Two recent decisions of the Constitutional Court of Romania related to an employer’s ability to suspend an employee’s employment contract have created an unfortunate situation for both employers and employees, with the former limited in their ability to protect themselves and the latter at risk of being terminated without cause.
Background
Last year, the Constitutional Court of Romania issued Decision no. 279/2015, which was later published in the Official Gazette no. 431 of June 17 2015, on the constitutionality of Article 52(1)(b) of the Labor Code. The effect of this decision was to restrict an employer’s ability to suspend an employee’s employment contract. Previously, an employer was able to suspend an employee’s contract if the employer filed a criminal complaint against the employee. This was conceived as a safeguard to protect the employer’s economic and commercial interests if an employee was accused of having committed a criminal offence. However, the Constitutional Court found that this provision was contrary to other constitutional norms, since suspending the employee’s labor contract was seen as a disproportionate measure to achieving the objective of protecting the employer’s interests.
This year, the Constitutional Court issued a second decision restricting employers’ ability to suspend labor contracts even in cases where there is suspicion of misbehavior on the part of an employee. Thus, through Decision no. 261 issued on May 5 2016, published in the Official Gazette no. 511 of July 7, 2016, the Constitutional Court found that the provisions of Article 52(1)(a) – permitting employers to suspend a labor agreement for the duration of an employee’s preliminary disciplinary investigation, prior to issuing a final decision – are also unconstitutional, on similar grounds as last year’s decision.
While last year’s decision had a limited effect on businesses, since the filing of criminal complaints could be done only under restrictive conditions, this new decision is expected to have a much wider impact on business and labor relations, because it covers the most frequent type of disciplinary cases.
In its decision, the Constitutional Court argued that although the provision was justified by a legitimate objective – to protect the employer’s commercial interests – which it was adequate and capable of fulfilling, its protection of employers’ rights was disproportionate compared to those of employees, particularly as the suspension of the labor contract was arbitrarily dependent on a condition which the employer itself could create. In other words, an employer could instigate a disciplinary investigation of an employee, and then, on the basis of that investigation, suspend the employee’s labor contract. In addition, the law lacked a clearly defined time limit for such a suspension, and offered very few remedies for the employee, so the Court concluded that it did not offer sufficient guarantees against abuse.
However, other provisions of the Labor Code limit an employer’s right to sanction an employee for disciplinary offenses pursuant to a disciplinary investigation to a six-month term, so there is an inherent limitation on the duration of the investigation and related labor-agreement suspension. Moreover, if the employee is found innocent, the Code provides that compensation is due for the period of suspension, during which time he or she may also enter into alternate employment agreements.
The Unintended Result
Taking this into account, as well as the normal legal redress available in cases of abusive behavior, the unintended consequence of the constitutionality decision is that both employers and employees may now find themselves in a less favorable position.
Commencing a disciplinary investigation into an employee’s alleged offense without being able to suspend the employment contract for the duration of the investigation will put pressure on both sides and give rise to potential risks. Allowing the employee to continue working when there is reason to suspect he may have committed an offense creates the risk that the employee could repeat the offense or interfere with the investigation and the gathering of evidence.
Such a situation does not only affect employers; it can also adversely affect employees. Since the employer will want to finalize a disciplinary investigation as quickly as possible in such conditions, this will lessen the employee’s chance of a full and complete investigation while also subjecting the employer to potential procedural errors that could further develop into costly litigation.
As of the decision’s publication in the Official Gazette, the application of the unconstitutional provision has been suspended for 45 days. During this time, the Labor Code may be amended to address the constitutionality issue that the Court identified. If this does not happen, however, the provision will be permanently struck down.
