Although Romania is going through a period of economic expansion there are still occasions where for a variety of reasons including economic reasons it is necessary for an employer to make employees redundant. This situation of redundancy is covered in the Romanian Labour Code.
According to the Code, an employee maybe dismissed in the case of redundancy under article 65 of the Labour Code and the procedures set out in the Code.
Article 65 of the Labour Code stipulates that an employer is entitled to make an employee redundant if the employee’s work position ceases to exist. The dismissal and decision has to be carried strictly in accordance with the provisions of Article 65. The dismissal has to observe the requirements of the Code and be for an actual, real and proper reason. The cancellation of the position is evidenced by the new organisational chart of the employer shows the cancellation of the position.
The legislation does not provide a definition as to what is a real and proper reason. This means that the criteria are subject to various interpretations by the courts, as they do not have a unitary jurisprudence regarding this subject. Examples of what complies with the above conditions could be the closure of a major project and therefore the employer has excess staff, or the reorganisation of the work force of the employer for other cogent economic reasons.
In order to dismiss an employee based on the ground of redundancy the employer must have complied with the following steps. The shareholders of the employer will need to convene a meeting to discuss the position and to decide upon the reduction of staff and the cancellation of the position. The employer will then prepare a new organisational chart without the redundant positions. Where an employer has more than 20 employees in is necessary for the employer to consult with the representative of the staff prior to the issue of any decision. The provisions also cover the position where the employer is an individual provided that the employees are working under a labour contract.
Following the decision, the employer will then issue the dismissal decision for each redundant employee. The decision notice must by law contain the following information, (i) the reasons for the dismissal based on the facts and the law, (ii) the notice period terminating the employment which must be at least 20 working days, (iii) the list of any vacant positions of the employer open to the employee, (iv) the period during which the employee may appeal the decision, and (v) details of the competent court to resolve any appeal against the decision.
If the dismissal decision does not follow the legal conditions and requirements, the decision will be void. The employer must communicate to the employee the decision personally or by recorded post.
The employee may appeal against the decision within thirty (30) days starting from the date of receipt. In such a case, the employee may claim in Court for the annulment of the employer’s decision, his re-instatement and payment of salary from the date of dismissal to the date of rehiring.
In practice the employee that appeals will succeed if he proves that the dismissal is based on an incorrect application of the facts and the law and that making the employee redundant is being used as a pretext and not supported by the facts. The appeal will also be successful if the employee can show that he was at the time of the service of the notice subject to one of the cases mentioned in Article 60 of the Labour Code. These cases are temporary incapacity of work, annual leave, pregnancy, maternity or child raising leave etc. When an employee is covered by these provisions, he cannot be made redundant.
Other grounds for an appeal are that In the period that he was dismissed the company was hiring other people in similar positions; the procedural steps were not correctly followed i.e., the employee did not received a proper notice, the decision is void for the lack of all elements that have to be observed, and the employer could have avoided the redundancy.
It is important to note that after the dismissal the employer is not entitled to employ another person immediately in the same position as the post that was made redundant or for a period of time. There is no legal provision that stipulates a specific period of time and in practice, it has been held that a dismissal is not for redundancy and is fictitious if the employer continues to hire new employees for the redundant position or a similar one.
In practise we recommend that this period of non-hiring should be for at least six (6) months starting from the date of the issue of the decision.
During the notice period the employer has to pay the employee’s salary and the employee has to fulfil his contractual obligations. Any obligation to pay additional wages or compensation must be contained in the labour contract and/or the internal rules of the employer. The employer is legally bound to pay the dismissed employee any additional payments provided for by the above-mentioned documents.
If there is no provision in any documents the employer is not obliged to make any additional payment. In practice, employers often offer an additional payment in order to substantiate the reason for the redundancy and to show goodwill toward the employee.
Although the Labour Code does not provide for it, some employers will offer the employee a similar post inside the company if such a position is vacant. Some judges have held the view that the dismissal decision would be unlawful if the employer does not offer a similar position to the employee if it had this possibility.
Where possible i.e. a small number of employees are involved, we advise the employer to try to conclude with the employee of an amicable termination of the labour contract. In such case, the employer is not obliged to pay compensation other than as agreed. The employer in such cases may consider offering an additional sum as compensation in order to avoid any future legal action.
Where the matter of redundancy cannot be dealt with amicably great care must be taken by the employer to ensure that the requirements of Article 65 are followed to ensure that its position is properly protected. If the legal provisions are followed then the employer will be entitled to dismiss its employees legally and quickly with the minimum of fuss for the reason of redundancy.