Romania

    1.1 In what circumstances does the employee transfer law apply?

    The employee transfer law applies upon the transfer of a business (or part of one) to another employer as a result of a legal transfer or merger.

    However, as distinct from the EU Directive, the law only protects employees in transfers of ‘ownership’, for the purpose of continuing either a main or ancillary activity for profit or otherwise.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    The employee transfer law applies to the sale of a business. A business typically comprises assets such as premises, equipment, customers and staff. If those are sold and the business is continued, the transfer of an economic entity is deemed to have taken place.

    (b) Outsourcing

    Romanian law only covers ‘ownership’ transfers, as the definition of transfer provided by the EU Directive has been incorrectly transposed into Romanian law. However, the Directive has primacy and so the national courts must interpret national law in the spirit of the Directive and the case law of the European Court of Justice. In light of this, outsourcing may qualify as the transfer of a business if the outsourced operation is considered an independent economic entity which retains its identity after the transfer, based on a contractual relationship that changes the legal person responsible for carrying on the business.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    1.3 In outline, what are the implications of the employee transfer law?

    If employee transfer law applies:

    • employees assigned to the undertaking transfer from the transferor to the transferee on their existing (pre-transfer) terms of employment;
    • collective agreements and union recognition arrangements transfer;
    • the transferor and transferee are required to provide information about the transfer to employee representatives or, if none, to their own employees for consultation;
    • if employees have any claims relating to their employment with the transferor (e.g. for pay, personal injury or discrimination) the transferee becomes liable in place of the transferor;
    • if an employee is dismissed for a reason connected to the transfer, the dismissal is automatically unfair.
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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.1 Who transfers?

    The employee transfer law applies to employees assigned to the relevant business. If the employee works only within the business to be transferred he or she will be assigned to it.  If an employee’s role involves work partly within the business to be transferred and partly in a different part of the business, the position is more complicated and will depend on factors such as:

    • the proportion of time spent within the entity transferring, as compared to other parts of the business;
    • the value given to each part by the employee;
    • the employee’s job description; and
    • how the employer allocates the costs of the employee’s services.
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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.2 Can employees object to transferring?

    Employees transfer automatically and cannot object to transferring. If they refuse to work for the transferee, they could be dismissed for disciplinary reasons. However, if the transfer involves a substantial detrimental change to the working conditions, the employer will be deemed to have terminated the employment. If  so, the court may order the employer to pay an indemnity equal to the salary and other amounts the employee would have been entitled to and, if the employee so requests, reinstate the employee.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.3 What happens to terms of employment contracts?

    As a result of the transfer, all rights and obligations under the employment contracts and applicable collective bargaining agreement transfer to the transferee.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.4 What about other employee benefits?

    The transferee is required to maintain contractual benefits.  This can be difficult in relation to benefits which are linked directly to the transferor’s business. Examples may include bonuses, commission, profit share schemes and share options. In such cases, the transferee is generally required to provide schemes of broad equivalence. Past employment with the transferor will count as ‘continuous employment’ with the transferee. This is relevant for certain statutory employment rights, for example dismissal and for service-related contractual benefits.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.5 What happens to pension rights?

    A transfer does not affect contributions paid by the transferor for employees to the state pension fund. The new employer is required by law to pay the same contributions for the transferred employees.

    If the transferor granted private pension benefits to its employees on a contractual basis, generally, these will transfer to the transferee. However, if the transferee has no equivalent scheme, it could set up private pension arrangements of broad equivalence.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.6 What liabilities transfer?

    The transferee will be responsible for any liabilities referable to employment before the transfer. Any act or omission of the transferor will be treated as an act or omission of the transferee. However, the transferor and transferee are individually liable towards their employees for any failure to inform and consult about the transfer.

    The transferor and transferee have the option of agreeing to put provisions in the business transfer agreement for redress from the transferor for transferred liabilities.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.7 Do collective agreements transfer?

    If there is a collective bargaining agreement that applies at the level of the transferor, the transferee must comply with it until it expires or is terminated. However, the transferee cannot amend it within the first year of the transfer.

