Government Emergency Ordinance No. 111/2010 on child-raising leave and indemnity (Child Raising Leave Law) (CRLL) has recently been the subject of amendment through Law No. 66/2016 (Amendment Law), published in the Official Gazette of Romania no. 304 of 20 April 2016. The Amendment Law enters into force on 1 July 2016.
With the aim of promoting equality of treatment and a non-discriminatory approach between parents who opt for child-raising leave, as well as ensuring real support for families with a view to helping increase the birth rate in Romania, the Amendment Law introduces new rules regarding, amongst others, (i) eligibility criteria, (ii) the level of indemnity for child-raising leave, (iii) the duration of leave and (iv) return-to-work benefit (Romanian, stimulentul de insertie).
Without intending to provide an exhaustive overview of the Amendment Law, here is an outline of the core changes to the CRLL, as amended.
Scope of applicability
The CRLL's general scope will be further extended to also include parents who earn salary-assimilated income.
Also, in terms of individuals who are entitled to benefit from the CRLL, the Amendment Law expressly provides that the requirements relating to the applicant (including, amongst others, domicile/residency requirements) are correlated with EU Regulation No. 883/2004 regarding the coordination of social security systems. This needs to be analysed on a case-by-case basis as it might lead to a further extension of the CRLL's scope.
Upon its entry into force, the CRLL will apply to parents:
- whose child is born on or after 1 July 2016 or who adopt a child on or after this date;
- who benefit from child-raising leave and indemnity under the old law (regardless of the expressed option of 1 year or 2 years);
- who benefit from return-to-work benefit under the old law;
- who benefit under the old law from unpaid leave up until the child reaches 2 years of age.
As a result:
parents who (i) are on child-raising leave until the child reaches the age of 1 year; (ii) receive return-to-work benefit or; (iii) are on unpaid leave until the child reaches 2 years of age, may change their option by request, together with proof of income suspension, for the remaining period until the child reaches the age of 2 years (3 years, in the case of a child with disabilities);
parents on child-raising leave until the child is 2 years old automatically benefit from the change in the monthly indemnity;
parents receiving return-to-work benefit (regardless of the initially expressed option) and who do not choose to take child-raising leave automatically benefit from an extension to the period of receiving the benefit until the child reaches 3 years of age (4 years in the case of children with disabilities).
Changes to eligbility criteria and other requirements
Contribution period requirement
With a view to ensuring a more flexible approach for the CRLL, the amendments require an individual to have earnt income subject to income tax for at least 12 months in the 2 years preceding the child's birth.
The old law required an individual to have earnt income for 12 months in the last year prior to the child's birth. This led to some parents being ineligible for child-raising leave because of gaps in their contribution period (irrespective of length) during the year preceding the child's birth.
Payment of local taxes requirement
In order to be eligible for rights under the CRLL, an individual previously had an obligation to pay local taxes (or would otherwise have the indemnity suspended or ceased). With a view to correlating the CRLL with recent legislative changes regarding social aids/guaranteed minimum income and to support families with children, this requirement is completely eliminated.
Changes to duration, indemnity and benefit
The most important changes introduced by the amendments relat to (i) the level of indemnity, (ii) the leave duration and (iii) the extension of the return-to-work benefit.
New indemnity thresholds
There is no longer a maximum threshold for the indemnity. This means the indemnity will be 85% of the average net income earned in the last 12 months of the 2 years prior to the child's birth, without any maximum cap. The exact calculation method may be further clarified through the methodological norms.
The child raising indemnity will only have a minimum limit, which will be 85% of the minimum gross salary at national level (approx. RON 1,100).
Unique duration of the child raising leave
The old law provided that parents could opt between child-raising leave up until the child is (a) 1 year old (or 3 years for disabled children) or (b) 2 years old, with a different level of indemnity for each type of leave.
From 1 July 2016, eligible parents may benefit from child-raising leave with a unique duration, namely until the child is 2 years old (or 3 years old for disabled children), and will be entitled to the same indemnity during the entire period. This is aimed at encouraging parents to get involved in their children's education, whilst receiving a real and appropriate financial support to do so. Parents may also choose to return to work earlier, case in which they may benefit from extended return-to-work benefit.
The amendments change the calculation method for the return-to-work benefit which is payable to parents who decide to return to work while they are still entitled to benefit from child-raising leave. This benefit will be 50% of the minimum child-raising indemnity (now approx. RON 550). This means, going forward, this benefit will also reflect the changes to the minimum gross salary at national level.
Also, the amendments introduce a new favorable provision for parents who return to work at least 60 days before the child is 2 years old (3 years old, in the case of disabled children), by extending the period of return-to-work benefit until the child is 3 years old (4 years old, in the case of disabled children).
The protection from termination of employment is maintained as previously regulated. This means that employers are prohibited from terminating the employment relationship of (a) an employee who is on child-raising leave until the child reaches 2 years of age (3 years, in the case of children with disabilities), and (b) an employee receiving return-to-work benefit (which may be extended - and, thus, the protection prolonged - up until the child is 3, or 4 in the case of disabled children).
At the same time, this prohibition extends, only once, with 6 months after the employee's final return at the workplace.
To sum up, the reforms are a firm step forward by the state in providing real and strong support to parents raising children, by securing the legislative and financial basis to allow them to take more time to be involved in raising their children.
In terms of practical impact for employers, these changes might translate into (i) longer periods of child-raising leave taken by either parents, during which securing a replacement via a fixed-term employment contract remains the suggested solution (while the absence period may be more clear) or (ii) extended protection periods.
However, further details (especially regarding its impact on employees already on leave or the calculation method) will be provided by separate instructions and amended methodological norms (expected at the end of June 2016).