More flexible labor relationships

22 February 2006 (Insight)

The recent amendment of the Labor Code by Government Emergency Ordinance 65/2005, approved at the end of last year by law, aimed at fostering the business environment by emerging labor relationships from the grey zone.

Justified by the need to harmonize Romanian legislation with community one, the new enactment contemplates removal of certain excessively restrictive provisions of Labor Code, enhancing at the same time foreign investments.

A first set of amendments envisaged extension of duration of labor agreements for definite period from 18 to 24 months, also enlarging the applicability of this agreement type.

The regime of employee’s non-compete obligation has also been adjusted. Differently from former regulation, this obligation subsists during the validity period of the labor agreement without the need of an express clause in this respect and payment of a special indemnification. Explicit non-compete clause is necessary only where the employer intends extending the obligation after cessation of labor relationships, but for a maximum general period of two years, without the previous distinction between operational and management personnel.

As regards the fiscal treatment, the non-compete indemnification represents cost born by the employer, is tax deductible and is levied on the beneficiary natural person.

Completion of cumulative standard age conditions and the minimum contribution periods required for retirement does not represent any longer an event triggering de jure termination of labor individual agreement. It has been regulated instead the termination of labor agreement upon the communication date of advance retirement decision or the partly advance retirement decision.

It has also been regulated the possibility to extend the working hours program, as an exception, over 48 hours per week (including the extra-work hours), provided that working hours average calculated for a reference period of one calendar month does not exceed 48 hours per week.

For certain fields of activity, entities or professions established under the collective labor agreement at national level, there may be negotiated reference periods longer than three months, but no more than 12 months, through the collective labor agreement at the level of each branch.

As concerns the employees’ professional training, employer’s obligation to ensure employees’ attendance to training programs has been tailored to the number of employees, the concrete implementation ways being settled upon parties’ agreement.



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