When it comes to the end of employment, it’s crucial to follow the right procedures to avoid potential pitfalls, particularly around the concept of fair dismissal in Romania.
This guide will dive into important aspects of employment law in Romania that every employer should be aware of, especially regarding notice periods, end of employment, fair dismissal in Romania, transfer of undertakings, and separation agreement waivers.
Whether you’re dealing with employee resignation, dismissal, or probation, knowing the right notice periods can help your business remain organised and legally compliant.
When terminating an employment contract in Romania, employers are generally required to provide a notice period. This allows both parties time to prepare for the change and ensures a smoother transition. According to Romanian labour laws, the notice period in Romania for dismissal is typically a minimum of 20 working days, regardless of the type of employment contract.
This applies to most roles, but if an employee holds a management position, the notice period may extend up to 45 working days. It’s essential to follow this minimum requirement, as failure to do so can lead to legal disputes.
Moreover, the notice period starts once the employer has provided the employee with formal, written notification of the termination.
Employees in Romania can also terminate their employment agreement by resignation. The notice period for resignation differs depending on the employee’s role:
These notice periods ensure that employers have enough time to find a replacement or reorganise operations while allowing employees to leave in a structured manner. During the notice period, the employee is still obligated to fulfil their job duties unless otherwise agreed upon.
If both parties agree, the notice period can be shortened or waived. However, the maximum limits must be respected unless there is a mutual agreement.
Unlike in many countries, there is no statutory severance pay in Romania, unless it is specified in a collective bargaining agreement or in an individual employment contract. Employers are not automatically required to provide severance pay when an employee is dismissed unless certain conditions have been set in a collective agreement.
However, in cases of collective redundancies or certain restructuring scenarios, severance packages may be negotiated as part of the termination process. While it is not mandatory, offering severance pay can help maintain goodwill and reduce the likelihood of legal disputes.
Probation periods in Romania are a valuable tool for employers to assess new hires’ suitability for a role. The probation period is specified in the employment agreement and depends on the employee’s role:
During the probation period, the employment contract can be terminated by either party without providing a formal reason, but a notice period of at least 5 working days is required. This allows both the employer and the employee to adjust if the working relationship is not a good fit.
Although probation periods are more flexible, employers should still respect the notice period to avoid potential legal issues.
Navigating the termination of employment in Romania requires a clear understanding of labour laws to ensure compliance and protect both the employer and the employee. From dismissal grounds to the necessary procedures, Romanian labour laws outline specific steps that employers must follow.
Employment contracts in Romania can be terminated under several circumstances, as outlined in the Romanian Labour Code. The process and requirements depend on the type of contract, the employment agreement, and whether a collective agreement is in place. Individual employment contracts can be terminated in the following ways:
Employers can terminate employment contracts through dismissal for reasons related to the employee, such as professional inadequacy or misconduct, or for reasons not related to the employee, such as job redundancy or company restructuring. It is crucial that employers clearly document the reasons for termination to avoid potential disputes.
The termination process in Romania depends on the employment agreement, collective bargaining agreements, and the reason for termination. Regardless of the reason, employers must adhere to several procedural steps to ensure compliance with Romanian labour laws:
In Romania, a notice period is generally required when an employment contract is terminated. The standard notice period during termination in Romania is 20 working days for most employees. However, this can extend to 45 working days for managerial staff or other specific positions outlined in the employment agreement.
The notice period starts once the employee is formally notified of the termination. During this period, the employee is expected to continue fulfilling their job responsibilities unless otherwise agreed upon. The purpose of the notice period is to provide both parties with enough time to adjust to the impending termination, allowing the employer to find a replacement and the employee to seek new employment.
If the dismissal is due to serious misconduct, the notice period can be bypassed, but this requires thorough documentation and legal support to ensure compliance with labour laws.
Termination pay (also known as severance pay) is not automatically required by law unless it is stipulated in the employment contract or a collective bargaining agreement. However, in cases of collective redundancies, employees may be entitled to termination pay as part of their compensation for the job loss.
The amount of termination pay varies depending on the employment contract and industry-specific agreements. In some cases, employers may choose to offer termination pay as part of a negotiated severance package, especially when trying to avoid potential litigation or to facilitate a smoother transition for the departing employee.
