Employment in Romania

Hiring Employees

The Employment Contract

A labour relationship is created by an employment contract made, as a matter of principle, in writing (ad probationem), in the Romanian language. The failure of the employer to sign a written employment contract, however, does not affect the existence and validity of such a contract.

If the employer fails to sign a written agreement between him and the employee the employment contract is deemed to be made for an indefinite period of time. The parties may overturn such a presumption and prove any other provisions of the contract by using any possible evidentiary method.

Individual employment contracts must be registered by the employer with the competent labour inspectorate within 20 days of the date of its conclusion. At the moment of registration, the labour inspectorate verifies (in a very limited manner) the compliance of the contract with the mandatory labour law provisions.

An employment contract must as a minimum contain the following issues:

• names of the parties and their addresses;
• details of the place of work or a statement that the work will be performed in various places;
• the job description;
• the risks specific to the particular position;
• Mandate of commencement of work;
• the duration of employment (if employment is for a definite term);
• the duration of the paid leave;
• notice periods and conditions;
• the basic salary and bonuses, and frequency of payment;
• the daily and weekly working hours;
• the applicable collective labour contract (if relevant);
• the duration of the trial period (if applicable).

An employment contract should, in principle, be entered into for an indefinite period of time. Hence, a fixed-term employment is only lawful if it is justified by a reason expressly provided by law (e.g. it is for seasonal business, replacement staff for temporarily absent workers, a temporary rise in the volume of business). Such a fixed-term employment contract must be concluded in writing.

When entering into an employment contract, a probationary period lasting a maximum of 30 days for non-management positions or 90 days for executive positions, with a termination notice period of at least 15 calendar days (as a rule), may be agreed. In the case of a fixed-term employment contract, the duration of the termination notice varies as according to the agreed contractual period, and is contained in the Labour Code.

Choice of law

Under Romanian law, the parties to an employment contract may not elect a governing law other than Romanian law.

Jurisdiction clause

The parties to an employment contract may not choose a court for solving an eventual dispute other than those provided by the applicable procedural laws of Romania.

Contracts for services

Apart from an employment contract, services may also be rendered under a contract for services, under which the service provider must be an authorised independent business person. It is important that the purpose of such an agreement is not to evade employment law. Therefore, if a contractor is integrated into the other party’s business and is subject to its control he or she is likely to be considered as an employee regardless of the label of the contract.

Also, directors/managers of trading companies may be ‘hired’ by using a ‘management contract’ (a type of mandate).

Employment of foreigners

When hiring foreign citizens, in addition to the general conditions required under the Labour Code, the special conditions required under the Government’s Emergency Ordinance regarding the legal status of foreigners (OUG 194/2002) must be met. Basically, this means that such persons must obtain an appropriate visa (a business visa or an employment visa) from the National Authority for Foreigners and a work permit from the National Office for the Movement of Employees. Special conditions may be contained in bilateral agreements between Romania and other states.

Business visas are usually issued to foreigners who are members of the management or supervisory boards of Romanian companies. These foreigners must apply for a business short-term or long-term work permit.

Special rules for executives

Directors of Romanian companies may serve under an employment contract or a management contract (a type of mandate). In the latter case, the director’s contractual relationship is determined by the general commercial and civil law.

Minimum wage

The parties are free to agree on the gross amount of wage, bonuses and other privileges and incentives. However, when doing so, the parties must comply with the legal minimum wage, which is established from time to time by a governmental decision. Currently the minimum wage amounts to ROL 2,800,000 (approx. €70) per month.

If the employer is covered by a collective bargaining agreement at sector level or at the employer’s level, then the minimum levels of pay set out by such an agreement must also be observed. Please note that the collective bargaining agreement at national level (“Natural Collective Agreement”) (mandatory for all Romanian employers) provides for certain specific rules for increases in salary or paid hours off for employees working in difficult conditions.

Pay increases

Pay increases are usually agreed individually by the parties or they occur as a result of collective bargaining. Moreover, they can also be provided for by staff rules. It should be noted that there is no general point of reference for pay increases, other than the increase of the minimum wage at national level (as this is decided by the Government from time to time).

