New social protection measures for redundant workers

As of 31 January 2007, previous regulations on the restructuring, reorganisation and privatisation of societies and companies with majority state capital are no longer valid, although the respective processes must continue until they are completed. Consequently, the government has introduced a new regulation stipulating special social protection measures for workers due to be laid off as a result of collective redundancies.

Reasons for new regulation

Collective redundancy has triggered several regulations drafted specifically for certain companies and sectors in difficult situations at various times. The 2006 Labour Code includes amendments that regulate, in general, the rights of redundant workers and the social partners introduce provisions to this effect in collective agreements.

On 22 November 2006, a memorandum was approved at a government meeting on the ‘drafting of a regulation stipulating social protection measures for workers affected by collective redundancies as of 1 January 2007’.

According to the Minister Delegate for Relations with Parliament, Mihai Alexandru Voicu, one objective of the government’s programme for 2005–2008 is to restructure and reorganise national corporations, state-run companies (regies autonomes) or commercial companies with a majority state-owned capital, as well as commercial companies and state-run companies governed by local public administration authorities. The aim of this measure is ‘to continue to reduce subsidies and exploitation losses, achieve a genuine competitiveness in a free market and mitigate the social impact through effective programmes’.

As of 31 January 2007, previous regulations on the restructuring, reorganisation and privatisation of societies and companies with a majority state ownership are no longer valid, which includes Government Emergency Ordinance (GEO) No. 8/2003. With the new regulation, the government hopes to promote measures and actions intended to mitigate the social impact of restructuring and reorganisation processes and to improve social protection policies for redundant workers.

To this end, at the end of 2006, the government passed a new emergency ordinance which was previously approved by the Economic and Social Council (Consiliul Economic si Social, CES).

Rights of redundant workers

This official order regulates the social protection measures benefiting workers affected by collective redundancies resulting from restructuring and reorganisation programmes. The companies, restructuring programmes and the number of workers to be made redundant will be approved by government decision, according to the proposals of the ministries responsible or the Authority for State Assets Recovery (Autoritatea pentru Valorificarea Activelor Statului, AVAS). The deadline for finalising current restructuring programmes and planned collective redundancies has been set for 31 December 2010 in the case of the mining sector – in line with the 2004–2010 strategy for the mining industry (RO0405102F) – and 31 December 2008 for the remaining sectors.

The provisions of the new ordinance apply to workers whose individual employment contracts are concluded at least 24 months before the date of the planned collective redundancy.

Redundant workers are entitled to the following protection measures:

  • a month’s wage equivalent to the national average net wage as it stands in January of the redundancy year;
  • unemployment benefit according to the legislation in force;
  • a monthly compensation income, calculated as the difference between the amount of unemployment benefit and the individual average net wage in the three months prior to redundancy, which must not exceed the national average net wage. This income is granted for a period of 20–24 months, depending on employees’ length of service in the job: 20 months for up to 15 years of service, 22 months for 15–25 years of service, and 24 months for over 25 years of service.

After the expiry of the unemployment benefit period, the compensation income is granted in full with no deductions. If workers who become unemployed as a result of collective redundancies find employment in the course of the period when they are entitled to the abovementioned protection measures, they may continue to receive up to half of the compensation income; however, in the case of retirement, the payment ceases altogether.

Commentary

The law also meets the demands made by the national trade union confederations in 2006 (RO0606019I), which are of major importance since approximately 10,000 workers are expected to be affected by restructuring measures in 2007, as well as a further 1,500 workers in 2009 and 5,500 workers in 2010.

In 2006, government decisions approved collective redundancies involving approximately 10,000 workers in the mining sector (RO0604019I), as well as other workers in the thermal energy and public utilities services sectors (RO0609049I) governed by local authorities in various cities and towns.

In general, all measures are also approved by the trade unions involved and by CES.

Constantin Ciutacu, Institute of National Economy

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