When managing employees in Romania, restraints such as non-compete and non-solicitation clauses, can protect your business interests after an employee leaves. However, implementing these clauses effectively requires careful attention to Romanian labour law to ensure they are enforceable.
In this section, we’ll explore the key aspects of work restraints in Romania, focusing on non-compete and non-solicitation clauses.
A non-compete clause is a contractual agreement where an employee agrees not to engage in activities that would compete with their previous employer after leaving the company. This is a common method for employers to safeguard their business from potential competition by former employees. In Romania, these clauses are permitted but are strictly regulated under the work restraint system.
For a non-compete clause to be valid under Romanian law, it must include certain mandatory elements:
In addition, non-compete clauses are considered an exception to the principle of freedom of work in Romania. Therefore, any failure to meet these legal requirements can render the clause void.
While non-compete clauses are clearly regulated, non-solicitation clauses—which prevent former employees from soliciting clients or employees of their previous employer—are not explicitly covered under Romanian law. However, they can still be included in employment contracts and may fall within the scope of a non-compete agreement if carefully crafted.
A non-solicitation of customers clause aims to prevent former employees from approaching or attempting to do business with the clients of their former employer. Although this is not directly regulated by Romanian law, it is common practice for businesses to include such a clause as part of the broader work restraint system.
These clauses can be particularly useful in protecting the employer’s relationships with key customers, ensuring that a departing employee cannot immediately capitalise on those connections. While not explicitly covered by law, a well-drafted non-solicitation of customers clause may be upheld if it is considered reasonable and is part of a broader non-compete agreement.
A non-solicitation of employee’s clause prevents a former employee from poaching colleagues or staff members from their previous employer. Like customer non-solicitation, this is not expressly regulated under Romanian law but may be valid if included in a non-compete agreement.
This clause helps businesses protect their workforce and avoid disruptions that could arise from key employees being recruited by a former colleague. Ensuring that the clause is reasonable in scope and duration is key to its enforceability under the work restraints in Romania’s system.
While it’s common to reach mutual agreements during separations, it’s important to note that, under the Romanian Labour Code, employees cannot waive their legally recognised rights. Any agreement aimed at waiving or limiting employee rights is considered invalid.
This rule ensures that employee rights, such as wages, working conditions, and protections, remain intact, regardless of any separation agreements. Employers should be cautious when drafting such agreements to avoid invalid clauses that contradict this provision.
It’s also worth noting that the visa waiver program in Romania is separate from employment law. However, understanding the Romania visa waiver process can be crucial for international businesses looking to hire foreign workers.
When a business undergoes a transfer in Romania, whether through a merger, acquisition, or insolvency, it’s essential to understand the legal implications for employers and employees. The Romanian Transfer of Undertaking Law No. 67/2006 (TUPE), based on the EU Acquired Rights Directive, governs the transfer of employee rights and obligations.
When a business is transferred, the employees’ rights, including their individual employment agreements and collective bargaining terms, are automatically transferred to the new employer. This automatic transfer follows the EU Acquired Rights Directive and Romanian Transfer of Undertaking Law No. 67/2006 (TUPE). The new employer inherits all employment-related responsibilities, including salaries, benefits, and working conditions.
Moreover, dismissals related to the transfer are prohibited, and the new employer cannot change the terms and conditions of employment following the transfer, except under specific conditions. This ensures that workers’ rights in Romania are safeguarded during transitions.
Insolvency can complicate the transfer process, but employees’ rights still apply. Employment contracts are transferred to the new employer, who must work closely with both the insolvent company and the transferee. The government may intervene to protect wages or benefits, ensuring that workers’ rights in Romania are upheld.
Even during insolvency, employers must follow Romanian labour laws, particularly regarding employee contracts and obligations. Non-compliance can lead to significant liabilities.
No matter how an employee’s time with your business ends, staying on top of the labour laws and regulations, as well as the relevant best practices about the end of employment is crucial. This helps your business stay compliant and ensures you’re handling the transition with care.
However, the process around the end of employment and its regulations can be difficult to navigate, especially for companies unfamiliar with the local market.
This is where CXC comes in. Our team of compliance experts has a deep understanding of the local labour market and the regional best practices. That means, you don’t have to worry about compliance, and you can focus on growing your business.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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