Reduction of wages

If the employer wishes to pay the employee a lower wage, or to amend another part of the employment contract (other than the provisions regarding the place of work, within the terms of the Labour Code), he must obtain the consent of the employee.

However, if the employee withholds such consent, the only way for the employer to amend the present employment contract (i.e. the employee's wage) would be to seek unilateral termination of the employment contract of that employee and, concurrently with such termination, offer the employee another employment contract containing the amended terms and conditions (i.e. the lower wage). However, please note that the termination of an employment contract at the initiative of the employer may occur only in compliance with very restrictive conditions and only in the cases provided by the Labour Code. It is necessary to stress that the employer must not propose any terms and conditions, including with respect to wages, which are below the minimum level as defined by the relevant governmental decision, the collective bargaining agreement or the staff rules.

Working time

Standard working hours and breaks

A regular working week for full time employees, over 18 years of age, consists of 40 working hours, which, distributed evenly, amounts to 8 hours per day. Depending on the specific activity of the employer, there may be other structures of the working programme (within the terms provided by the Labour Code).

An employee working full time is entitled to a meal break each day. The duration of such break is left to be established by the applicable collective bargaining agreement or by the employer’s internal regulations. The break time is not included in the working hours.

Minimum rest periods

An employee is entitled to a daily rest between two successive working days of at least 12 consecutive hours. In the case of a shift programme, the break may not be fewer than 8 hours between shifts.

An employee is entitled to a weekly rest of at least 2 days, which are generally Saturdays and Sundays. If there is a specific need pertaining to the employer’s activity for work on Saturdays and/or Sundays, the employee must be given time off during the rest of the week, as provided in the applicable collective bargaining agreement or in the employer’s internal regulations. In the latter case, the employee should also receive a bonus salary.

Maximum working hours

The maximum duration of the working hours may not exceed 48 hours a week, including extra working hours (not applicable for employees under 18 years of age). In the case of a shift working program, the daily and weekly duration of the work may exceed 8 hours and 48 hours, respectively, provided that the average over 3 weeks does not exceed 8 hours a day and 48 hours a week.

Overtime work

Overtime work is only allowed in the following circumstances:

• in cases of force majeure;
• in urgent cases, with the purpose of preventing accidents or limiting their consequences; and
• in any other case, only with the consent of the employee.

In accordance with the Natural collective Agreement for 2003, overtime work exceeding 120 hours per year per employees also needs labour union consent.

The following groups of employees are barred from working overtime:

• employees working in part-time jobs, save for urgent cases, with the purpose of preventing accidents or limiting their consequences;
• employees under 18 years of age and apprentices;
• employees working in difficult conditions; and
• women employees, if they are over 5 months pregnant or breast feeding.

In any event, the normal programme plus overtime work must not exceed 48 hours a week (see 3.3 above).

As a rule, overtime work is to be compensated by corresponding paid hours off duty, within the next 30 days. If such compensation is not possible within such time reviewed the overtime work is to be compensated at double the normal base salary for the first 120 extra hours/year/employee, and at one a half times base salary for hours over this.

Working on weekends and public holidays

Work on Sundays and on public holidays must be justified by a special business need (i.e. activities which objectively need the employees’ presence on such days) to be lawful. Employees working on such days are entitled to corresponding time off duty or to a salary bonus established by the individual employment contract or by the applicable collective bargaining agreement. The Collective Agreement for 2003 provides for double the normal salary to be paid for the hours worked on weekends or legal holidays.

Premia for night work and heavy-duty work

Apart from overtime work and work on weekends or public holidays, an employee is also entitled to an additional payment for heavy-duty work and night-shift work. The amount of the premium may be specified in collective bargaining agreements, in the employment contract or in the staff rules. In the event nothing is specified the employer must pay additional salary of at least 15% of the base salary calculated on the number of hours worked during the night shift. Employees working in difficult conditions are entitled, pursuant to the Natural Collective Agreement for 2003, to a 10% bonus (calculated based on the base salary). In addition they are also entitled to an extra 3 days paid leave.

