The High Court of Cassation and Justice of Romania has recently stated that if contractual parties do not observe the written form of the labor agreement, individuals performing work for and under the authority of the other party may request by means of a declaratory action the recognition of the employment relationship and its effects, even in the case in which labor relations were terminated before bringing proceedings in front of the court.

The decision is highly relevant in the context of labor relations between employees and employers.

Pursuant to the Romanian Labor Code, the individual labor agreement is defined as the contract pursuant to which an individual, the employee, undertakes to perform work for and under the authority of an employer, either individual or legal person, in exchange of a remuneration, as salary. The individual labor agreement is concluded based on the parties’ consent, in written form, in the Romanian language. However, the employer is the one obliged to observe the written form of the agreement. Furthermore, the law states that the written form is mandatory for the valid conclusion of the agreement and that failure to observe the legal requirements for its valid conclusion triggers its nullity. Such nullity may be either agreed by the parties or declared by the court. In any case, the nullity produces effects only for the future and from a procedural point of view it may only be claimed during the existence of the labor agreement.

As the decision states, an individual labor agreement that has not been concluded in written form is valid if the legal existence of such an agreement has been proven following the assessment of the obligational relation. Even though such contract is null, it exists, nevertheless, given the will of the parties that have executed the specific obligations of an employment relationship (work performance and salary payment).

The decision states also that, despite the legal obligation of the employer to conclude the agreement in written form, it should nevertheless be considered that the law does not provide any legal mechanism for the recognition and enforcement of the employment status for the period related to the performed activity in the absence of legal forms.    

It has been established that, in the absence for the employee of the right to a legal action for the obligation of the employer to conclude the agreement in written form, as a retroactive measure, the employee is only entitled to file a declaratory action. By the decision issued within such declaratory action, the court is not entitled to conclude the labor agreement for the parties, but only verifies the existence of the contractual elements pursuant to the parties understanding and, only to the extent to which such elements exist, the court issues a decision ascertaining the effects of a null agreement. In other words, a labor agreement concluded verbally shall only be null for the future, but valid for the past as regards its legal effects.

Given the limits of the proceedings brought before the High Court of Cassation and Justice in the case at hand, the decision does not however state in respect of the nature and extent of the effects of a labor agreement concluded otherwise than in written form, namely the effects in respect of the salary, seniority or payment of mandatory contributions.

As regards the applicability of the legal provisions pursuant to which the nullity of a labor agreement may only be claimed during the existence of said contract, the decision determines that the court cannot be impeded to assess upon the effects of a labor agreement. A contrary interpretation would be burdensome for employees who depend exclusively on the time the claim is filed with the court.

The decision rendered by the High Court of Cassation and Justice is salutary given the absence of constant case law in this respect. On the contrary, so far most of the existing case law has established that declaratory actions in the matter hereof are inadmissible or that the conclusion of  labor agreements otherwise than in written form is not allowed, individuals having thus no other available legal actions to ascertain the existence of an employment relationship.