendment of the Labour Code is also a priority from the perspective of Romania’s commitment under the recent loan agreement with the International Monetary Fund (IMF).

The contemplated additions and modifications mainly provide for:

  • an extended probation period for newly recruited employees;
  • new rules regarding fixed-term individual employment contracts, and temporary agency work;
  • new terms related to collective dismissals and individual redundancies;
  • more flexible conditions with respect to working time.

Probationary stage

According to the new rules, the probation period agreed in an individual’s employment contract and which allows the skills of a new employee to be verified, may not exceed:

  • 45 calendar days for regular employees (instead of 30 under the current version of the Code);
  • 120 days for management positions (instead of 90 at present).

At the end of the probation period, the individual employment contract may be terminated instantly without notice. While the current version of the Code forbids probationary employment of more than three consecutive persons for the same position, the new version lifts this restriction. This new rule also applies to recent graduates.

Fixed-term employment contracts

Under the current Code, the open-ended individual employment contract is the rule and the fixed-term contract an exception. The same parties may enter into a maximum of three fixed-term individual employment contracts over a period of a maximum of 24 months. During this 24-month period, an individual contract may be renewed at most twice consecutively.

The new amendments extend this period to 36 months and allow contracts to be renewed beyond this time span when this is required to advance a project, programme or works, subject to the parties’ written consent. The restrictions on the number of renewals have been abolished.

Dismissals and labour conflicts

The proposals also lift the ban on employers employing, within nine months of a collective dismissal, new people for the positions previously held by the dismissed staff. The new rules also set work performance as the first criterion for the selection of staff to be made redundant.

In the case of labour conflicts, the government proposes to eliminate from the Labour Code the article stating that ‘the burden of proof in labour conflicts lies with the employer, who must submit evidence to support his or her case’.

In case of resignation, employers are now obliged to register the resignation. The prior notice period may not be shorter than:

  • 20 business days for regular employees (the current maximum is 15 business days);
  • 45 business days for management staff (currently 30 business days).

Working time flexibility

Under the new provisions, working time flexibility is increased by extending the reference period from three to four months for an expanded working week of more than 48 hours. In some professions or sectors, however, the reference period may be as long as six to 12 months.

Another amendment provides for overtime to be compensated by hours off, taken within the next 60 days (currently 30 days).

Employers will now have the option of granting paid days off for periods of temporary business slowdown. Such days off would be recorded in a ‘credit account’ and then used to balance out subsequent overtime within the year.

Temporary work

The amendments to the Labour Code include proposals to extend the length of temporary status to a maximum of 36 months (18 months under the current Code), as well as to eliminate the obligation of a temporary agent to pay a temporary worker, between two jobs, an amount at least equal to the national gross minimum wage.

Views of the social partners

When invited to the Ministry of Labour, Family and Social Protection to express their views on the proposed amendments, representatives of the Alliance of the Employer Confederations of Romania (ACPR) – an umbrella organisation that brings together seven of the 12 employer organisations with national recognition – said that not even the employers could agree to some of the provisions of the new draft Labour Code. They claimed that it was drawn up under pressure from the Romanian–American Chamber of Commerce (RACC) and the Foreign Investors Council (FIC).

The Vice-President of ACPR announced that representatives of the employers and the trade unions would draw up a schedule for the joint drafting of six fundamental acts meant to regulate social dialogue.

‘Only after these six regulatory acts are in effect, can we talk about amending the Labour Code again. And we will not agree to discuss amendments proposed by anyone other than the unions and the employer organisations’, the Vice-President told the Mediafax news agency.

The five national trade union confederations, in their turn, sent an open letter to the Prime Minister, Emil Boc, saying that they:

... will exclude themselves from all social dialogue committees, or from any other type of consultations in ministerial and county committees, including the Economic and Social Council (CES) until the government stops treating the social partners like extras in a cast, with complete disregard for their proposals and demands.

The unions share the employers’ view that, instead of making further amendments to the Labour Code, if the government wishes to improve the labour market of Romania, it should focus on amending the legislation governing employer and trade union issues, collective agreements, labour conflicts, the Labour Inspection Office (IM) and the labour courts.

‘The only opinions well received by the government so far are those that satisfy the expectations of the multinational corporations represented by FIC and RACC, while the submissions, proposals and requests coming from the employer organisations and the trade unions are totally ignored’, according to the letter to the Prime Minister.

Commentary

Although the amendments to the Labour Code proposed by the ministry for public debate (which ended on 20 December 2010) include elements that may contribute to a greater flexibility of the labour market, the failure to communicate with the social partners explains why it was met with such resistance.

The main objections raised by the employers and trade union representatives at the national level are that:

  • the proposed amendments were put forward by organisations (FIC and RACC, which announced their involvement with the new regulation in a press release) that are not parties to the social dialogue;
  • some of the changes being pursued go far beyond European standards.

An example is the regulation that shifts the burden of proof in dismissals on grounds of economic difficulty to the employee, who must now demonstrate that the employer was not in difficulties at the time of the dismissal. This provision is contrary to various European directives.

The social partners are currently negotiating a new version of the trade unions act and employer organisation law with the government. Once these negotiations are over, dialogue on the new Labour Code will follow.

Luminiţa Chivu, Institute of National Economy, Romanian Academy


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