Paid annual leave (holiday)

In each calendar year, an employee is entitled to receive paid annual leave of at least 21 working days (in accordance with the Natural Collective Agreement for 2003). Public holidays and statutory non-working days do not count towards the annual leave. For part-time employees, the annual paid leave must be granted proportionally to the time actually worked.

Employees working on jobs affect their health and handicapped employees are entitled to an extra 3 days of paid annual leave. Employees under 18 years of age are entitled to a minimum of 24 working days of annual paid leave, in accordance with the Natural Collective |Agreement for 2003. An enhanced entitlement to annual leave may also be provided for in any other applicable collective bargaining agreement, staff rules or employment contracts.

When employed by a new employer, an employee will accrue his leave entitlement proportionally to the time actually worked for the new employer.

Annual paid holiday must be made taken on an individual or collective schedule of holidays, agreed by the employer. The schedule is to be made up to the end of the calendar year for the following year. If the leave is not taken in one go, the employer must schedule the leave so that each employee has at least 15 consecutive days of paid leave every calendar year.

Annual leave may be interrupted, at the request of the employee, for objective reasons. In its turn, the employer may request such an interruption in the case of force majeure or if an emergency occurs which requires the presence of the relevant employee. In such cases, the employer must bear all expenses related to the interruption.

During his annual leave, the employee is entitled to be paid according to the applicable collective bargaining agreement and staff rules. However, this must be at least the base salary plus an amount equal to the average of this additional salary (bonuses, premias, etc.). This compensation must be paid in advance, before the employee takes the annual leave.

Any agreement on the transfer, limitation or waiver of the right to take annual leave or providing for payment in lieu of taking the annual leave, will be null and void. Payment in lieu of the statutory paid leave is possible only in the event of termination of the employment contract.

If the holiday allowance is not taken in full during the year, the balance may be taken, at the latest, by the end of the following calendar year. However, it should be noted that the rule is that the employee should take the entire annual leave during the relevant year.

Sick pay

In the case of a temporary inability to work due to illness or injury, the employee must obtain a medical certificate to this effect, granting a number of days of medical leave. Please note that “ordinary” medical leave may not exceed 14 days. For extensions of a 14 day period, employees must obtain special certificates from specialised medical commissions.

During the period of sick leave (generally not longer than 6 months) the employee is entitled to receive sick pay on the basis of his average salary during the preceding 6 months, but not less than 75% of such amount (depending on the type of sickness). The sick pay is granted by the employer for a number of days (depending on the total number of employees) and afterwards by the public social health insurance budget.

A person may only be employed on the basis of a medical certificate acknowledging that the respective person is fit for performing the relevant job. Non-compliance with such requirement renders the employment contract null and void. The Labour Code also provides for several situations during employment (generally implying changes in the performance of the contract) in which a medical certificate must be produced.

Termination of Employment

As a matter of principle, the termination of an individual employment contract may occur in the following situations:

• by operation of law, following: the employee reaching retirement age (having contributed to the social security funds for the minimum period), or dieing; the employer’s death or, if a legal entity, dissolution; the withdrawal of any consents, authorisations or permits required for the exercise of a profession, or the introduction of a safety measure or prohibition on the exercise of a profession; the employment contract reaching the end of its contractual term or being determined to be null and void; the reinstatement of an illegally dismissed employee into their original position; a criminal conviction committed at the place of work; or, the withdrawal of a parent’s or guardian’s consent, where an employee is aged between 15 and 16 years.
• as an operation of law, following:
• upon the agreement of both parties, (which will be effective as of the agreed date);
• at the employee’s initiative, evidenced by him submitting his resignation;
• at the employer’s initiative, but only in the cases and within the conditions expressly set out in the law, namely:

(i) for reasons connected to the employee’s person (which imply the employee’s misconduct or inadequacy);

(ii) for reasons that are not connected to the employee’s person (which basically occur for objective reasons, which are not attributable to the employee), following the cancellation of the particular position/job due to economic difficulties, technological changes or reorganisation of the businesses’ activities. The dismissal may be either:

(1) an individual dismissal; or

(2) a collective dismissal.

