Impact of COVID-19 on Employment Relationships

3 April 2020

The impact of the current crisis has put a significant strain on the economic activity and employment relationships. According to the Ministry of Employment, a significant number of employment agreements have already been suspended as a result of the COVID-19 outbreak and more are expected to follow.

The outbreak also raises work related health concerns, to which Romanian authorities have responded by issuing regulations and recommendations.

1. Suspension of employment agreements

1.1. Suspension in case of a significant loss of activity

Under the Employment Code, if an employer experiences a significant loss in activity or other important shortages as a result of the outbreak, the employer may unilaterally suspend the individual labour agreements (the “ILAs”) concluded with the employees assigned to the impacted activity under the following conditions:

•Suspension of the ILAs will be decided for the estimated duration of the difficulties experienced by the employer and may be extended, depending on the specific economic situation;

 

•The employer’s decision needs to be communicated to the impacted employees;

 

•Suspension of ILAs based on this ground needs to be economically substantiated (e.g., with numbers proving a significant decrease in revenues and/or shortages in supply & demand);

 

•Affected employees will remain ready to resume work whenever the grounds leading to suspension have disappeared;

 

•During the suspension period, employees are entitled to a remuneration of 75% of the base salary corresponding to the occupied position, unless more favourable provisions have been agreed through the applicable collective labour agreements; and

 

•All the other provisions of the applicable collective labour agreements with respect to the employees’ rights in case of technological idleness will remain applicable.

 

1.2. Suspension in case of force majeure

In case of force majeure, the impacted ILAs are suspended by effect of the law. Suspension of the ILAs will last for the entire duration of the force majeure.

1.3. The Romanian State support for companies forced to suspend ILAs

Under the rules established by Government Emergency Ordinance 30/2020, as amended by Government Emergency Ordinance no. 32/2020, in the context of the Covid-19 outbreak, the state shall bear the remuneration representing 75% of the base salary for ILAs suspended due to activity shortages, as per Section 1.1 above, but no more than 75% of the average national salary, i.e., an amount of RON 4,072 per month per each suspended ILA.

If the base salary under the ILA is higher than the average national salary, and the employer’s personnel budget allows, the employer may supplement the remuneration granted to the employee with an amount up to a minimum of 75% of the employee’s base salary. This additional amount shall be borne by the employer.

The employees who have concluded multiple ILAs will not benefit from the remuneration established by Government Emergency Ordinance 30/2020 if at least one of the ILAs is a full-time ILA and remains active during the state of emergency. If all of the ILAs concluded by one employee are suspended due to activity shortages, as per Section 1.1, the employee in question will benefit from the remuneration of 75% of the base salary corresponding to the ILA containing the most advantageous salary rights. The cap of 75% of the average national salary, as well as the possibility for the employer to supplement the remuneration remain applicable.

During the suspension of the ILAs as per Section 1.1, the employer is exempted from paying the work insurance contribution (in Romanian: contributia asiguratorie pentru munca) of 2.25% of the base salary. However, the period during which the ILA is suspended and the work insurance contribution is not paid will still be recognized as contribution period to the benefit of the employee.

1.4. Other employer and employee rights

Affected employees and unions may challenge the employer’s decision ordering or ascertaining the suspension of the ILAs.

However, under Presidential Decree no. 195 of 16 March 2016 instituting a state of emergency on the territory of Romania (the “State of Emergency Decree”), all limitation terms and litigation (except for urgent matters, as decided by the High Court of Cassation and Justice and Courts of Appeal) have been suspended for 30 days, with the possibility of extension. Therefore, any potential litigation against the employer’s decision may be postponed until the state of emergency is lifted.

Also, collective labour litigation in units deemed essential under the State of Emergency Decree for the normal functioning of community services has been banned.

Except for the case in which the activity of the employer was suspended by decision of the Governmental authorities, the suspension of the ILA is not the only legal remedy for an employer facing economic distress in the current global context of the Covid-19 outbreak. Depending on the actual circumstances of both the employer and the employee, alternative solutions, meant to provide comfort on both sides, may be implemented.

2. Health Measures for Limiting the Spread of COVID-19

The State of Emergency Decree has simplified the procedure for remote working, by allowing private companies to ask their employees to work from home, whenever possible, for the entire duration of the state of emergency.

Employees who can only complete part of their tasks remotely may be requested to work from home only on specific dates or between specific hours, as required by the nature of the activity and by the work schedule.

Employers must provide health and safety instructions adapted to the specifics of working from home and ensure that the employees are provided with the necessary equipment for properly fulfilling their tasks. Also, employers are entitled to verify the activity of the employees during the remote work schedule.

When remote working is not possible, employers need to bear in mind that the responsibility for ensuring proper health and safety conditions at the workplace rests with them. In the context of the COVID-19 outbreak, this requires taking all the necessary measures to prevent contagion, such as: properly sanitizing the working space, providing the employees with protection masks and gloves, adapting the prevention and protection health and safety plan in accordance with the recommendations of the occupational health service provider etc.

Upon consulting the employees’ representatives (if the case), the employer may also schedule frequent medical checks throughout the duration of the outbreak, in collaboration with the occupational health service provider.

In the event of a confirmed COVID-19 case at the workplace, the employer should immediately inform the Public Health Direction and request instructions. The employer must also inform the other employees who have been in contact with the infected employee with respect to the applicable procedure for requesting medical leave in case of quarantine or self-isolation.