Government Emergency Ordinance no. 82/2017, which amends and supplements provisions relating to the Romanian tax code (“GEO no. 82/2017”) was published on 16 November 2017 in the Romanian Official Gazette, Part I.

GEO no. 82/2017 is directly connected to Government Emergency Ordinance no. 79/2017 amending and supplementing Law no. 227/2015 on the Romanian Tax Code (“GEO no. 79/2017”), which introduces important changes regarding personal income tax and the mandatory social contributions of employees—namely, that, from 1 January 2018, social contributions will be shifted from the employer to the employee.

The most significant impact of GEO no. 79/2017 is the increase of the level of social contributions that each employee will have to pay on a monthly basis, thus leading to a general reduction of the level of net salary income in Romania. As GEO no. 79/2017 is planned to enter into force at the start of the new year, its implementation is currently one of the hot topics in Romania..

GEO no. 82/2017 was adopted with the aim of setting up a special legal framework to facilitate collective dialogue between employers and employees with respect to the provisions of GEO no. 79/2017. To ensure that such collective dialogue is applied universally in Romania, GEO no. 82/2017 also provides for the derogation from current Romanian labour legislation and extends the collective negotiation obligation to all employers, including employers with less than 21 employees and which are currently excluded from the general legal regime.

Outline of the new obligations

GEO no. 82/2017 provides that during 20 November - 20 December 2017, Romanian employers must:

  • initiate collective negotiations for implementing the provisions of GEO no. 79/2017, even if there is no collective bargaining agreement in place at the company level;
  • initiate collective negotiations of addenda to collective bargaining agreements already in place in order to implement the amendments provided by GEO no. 79/2017.

In essence, the object of the collective negotiation is for employers to discuss with the respective trade unions, employee representatives or representatives of trade union federations, whether or not the employer will increase gross monthly salaries in order to maintain the net monthly salaries of its employees—i.e, if the employer will agree to take over part of its employees’ social security payment obligations.

Next steps

Given the impact on salaries of GEO no. 79/2017 from the start of the new year, companies need to act quickly and initiate collective negotiations during the period 20 November 2017–20 December 2017 to determine how GEO no. 79/2017 will be implemented at the company level.

Given the rather short deadline of one month for initiating the discussions provided by GEO no. 82/2017, companies with less than 21 employees or companies where employees have not elected employee representatives may face practical difficulties in implementing GEO no. 82/2017.