Formal requirements to be observed by the employer

If the employer intends to terminate an employment contract, the Labour Code provides for a strict procedure regarding such termination, containing a requirement for the issuance of a decision to this effect, which should state the reason for the termination of the contract. In cases of dismissal for reasons connected to the employee’s person, the procedure usually implies also the following of a prior disciplinary investigation (where applicable), in accordance with steps laid down by the Labour Code. Non-compliance with such requirements may result in the termination being null and void.

The Labour Code provides for the involvement of the employees’ representatives especially where collective redundancy is concerned.

Notice periods

Romanian labour legislation provides for different notice periods to be given by the employer and for the employee. The notice periods also depend on the position occupied by the employee. Usually, the notice period for termination upon the initiative of the employee is a maximum of 15 calendar days (30 calendar days for employees in executive positions). The employer must give notice of a termination at least 20 working days in advance. During the notice period the employee is entitled to receive his salary and all other statutory rights.

Termination without notice (summary dismissal)

Termination without notice (summary dismissal) is only lawful if there is a severe or repeated breach of the employee’s duties or in cases where the employee is put under preventive arrest for more than 60 days.

If there is a valid reason for a summary dismissal (and, in any case, no longer than 6 months from the date the reason for dismissal occurred), the employer should not wait for longer than 30 days in order to declare the dismissal, otherwise he will have forfeited his right to do so.

Requirement for a valid reason to terminate the employment

Unlike the employee, the employer must generally have a lawful reason for terminating an employment contract. However, this does not apply to dismissals during the probation period.

The valid reasons for dismissing an employee are exhaustively set out in the Labour Code:

• reasons connected to the employee’s person (which imply the employee’s misconduct or inadequacy), specifically:
• • as a disciplinary sanction, in the event of severe misconduct or repeated misconduct, by breach of the labour discipline rules or rules established by the individual employment contract, collective labour contract or internal regulation;
  • if the employee is under preventive arrest for a period exceeding 60 days, as provided by the Code of Criminal Procedure;
  • if the competent medical investigation bodies establish the employee’s physical or psychological inadequacy for performing the job;
  • if the employee does not meet the professional requirements for his/her position (professional inadequacy).
• for reasons that are not connected to the employee’s person (which basically occur for objective reasons and which are, not attributable to the employee), following the cancellation of the respective position/job due to economic difficulties, technological changes or activity reorganisation. The dismissal may be:
• • on individual dismissal; or
  • a collective dismissal.

For some dismissal/termination cases, which do not imply actual misconduct of the employee (eg. where the competent medical investigation bodies establish the employee’s physical or psychological inadequacy for performing the job); where the employee does not meet the professional requirements for his/her position); and in the case of an illegally dismissed employee (who previously held the position occupied by the current employee) being reinstated in the former position, the Labour Code requires the employer to seek alternative measures for the benefit of the concerned employee, before issuing the dismissal decision.

In a redundancy situation, the employer is obliged to take account of the socially vulnerable categories of employees and the employment history, obligations and age of the employee.

If the employer, within the 12 months following a collective dismissal, wants to recruit new employees for the same positions, he must first offer to employ the employees whose contracts were previously terminated.

Collective Redundancies

Terminations of employment are classified as “collective redundancies” if, within a period of 30 days:

• in a business with more than 20 employees, but less than 100, they affect more than 5 employees;
• in a business with at least 100 employees, but less than 300, they affect more than 10% of the employees;
• in a business with at least 300 employees, they affect at least 30 employees.

In such a case the employer has to consult with the labour union (giving it all the necessary information), and set up a redundancy social plan. In addition, the employer has to propose to the employees certain alternative professional training programmes and inform the local labour inspectorate. If there is no labour union, the employer has to consult with the employees’ designated representatives.

The employer has an obligation to notify in writing (in the form of a collective dismissal project) the labour union or the employees’ representatives of its intention to make a collective dismissal 45 days prior to the issuance of the dismissal notices. In return, the labour union or the employees’ representatives may submit to the employer, within 20 days of receipt of the dismissal plan, certain measures aimed at avoiding the dismissals or limiting their number. The employer has an obligation to answer such proposals in writing and provide reasoning, within 10 days of receiving them.

