New Labour Code criticised by employers
Romania's new Labour Code came into force in March 2003, laying down a revised legal framework for industrial relations. Some parts of the Code has been criticised by employers as being inconsistent with the principle of a free market, and the government has responded by promising to introduce clearer procedures for applying the new rules.
A new Labour Code came into effect on 1 March 2003, following the introduction of Law No. 53 of 2003 (the 'Labour Code law'). It aims to replace Romania's previous industrial relations rules, which were dominated by the assumptions of the former 'command economy' based on centralised planning. The new Code – made up of 13 titles, 37 chapters, 17 sections and 298 articles – governs collective labour relations as a whole, involving employees (defined as Romanian citizens working inside or outside the country, and foreign citizens working for a Romanian employer in the country, including refugees), employers (individuals or companies with legal personality), trade unions and employers' organisations.
The new Labour Code has been contested, largely by employers' interests, both while it was being draw up and since its promulgation. The day after the law was adopted, 54 members of parliament referred to the Constitutional Court nine articles of the new law, which they claimed violated the Constitution. These articles related to:
- an obligation on employers periodically to inform their employees about the company's economic and financial position;
- the suspension of employment contracts while an employee is involved in a penal law case, up until the final court decision;
- the payment of compensation (worth 75% of pay) to employees if a company is temporarily closed;
- competences for trade unions to oppose some employer decisions and propose measures to avoid collective redundancies (three articles on this matter);
- an obligation to involve trade unions in drawing up 'standard work norms' (which regulate matters such as the time needed for each operation, the sequence of work etc) and to obtain their acceptance in applying them;
- a provision making a court decision mandatory in order for an employer to be able to recover debts from an employee (eg for damages cause to the employer by the employee's actions); and
- a provision whereby trade union leaders cannot be dismissed by their employer during their term of office and for two years after, for reasons of professional incompetence (union leaders are often seconded from their normal jobs to perform their union duties full time, during which period their employment contracts are suspended, returning to work after their term of office ends).
After debate over these complaints, the Constitutional Court issued its definitive decision (No. 124) on 22 January 2003, concluding that all the articles concerned are in accordance with the Constitution. The decision was submitted to the President of Romania, who promulgated the Labour Code law.
On 10 June 2003, with the law in force, 33 companies, employers' and professional associations held a public meeting entitled 'Labour Code – changing the regulations which hinder business administration'. They expressed concern over the general structure and substance of the Labour Code and its effects on companies’ activities, as well as making general and concrete proposals to modify specific provisions of the Code in accordance with other legislation, and requesting a strict definition of the procedures for applying some provisions. The issues of concern raised relate to 47 of the law's 298 articles.
On 16 July 2003, the Council of Foreign Investors in Romania (Consiliul Investitorilor Străini, CIS) organised a meeting with the Delegate Minister for relations with the social partners. CIS representatives stated that 'some Labour Code clauses are restrictive and incompatible with companies acting in a functional free market' and claimed that adhering to them would lead to adverse effects for both employer and employees. Their main concerns related to the Code's provisions:
- obliging companies to set up a 'wage guarantee fund', guaranteeing workers' pay in the event of bankruptcy etc;
- placing a 48-hour ceiling on weekly working time, which limits employees’ overtime work;
- making recruitment and dismissal procedures more complicated;
- introducing special payments for employees who are banned by their employment contracts from working for competitors (it is common for Romanian workers to have more than one job);
- involving trade unions in drawing up 'standard work norms' (see above); and
- introducing 'excessive' requirements regarding employees' rights to annual training.
In response to these submissions, a government representative stated that the Ministry of Labour, Social Solidarity and Family (Ministerul Muncii, Solidarităţii Sociale şi Familiei, MMSSF) would act to define clearly the procedures for applying the new Labour Code, removing any need to modify the law.