    If the transferred business does not maintain its identity after the transfer and the terms of a collective agreement applicable at the transferee are more favourable, the more favourable agreement will apply to the transferred employees.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    2.8 How does the transferee obtain information on transferring employees?

    Before the transfer, the transferor must give the transferee information about all the rights and obligations that will be transferred. However, failure to comply with this obligation will not prevent the transfer of these rights and obligations.

    In practice, the transferor will need to provide the transferee with the employees’ files on the day before the transfer at the latest, to enable the transferee to register with the General Registry of Employees.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    3.1 Can employers make changes to employment contracts?

    There are no legal provisions prohibiting the employer from making changes to an employment contract following a transfer of the business. However, any change to an employment contract must be made by way of an addendum and this requires the employee's consent. Even if the change is solely because of the transfer itself, provided the employee consents to it, this is sufficient to enable it to be implemented.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    3.2 When can employers safely dismiss employees before or after a transfer?

    The law expressly prohibits the transferor or transferee from dismissing employees on the grounds of the transfer itself. Consequently, any termination of individual employment agreements immediately before or after the transfer may be challenged by the affected employees and nullified by the courts if not adequately grounded on reasons other than the transfer.

    There is no fixed period after which one can safely say that a reason is not connected with the transfer, but based on the scarce case law on this topic, a period of six to eight months should minimise the risk.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    4.1 Who must employers consult?

    Both the transferor and transferee must inform and consult with the employee representatives (i.e. the trade union representatives or elected employee representatives) or, if none, the employees at least 30 days before the transfer.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    4.2	What information must they provide?

    Both the transferor and transferee must provide information about the following:

    • the date or proposed date for the transfer;
    • the reasons for the transfer;
    • the expected economic, legal and social impact of the transfer on the employees;
    • the measures envisaged in relation to the employees, including measures aimed at mitigating the effects of the transfer;
    • the working conditions.
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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    4.3	What does consultation involve?

    If the transferor or transferee are proposing to take measures in relation to their existing employees as a result of the transfer, they must also consult with the employee representatives (i.e. the trade union representatives or elected employee representatives) or if none, the employees, with the aim of reaching agreement in relation to those employees, at least 30 days prior to the date of the transfer.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    4.4	How long does consultation last?

    The length of consultation will vary case by case, depending on the complexity of the case and the measures proposed for the employees.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    4.5	What happens if an employer fails properly to inform or consult?

    Failure to observe the information and consultation requirements is an administrative offence that may be sanctioned with a fine ranging from RON 1,500 to 3,000 (i.e. approximately EUR 335 to 670). Additionally, the employees or their representatives may file a court claim for harm caused by the failure. However, note that these sanctions do not have any effect on the transfer itself.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    5.1	Identify up to three issues in this country of which employers should be aware?

    Romanian law, as distinct from EU Directive, limits the protection of employees to ‘ownership’ transfers, as a result of an incorrect transposition of the definition of ‘transfer’ provided by the Directive. Although obliged to interpret national law in the spirit of the Directive and ECJ case law, the Romanian courts have tended to restrict themselves to interpreting Romanian law.

    In addition, it may be difficult for the transferee to implement bonus schemes applicable at the transferor (e.g. private health insurance). The transferee is required to offer something broadly equivalent, but this may be problematic in practice.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    Romanian employee transfer law applies to any transfer of a business (or part of one) located in Romania as a result of a legal transfer or merger. It is not clear if the law applies to transfers located in Romania where the transferee is a foreign entity, or to cases of transfers to another country, where the transferee is a Romanian entity. Theoretically, it is possible that Romanian employee transfer law may apply in both scenarios.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    Two pieces of national law apply: the Labour Code and Law no. 67/2006 concerning the protection of employees’ rights in the event of transfers of undertakings, business or parts of undertakings and businesses. This was a (not entirely accurate) attempt to transpose Directive 2001/23/EC.

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    Author: Nestor Nestor Diculescu Kingston Petersen

    Date: 2017

     

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