Whilst the Labour Code does not contain any express provisions covering the situation where an employer fails to follow the collective dismissal procedure, based on the general principles applicable to the validity of legal documents, one must infer that any such dismissals would be null and void.

Severance payments

Employees dismissed for reasons not linked to their person, benefit from active measures against unemployment and from compensation provided by the applicable collective bargaining agreement. The Natural Collective Agreement for 2003 imposes an obligation on the employer to pay to such employees compensation equal to 50% of their monthly salary, plus any other salary rights due at the date of dismissal.

Involvement of the works council (labour union)

Under the relevant provisions of the Romanian Labour Code, an employer has an obligation to consult with the labour union or with the employees’ representatives, as the case may be, with regard to any decisions which may substantially affect the rights and interests of the employees. However, the Labour Code does not give any specifics to which decisions fall within this requirement. Therefore, in respect of an individual termination of employment, such involvement of the labour union seems to be merely optional. However, the involvement of the labour unions in dismissal procedures may be requested by the employee concerned.

For collective redundancies special rules apply.

Employees with special protection against termination of employment

In Romania, employers may not terminate an employment contract with any of the following persons:

• employees suffering a temporary work incapacity, evidenced by a medical certificate;
• employees on quarantine leave;
• a female employee who is pregnant, provided that the employer had knowledge of this prior to the issuance of the dismissal notice;
• a person on maternity leave;
• a person on leave granted for raising a child under two years, or, in the case of a handicapped child, under three years;
• a person on leave granted for nursing a sick child under seven years, or, in the case of a handicapped child, under 18 years;
• anyone called up for military service;
• someone appointed to an eligible position in a labour union, except for when the dismissal occurs for severe disciplinary misconduct or for repeated disciplinary misconduct; this applies for the entire duration of their mandate, as well as for 2 years after its cessation. Representatives elected to the higher bodies of labour unions may not be fired for reasons not attributable to them, for professional inadequacy or for reasons pertaining to the performance of their mandate as labour union leaders.
• a person on annual leave.

During their mandate and for 2 years thereafter, the employee representatives elected to the senior bodies of labour unions may not be fired for non-personal reasons which require an assessment to be made by the employer save with the express written consent of the collective leadership body of the relevant labour union. The law provides an exception in respect of anyone who is revoked from his labour union position for infringement of relevant legal provisions.

Changing terms and conditions of the employment contract

In accordance with the provisions of the Labour Code, the following are deemed to be amendments to the employment contract:

• an amendment to the duration of the contract;
• changing the place of work;
• changing the position of the employee;
• modifying the work conditions;
• modifying the salary; and
• amendments to the work and rest durations.

As a rule, the terms and conditions of an employment contract may be amended only upon the agreement of both parties, expressed by an additional document to the individual employment contract. However, the employer may unilaterally modify the terms of employment, within the express limits provided by the Labour Code.

As an exception from the aforesaid principle of the need for a mutually agreed amendment of the employment contract, the Labour Code provides for the possibility of a unilateral change by the employer, on a temporary basis, to the place of work of the employee. The measures by which an employer may change the place of work are delegation (for a maximum of 60 days, which may be prolonged, upon the employee’s consent, for another 60 days) and detachment (for a maximum of one year, which may be prolonged, upon the employee’s consent, every 6 months).

Business transfer

If a business (or a part thereof) is being transferred to another natural or legal person the employment contracts of the employees working for the business will also be automatically transferred. That is to say that all the rights (arising under the employment relation that existed up to the day of such transfer) of the employees whose employment contract is being transferred will survive the transfer and be transferred to the assignee. The employer to whom employment contracts are so transferred shall assume, as of the day of such transfer, all the rights and obligations (unchanged in form or extent) arising under the transferring contract.

The transfer of the business (or part thereof) may not constitute by itself, under any circumstance, a reason for an individual or collective dismissal of employees, either by the assignor or by the assignee.

Both the assignor and the assignee have an obligation to consult, prior to the transfer being made, the labour union or the employees’ representatives, as the case may be, in respect of the legal, economic and social implications of such a business transfer, as far as it affects the employees.

