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Introduction |
The world economic crisis has had a negative impact on employment in
Romania, particularly in the construction and automobile industries.
Throughout the country, employers have been forced to fire or lay-off
large numbers of their employees with grave consequences to the
individuals and to their communities. Indeed, collective dismissals are
much more than just the sum of individual dismissals – they bear
significant social consequences that may affect the life of an entire
community, most especially in localities where its entire economic life
is focused around one or two major employers faced with the fallout from
the global crisis.
The decision to collectively dismiss employees in Romania involves a
complex legal process, and the consequences of failing to conduct the
process in full compliance with the law can be disastrous for the
company, resulting in the absolute nullity of the collective dismissal
decision and the reversal of the whole process.
Romanian labor law sets forth the steps that must be followed for
collective dismissals. Those steps are in full compliance with the
specific Directive adopted at the European Union level, i.e., Directive
98/59/CE, dated July 20, 1998, on the legislation of the member states
regarding collective dismissal within the European Union. However,
certain ambiguous legal provisions have caused discrepant practices that
can harm employers, while they must rely upon this procedure for their
economic survival.
Applicable Legal Provisions
The collective dismissal procedure is regulated by the provisions of the
Labor Code and by the collective bargaining agreement adopted at the
national level (the “National CBA”). However, employers should
also consider the more specific provisions of the collective bargaining
agreements adopted at lower levels, i.e., the agreements adopted for
each industry sector, as for instance, the chemical, metallurgic or
garment industries, as well as those adopted at the company level
(generally referred to as the “CBAs”). This is important because
a CBA concluded at a lower level, such as at the company level, cannot
provide rights for employees that are less than the limits set within
the CBA concluded at a higher level. In case of discrepancies, the
provisions creating more favorable rights for employees prevail.
According to the Romanian Labor Code, a collective dismissal is a
dismissal by employers of employees for a period of 30 days or more for
reasons not pertaining to individual aspects of the particular
employees. Such reasons may be represented by economic difficulties or
technological transformations that the employer is facing. The Labor
Code provides that a collective dismissal must be based upon a real and
serious cause. In practice, a cause is real when it is imposed by the
economic difficulties of the employer, and it is serious when it is
based on objective reasons, i.e. reasons that pertain to the business
activity of the employer and not to the employees’ individual
characteristics, and where it can be demonstrated to have a significant
impact upon such business. The effective, real and serious reasoning
behind a collective dismissal is subject to the in-depth analysis of a
competent court if a collective dismissal decision is challenged.
Furthermore, a dismissal is qualified as a “collective dismissal”, and
not just as a sum of individual dismissals -- requiring compliance with
the specific procedures set by law -- only if it affects a certain
number of employees, out of the total number of persons employed by the
employer undertaking the dismissal. Therefore, a dismissal is collective
if: at least 10 employees are affected by the dismissal decision, if the
employer performing the dismissal has more than 20 and less than 100
employees; at least 10% of the employees are affected, if the employer
performing the dismissal has at least 100, but less than 300 employees,
and at least 30 employees are affected, if the employer performing the
dismissal has at least 300 employees.
Moreover, for a collective dismissal to be permissible under Romanian
law, the targeted employees should not be in situations in which
dismissals are prohibited by law, i.e. in vulnerable situations which
would not allow them to search for new jobs or attend any training
courses that would qualify them for further positions in other
companies. For instance, it is prohibited to dismiss employees if they
are in a temporary disability period ascertained by a medical
certificate; in case of pregnant women employees, to the extent that the
employer was aware of the pregnancy before issuing the dismissal
decision; or during the maternity leave or throughout the duration of
the leave for raising a child up to the age of 2 and, in case of a
disabled child, up to the age of 3. According to the Labor Code,
however, such prohibitions to dismiss are not applicable in case of
dismissals caused by the employer’s judicial reorganization or
bankruptcy. |
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The Collective Dismissal Procedure |
Consultation with trade unions or employees’ representatives
The most significant stage within the collective dismissal procedure is
the consultation stage with the trade unions or employees’
representatives. According to the Labor Code, where employers envisage
collective dismissals, they must initiate consultations with the trade
unions or, as the case may be, with the employees’ representatives, if
there are no trade unions.
 Labor
Code requires that the consultation agenda with the trade unions or
employees’ representatives cover at least the methods and modalities
envisaged for avoiding collective dismissals or for the reduction of the
number of employees to be dismissed, and the appropriate means envisaged
to reduce the consequences of the collective dismissals by resorting to
social measures aimed at, inter alia, providing support for the
re-qualification and professional re-training of the dismissed
personnel.
In addition, under the terms of the National CBA, employers must put at
the disposal of the trade unions or employees’ representatives the
technical and economic justification for the measures to be taken,
emphasizing the possibilities for the redistribution of personnel, the
reorganization of the business or the re-qualification or professional
reorientation of the employees.
