As already reported, the Government has decided, inter alia, to transfer the social contribution obligations from the employer to the employee beginning with 01.01.2018. The legal basis is the Emergency Ordinance ("EO") 79/2017.

In the previous special announcement, we have outlined the problems that employers need to address if they want to compensate the associated reduction in the net income of their employees.

In the meantime, the Government has issued an unannounced new Emergency Ordinance[1] (the "new EO"). This act obliges all employers - irrespective of the number of their employees - to conduct collective bargaining in this regard before the end of 2017.

Regulations

The new EO is introducing a series of regulations that deviate significantly from the principles of the Romanian collective labour law.

(Note: collective bargaining procedures are regulated by the Social Dialogue Law[2] - hereinafter referred to as the "SDL").

Please find hereinafter the most important regulations of the new EO and the principles of the SDL which hereby become temporarily inapplicable.

Please observe that according to the new EO, there is no obligation to introduce specific salary increases, but merely an obligation to initiate and, if the case, to conduct “collective negotiations on the application of the EO 79/2017".

Problems

According to its explanatory memorandum, the scope of the new EO is to “stimulate collective bargaining”. However, it introduces a genuine obligation to do so, and it concerns even employers who usually would not have a collective bargaining obligation at all.

Apart from the problems posed by the wording of the new EO, inter alia, the following aspects are unclear:

  • With whom to negotiate in small enterprises?

Most small companies have neither unions nor workers’ representatives (as they do not have any collective bargaining obligation). Therefore, they are not prepared for collective negotiations from a logistic point of view. It is unclear whether such employers have to initiate elections for workers’ representatives.

  • What is the outcome of such negotiations in case no collective bargaining agreement is in place?

If there is a collective bargaining agreement, the negotiations must expressly aim at concluding an addendum to it. If there is no such agreemen, the situation is unclear. From a legal point of view, employers cannot be compelled to conclude a collective bargaining agreement. However, the SDL does principally not provide any alternative instrument.

  • Is industrial action possible?

Usually, in case collective negotiations are refused or if they fail, the unions / workers’ representatives are entitled to industrial action, comprising a conciliation procedure and possibly even a strike. It is unclear whether this is valid also in this case.

  • Is there a fine for non- compliance?

The new EO itself does not contain any sanction for non- compliance. The fine provided by the SDL for the refusal to initiate collective negotiations (between 5.000 and 10.000 RON) could be applied in this case.

Measures for employers

Employers must now prepare for the new situation. The concrete steps which have to be taken depend on many aspects, inter alia on

  • The existence of a union in the company;
  • Whether this union is representative;
  • Whether workers‘ representatives have been elected;
  • The existence of a collective bargaining agreement.

Conclusion

As already mentioned, the stimulation of collective bargaining has been realized by stipulating an obligation to negotiate. It is not easy to assess to which extent this is justified from a constitutional point of view. A review of the new EO in this respect must consider, on the one hand, that employers have not been forced to specific salary raises, but only to negotiations. On the other hand, basic principles of the collective labour law have been temporarily suspended, and there is only very short time to implement the partially unclear measure.

Until such constitutionality review could be finalized, the aforementioned short term for the collective negotiations would probably have elapsed. All employers have to deal with this topic now.