Industrial relations

Labour unions and the management of the business

In Romania, employees have a constitutional, fundamental right, without interference, freely to establish a labour union and to join it under the conditions prescribed by law and by its by-laws or rules. Moreover, a labour union is guaranteed the right to represent its members in labour disputes with the employer, before the courts or governmental authorities, provided that it is organised as an association and registered in accordance with the Labour Union Law and the Labour Code.

Labour unions may independently decide on the mode of their representation with an employer. As a general rule they elect one or several members as labour union representatives.

Labour unions and their representatives have various statutory rights. These rights are to be exercised by the use of specific means, such as negotiation, mediation, arbitration or conciliation procedures, petitions, protests, meetings, demonstrations and strikes. Among the rights of labour unions there are:

• a general protection of employees’ rights;
• the right to undertake any action provided by the law, including the right to take judicial legal actions on behalf of their members, without any prior approval from such members;
• the right to submit draft labour laws to the legislator;
• the right to participate in meetings of the board of directors for discussing professional, economic, social, cultural or sports matters regarding the employees;
• the right to receive from the employer or from employers’ organisations the necessary information for the negotiation of collective bargaining agreements, for agreements regarding employment relationships, as well as information in respect of the establishment and use of funds for the improvement of labour conditions, work protection, social insurance and protection;
• the right to be consulted in respect of any decisions of the employers which may substantially affect the employees’ rights and interests;
• the right to be consulted and to submit counter-proposals in the event of a collective dismissal;
• the right to be consulted and to express its consent in respect of various issues pertaining to the work schedule and time off;
• the right to be consulted in respect of health and safety measures in the work place.

The influence of labour unions will be mainly reflected in collective agreements. Today the processes of privatisation are ongoing, and the majority of collective bargaining agreements are already in force and complied with both by employers and employees.

Employees representatives

In larger undertakings (of at least 20 employees where no one is a member of a labour union) employees´ interests may be represented by so-called ‘employees’ representatives’. The number of representatives is commonly established with the employer, based on the total number of employees. The right to elect and to be elected is granted to all employees of the same employer, subject to certain age (minimum 21 years of age) and length in service conditions (at least one year with the employer).

The representatives of the employees have the following principal rights:

• to observe the rights of employees, in accordance with the applicable legislation, the applicable collective bargaining agreement(s) and the internal regulations;
• to participate in the drafting of the internal regulations;
• to promote the interests of the employees regarding their salaries, work conditions, work programme and time off and employment stability;
• to inform the competent labour inspectorate in respect of any non-compliance by the employer of the applicable provisions of the law or of the collective bargaining agreement.

As mentioned the labour union representatives have statutory rights to participate at meetings of the board of directors for discussing professional, economic, social, cultural or sporting matters regarding the employees.

On the following issues the employees’ representatives must be consulted:

• in respect of the decisions which may substantially affect the rights and interests of the employees;
• in respect of any collective redundancy plan;
• in respect of the working conditions;
• in respect of the collective schedule for the annual paid leave;
• in respect of granting professional training leave;
• in respect of the collective bargaining on salaries;
• in respect of the possible consequences that a business transfer may have on the employees;
• in respect of the labour health and safety plan;
• in respect of the annual professional training plans.

Romanian legislation does not specifically address the issue of the employer not offering the information/consultations required by law.

Release from work to conduct labour union/employees’ representative activities

For the entire period an individual is elected to a senior body of a labour union, his/her individual employment contract is suspended and the employee maintains his/her previous position. The employer may not employ another person to fill that position unless it is for a pre-determined duration.

The employees’ representatives have at their disposal, for performing their mandate, 20 hours per month, which are considered as time effectively spent on the job, with the corresponding salary.

Financial and/or technical assistance of works council activities

The employer is obligated to offer to the labour unions, at no cost, the necessary rooms and logistics for conducting their activities as provided by the law.