Because the law requires that employers give employees the right to
provide constructive proposals with regard to a contemplated collective
dismissal, employers must notify in writing the trade unions or
employees’ representatives of all relevant information regarding the
envisaged procedure, including, at a minimum, the following: the total
number and categories of employees employed; the reasons for the planned
dismissal; the number and categories of employees to be dismissed; the
period over which the planned dismissal is to be performed; the criteria
considered within the collective dismissal procedure in accordance with
the labor law and to the CBAs; the contemplated measures for limiting
the number of dismissals; the measures meant to mitigate the
consequences of the dismissals, the severance payments to be granted to
the dismissed employees in accordance with labor law and CBAs; and the
term within which the trade unions or employees’ representatives may
submit proposals in order to avoid dismissals or obtain a reduction in
the number of dismissed employees.
On the same date that the notice has been communicated to the trade
unions or employees’ representatives, a copy of that notice must also be
submitted to the Territorial Labor Inspectorate and also to the
Territorial Labor Agency. Furthermore, the Labor Code provides for
certain terms that must be met with regard to the submission of the
notice. Because this stage of consultation is so important, and should
be performed in such a manner so as to lead to an agreement between the
parties involved, the law provides for a ten-day term from the receipt
of the notice sent by the employers during which the employees are
entitled to analyze the information they have received and the technical
and economic grounds for the dismissals and to produce any proposals
they deem appropriate in order to avoid the collective dismissals or to
reduce the number of dismissed employees. Employers then have the
obligation to provide reasoned replies in writing to the employee
proposals not later than 5 days after receiving them.
The Notice of Dismissal
After the final consultations with the trade unions or the employees’
representatives, if the employer decides to proceed with the collective
dismissals, it must issue a second notice. The second notice reiterates
all of the elements included in the first one, as well as the outcome of
the consultations with the trade unions or employees’ representatives,
specifically noting the reasons for dismissal and the total number of
employees to be affected by the collective dismissal, as well as the
date when such dismissal will become effective.
This second notice must be submitted to the Territorial Labor
Inspectorate and to the Territorial Employment Agency, as well as to the
trade unions or employees’ representatives at least 30 days prior to the
issuance of the individual dismissal decisions.
Prior Notice Term. The Dismissal Decision
According to the National CBA, employees that are affected by a
collective dismissal decision must be given a 20 business-day notice
before their termination takes effect. Provisions of CBAs adopted at a
lower level must also be observed, as well as the provisions of the
individual labor agreements, which may create even more favorable notice
terms for employees.
The legal provisions with regard to whether the prior notice term should
be communicated to the employees as a distinct document, or as part of
the dismissal decision, have proven to be confusing in practice.
Pursuant to the Labor Code, the dismissal decision must indicate, among
other mandatory elements, the duration of the notice term. Consequently,
this notice term runs from the date when the decision is communicated to
the employee. If employers communicate the notice as a different
document and prior to the dismissal decision, they may risk having the
entire dismissal procedure annulled in court.
Another potential reason for annulment is where the dismissal decision
does not include any of the mandatory elements provided by the Labor
Code, i.e.: the reasons for dismissal; the duration of the notice term;
the criteria to be fulfilled by the collective dismissal procedure; the
list of all vacant positions in the unit, if applicable, and; the term
within which the employees have to express their intention to accept a
vacant position (if there are no vacant positions, a mention of this is
to be made). Dismissal decisions produce effects from the date of their
communication, which is the date when the decisions are communicated by
registered mail with acknowledgement of receipt, or the date when the
decisions are communicated by means of service. Since there are many
cases when employees refuse to sign the receipt of the document, and
consequently employers cannot provide such proof, it is best that such
decisions be communicated through official service. |
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Effects of Collective Dismissals |
Compensations for Employees
According to the National CBA, the parties in collective dismissals must
negotiate the awarding of pecuniary compensation for employees, in
compliance with the law and with the provisions of the applicable CBAs.
Romanian law regards employees’ claims against employers as extremely
significant; in that regard, the Insolvency Law, i.e. Law 85/2006,
states that, in case of employers’ bankruptcy, employees’ claims arising
from labor relations have priority over other types of claims.
Prohibition to hire new personnel
The Labor Code and the National CBA prohibit employers that proceeded
with collective dismissals to hire new staff in the positions formerly
occupied by the dismissed employees for a period of nine months from the
date when the collective dismissal took place. In the event that the
employer’s economic situation has been rectified, and the employer
consequently seeks to hire personnel to fill the vacant positions, the
employer must first notify the dismissed employees; only if the
dismissed employees refuse to return to their former now vacant
positions, may the employer hire new personnel for the respective
positions.
Competent courts
An individual employee dismissed by a collective dismissal decision may
challenge it in court within a 30-day period from the date when the
decision was communicated to the employee. Since the right of employees’
to information with regard to the possibility to contest the decision is
essential, even though the Labor Code does not expressly provide for it,
the individual dismissal decision should also include the term in which
it may be contested by the employee. The competent court is the tribunal
where the claimant, i.e. the dismissed employee, has a primary
residence. |
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Conclusion |
 Collective
dismissals may prove to be advantageous for employers facing serious and
real financial problems, and may provide them with the necessary
solution for their economic revival. However, if employers have only
temporary and limited problems, they may resort to other procedures put
in place by Romanian law. For instance, companies facing economic
difficulties may decide to suspend their employment agreements and to
send their employees home under a so-called “technical unemployment”,
providing employees with 75% of their salaries. However, when the
collective dismissal procedure is chosen, each step of the process must
be carefully planned and implemented so that there is no room for any
claims prejudicing the company. |
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2009 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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