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Romanian Labor Law for Expat Employees

Both foreign employers and employees in Romania often have to deal with complex employment issues which can become far more adventurous than expected due to the Romanian legal culture relating to employment. Below are some insights on what aspects foreign employers and employees should take into consideration when dealing with labor law issues in Romania.
  • Dismissals can be performed only in the cases expressly provided by the Labor Code and under observance of the procedure stipulated by the respective provisions. If these provisions are not observed, the dismissal decision will be declared void by the court. Mutual termination of the employment contract is a recommended alternative to the dismissal procedure.
  • Concealed employment. A service agreement concluded with a freelancer must be drafted with special attention in order to avoid the risk of it being reclassified as an employment contract (with the associated taxation for salaries) by the fiscal authorities.
  • Transfer of undertaking. Employees and their representatives benefit from special protection in the case of transfer of undertaking. The applicable rules should be carefully analyzed by foreign investors before entering into sell-purchase agreements (both share deals and asset deals) in order to avoid any legal risks arising from these transactions with respect to the rights of the transferred personnel.
  • Probationary periods. In case the foreign employer considers that the maximum probationary period provided by the law (i.e. 120 days for executives and 90 days for non-executives) is not sufficient for evaluation of the employee, there is the possibility to conclude a fixed-term employment contract. Nevertheless, the employer should consider the restricted conditions under which the conclusion of such contract can be performed, as provided by the law.
  • Vacation. The rule is that vacation must be taken every calendar year. If vacation was not taken entirely in the respective calendar year, the employer is obliged to grant the employee the rest of his or her vacation until the end of the next calendar year. In practice, many employers fail to observe this provision, which leads to conflicts. To avoid this, it is recommended that foreign employers introduce strict internal rules regarding vacation.
  • Assignment of foreign employees. As a rule, foreign employees need to obtain a visa, a residence permit and a work permit in order to undertake work activities in Romania. It can take up to four months in order to obtain all three documents.

The most common work permits/visas are those for permanent employees (i.e., employees who conclude a local employment contract) and for assigned employees (i.e., employees who are employed with a foreign employer and who have been assigned to a local entity). The costs for obtaining a work permit and a residence permit are approximately USD 260 and USD 235 respectively. Many foreign employers ignore the complexity of the above-mentioned process, especially how time consuming it is. In order to avoid undesired measures taken by the competent Romanian authorities or the postponement of a project due to illegal employment of foreign employees, employers should schedule the whole permitting process at least five months prior to the actual assignment of the foreign employees.

Citizens of an EU/EEA-country or Switzerland do not need a visa and or working permit. However, they must obtain a registration certificate in case their stay in Romania exceeds 90 days. A registration certificate is issued by the Immigration Office within the same day the application is submitted, and the issuance fee is extremely low (less than USD 1).

 

Our contributor Andreea Suciu has more than eight years of experience in handling individual and collective employment matters for multinational companies. She has particular expertise in matters regarding residence rights, social security legislation, employment contracts and management agreements, trade unions, consultancy in negotiation and conclusion of collective bargaining agreements, and safeguarding of employees' rights, among many others. Andreea also published several articles and guides on her field of expertise.

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