Collective bargaining agreements

Collective bargaining agreements are concluded between the employer or an employers’ organisation, on the one hand, and the employees, represented through the labour union or by another means provided by law, on the other hand. They establish labour conditions, and salaries, as well as other rights and obligations arising from the employment relationship. Collective bargaining agreements are concluded at national level, at sector level and at the employer’s level.

A collective bargaining agreement may not provide for inferior employees’ rights than those provided by a collective bargaining agreement at a superior level (in the case of a collective bargaining agreement at national level, it cannot provide for employees’ rights inferior to those provided by the labour legislation). The agreement is binding only on the parties thereto, but the employer has a duty to incorporate provisions in the individual rights of the employees which are no less than those contained in the Collective Agreement.

Employment disputes

Employment disputes in general

Employment disputes are primarily tried by the district tribunals. There are currently no special labour courts (i.e. separately organised courts). However, whilst this issue has been discussed, under the present legislation dealing with judicial organisation, employment disputes are tried by specialised employment sections of the competent courts. In accordance with the relevant legislation, an employment dispute may not be resolved otherwise than by such competent courts, in accordance with the special laws regarding labour conflicts and the Code of Civil Procedure.

Disputes related to collective agreements

Disputes regarding the commencement, performance and conclusion of collective bargaining, have to be resolved before a conciliation representative of the Ministry of Labour, Social Solidarity and Family. For conducting the conciliation proceedings, both parties may designate a delegation consisting of 2-5 persons.

Where the labour dispute is not settled following the conciliation organised by the Ministry of Labour, Social Solidarity and Family, the parties have the right mutually to agree the initiation of a mediation procedure. The mediators are elected, by agreement of the parties, from the persons annually appointed as mediators by the Minister of Labour, Social Solidarity and Family, with the consent of the Economic and Social Committee. The procedure for the mediation of labour disputes is established annually by the Natural Collective Agreement. The mediation procedure may not last longer than 30 days from the date the designated mediator accepted his/her assignment.

State Benefits

The Romanian system of social security covers the following risks: maternity, age, sickness, invalidity, death and unemployment.

Contributions for social insurance and taxes

Contributions for social insurance are calculated on the basis of the employee’s monthly salary and amount to the following rates:

• pension insurance: 9.5% -payable by the employee
• health insurance: 6.5% - payable by the employee 7% - payable by the employer
• accident insurance: 0.50% - payable by the employer
• unemployment insurance: 1% payable by the employee 3.5% payable by the employer

In Romania, taxes on income amount to 18 – 40% of the monthly salary to which is added a fixed amount depending on the level of the salary. Each year, the fixed amount is provided by an order issued by the Finance Ministry.

Health insurance

The state system consists of a (compulsory) basic health coverage and an (optional) supplementary insurance coverage. The basic coverage provides for medical treatment, medicines, sanitary materials and medical devices.

Apart from the state system, private insurance companies cover a variety of health services as set out in the individual insurance contract.

State pensions

The Romanian pension system is organised and guaranteed by the state. This public system assures to all participants a non-discriminatory treatment regarding the rights and obligations provided by the law in this respect.

The required age for a regular pension is 65 for men and 60 for women. Furthermore, the employee must have at least 15 years of service and any employment must have terminated.

After 35 years of service (women: 30 years) men can claim an early retirement pension provided they are at least 60 years (women: 55 years) of age.

Basically, the key factors for the calculation of the pension are the person's age, the duration of his pension scheme membership, and the salary during their working life. According to the Statistics National Institute, the monthly average pension was ROL 1,819,703 for the second quarter of 2003, 3.4% higher than in the first quarter of 2003.

The legislation provides for the possibility of establishing a private pension fund by a special law. However, no legislation has yet been adopted in this respect.

Unemployment benefits

The state supports the unemployed by various employment incentive programmes and monetary benefits.

In order to be entitled to financial support an employed person must have had a period of contribution of at least 12 months during the 24 months prior to the registration of the request for unemployment benefit. Unemployment benefit is 75% of the gross minimum salary. The duration of the unemployment benefit depends on the length of the contribution period, and ranges between 180 and 365 days.

According to the National Statistics Institute, the unemployment rate registered in July 2003, was 6.9% in relation to the total active, civil, population (9.2% in July 2003).