Labour law- Adressing the current market needs

Despite the turmoil that continues to affect the worldwide labour market as a result of the severe economic crisis, Romania has managed to acquire a certain degree of stability in this field.

SOCIETATEA CIVILA DE AVOCATI PELI FILIP




IOAN DUMITRASCU

IOAN DUMITRASCU

at SOCIETATEA CIVILA DE AVOCATI PELI FILIP


Maria-Ecaterina Burlacu

MARIA-ECATERINA BURLACU

ASSOCIATE at SOCIETATEA CIVILA DE AVOCATI PELI FILIP

In 2011, the Romanian Labour Code underwent important changes, while a new Social Dialogue Law replaced entirely the 2006 legislation regulating collective agreements, the unions and the employers’ associations. These changes resulted in a much-needed flexibility of both individual and collective employment relations, as well as assisted to achieve a better balance between the rights of the employers and the protection granted to the employees.

 

Performance at work – a concept which finally gained recognition

 

Shifting the focus on employees’ performance at work was one of the most welcomed changes. This encourages motivation and employer’s ability to expect performance at appropriate levels. Of course, social protection is still preserved, and the employer maintains quite a cumbersome task to prove that an employee lacks performance and finally, as a cause of that, decide the dismissal of the respective employee.

 

As a downside, the law requires that the performance criteria are inserted in the employment agreement, thus subjecting them to employee’s consent. This requirement it is likely to restraint the ability of the employers to adapt the criteria for assessing performance to the ever-changing economic reality of its business. One solution is to find a broad enough language when defining the performance evaluation criteria so that they resist the test of time.

 

Lack of legal clarity can be compensated by better regulations at company’s level as well as transparent and meaningful communication with the employees.

 

The employers got new economic tools for adapting to the market

 

Another set of beneficial changes consisted of new means for adapting the business to the market changes and, at the end of the day, to avoid dismissals.

 

The option to compensate overtime with time off in lieu granted in advance of performing the overtime

 

Whenever the employer’s volumes decrease because of seasonality or other external causes, it can opt to grant paid time off to the employees with the latter obligation to perform overtime within the next 12 months. Previously the employers were limited to technical unemployment or unpaid leave, but these were not too well received by the employees.

 

When employing this tool, it is very important that the employer obtains the employees’ written agreement to perform overtime and communicates fairly in advance to the employees the date when they are requested to perform overtime.

 

Increased flexibility for fixed-term contracts and temporary work agencies

 

The rules regarding the use of fixed term contracts were loosened, which resulted in an increased number of employment agreements.  

 

Fixed term contracts were allowed in fewer situations than now and only for 24 months. Now, the term increased to 36 months and, in some cases, the arrangement can be extended up to 5 years.

 

The 2011 legislation removed the interdiction to establish a lower salary for the temporary employee than the salary received by a permanent employee of the user. While observing the principle of fair treatment of the leased employees, this change allows now for better deals between work agents and users. It is thus conductive to increase of temporary work agency agreements.

 

Elimination of the national collective labour agreement

 

This change was very well received by the business community as it was rather inappropriate for a minority to impose a contract binding for everybody.

 

The main issue with the national collective agreement was its tendency to repeat the provisions of the Labour Code with some differences in favour of the employees, but mostly making everything unclear and subject to interpretion.

 

Important changes in the collective labour relations

 

The 2011 legislation restored the balance between the employers’ and the unions’ organizations. 

 

Negotiations at company level were set to be conducted only by unions or employees’ representatives elected by more than 50% of the employees, as opposed to the previous system when a 15-member union affiliated to a representative federation could have concluded a collective agreement binding on all employees.

 

Despite this legislative progress, recent interpretations of the labour authorities suggest that minority unions affiliated to representative union federations are still able to negotiate collective agreements in the companies were the employees have not managed to elect representatives by a 50% + 1 vote.

 

As opposed to prior 2011 regulations, when the collective agreements at sector level were binding on all companies active in the sector, irrespective of being represented or not during the negotiations, nowadays such sector agreements apply only to the companies which gave an express mandate to the negotiators of that contract.

 

The obligation to undergo mandatory annual collective negotiations has been eliminated. This change is welcomed as companies have a need to set multi-year deals.

 

Lowering the protection granted to the trade union leaders has been a rather controversial change. Although much contested by the unions, in many cases the same level of protection continued by virtue of company-level agreements.

 

What can we expect on the medium term

 

The legal realities enacted in 2011 may prove rather fragile. Unfortunately, for 23 years now, the Romanian legislators have not found the key to enact legislation which would stand the test of time. Although not an exhaustive explanation, it must have something to do with the lack of sufficient consultation before enacting a law and the chronic inability of the authorities to explain and implement the law in a consistent manner.

 

A short recapitulation of the events that took place in 2011 might offer an overview on the process deficiencies, and, if history repeats, on what can we expect on the medium term.

 

The 2011 legislative changes seemed to have been driven by a last moment need of the Government to react to an enormous financial pressure to improve the business environment, voiced among others by a powerful lobby of the multinationals to render employment relations more flexible.

 

The Government seems to have surrendered the pen to the employers’ organizations and, when the bill of law was ready, it adopted it without further parliamentary debates, without any real impact studies and solutions thoroughly analyzed, and most importantly, without a real dialogue with the union side.

 

Meanwhile, the political power changed significantly following December 2012 elections, the left-side Government enjoys a comfortable Parliamentary majority and the unions have backed up this political change.

 

The current unions’ requests are simple: restore prior 2011 legislation plus few extra protection and rights for the employees. They unions national confederations have carried out an aggressive campaign before the 2012 elections and the only forces which stopped the move seem to have been the European Commission and International Monetary Fund, which were too concerned on the degrading status of the economy as to allow Romania to erode one of its perceived advantages: a cheap and flexible labour market.

 

Nevertheless, a unions’ initiative to change significantly the Romanian Labour Code is due to reach Parliamentary debates this spring, thus by-passing the Government and reaching directly the left-side Parliament.

 

Under these circumstances, it is sure that 2013 will be a year of fight between employers and employees organisations as far as labour law is concerned and it is reasonable to notice that the unions’ confederations have several aces which could well incline the balance in their favour.

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