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Increased Sanctions for Companies that Don’t Comply with Overtime Laws in Romania

Increased Sanctions for Companies that Don’t Comply with Overtime Laws in Romania

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On June 18, 2020, the President of Romania promulgated a law amending the Labor Code, two years after the country adopted legislation increasing the sanctions for employers who do not comply with the legal requirements for overtime work. According to the new amendments, the fine for non-compliance in such cases is between EUR 310-620. The amended provisions entered into force on June 21st 2020.

The tighter sanctions were necessitated by the fact that, while the existing fines for non-compliance with the legal provisions regarding overtime work were already between EUR 310-620, they applied regardless of the number of employees working overtime and there was no correlation between the amount of the fine and the number of overtime hours or the number of employees who did overtime work.

Although this amendment is designed to ensure proportionality between the fine and the extent of the violation, its actual consequences will appear soon in labor litigations. We expect to see challenges to the amendment initiated either by an employer already sanctioned under the new legal provisions or in response to an employee’s request for compensation for overtime work. Thus, the employer will be under the permanent threat of a fine. This issue risks to be even more controversial, since the law does not mention a maximum fine for violations involving multiple employees and provides no criteria for individualizing the sanction for each employee.

In an attempt to prevent these possible future problems, the President of Romania has requested that the amendments be re-examined prior to promulgation, requesting that Parliament return to the newly introduced amendment. The formulation “for each person identified as performing overtime work” was criticized for a lack of clarity and predictability of regulation and lack of correlation with the essential condition – that the additional work violate the legal provisions.

Although difficulties in qualifying the overtime work without fulfilling legal requirements existed in the past, they are still present in terms of evidence – and the burden of proof in employee claims for compensation for overtime work will be evenly distributed between the employee and the employer.

In this context, of the employers being more liable, the conclusions of the European Court of Justice (in Judgment C-55/18 - Federacion de Servicios de Comisiones Obreras (CCOO) / Deutsche Bank of May 2019), are even more relevant: the application of the Court’s ruling has become essential in litigation regarding overtime work that does not comply with applicable legislation.

For employers, having an objective, reliable, and accessible system to measure the duration of daily overtime work can make the difference between being fined or not in response to claims by employees that they had been required to work overtime in violation of the law.

Given the current situation, irrespective of the risk of possible overtime payment claims, employers should pay attention to creating sound documentation of the work schedule of each of their employees. They can do this by introducing clear rules on overtime work, in the framework contract, individual contracts, internal regulations, and job descriptions, both if the overtime is regularly requested by the employer or performed only in exceptional circumstances.

By Iulia Stanciulescu-Ilie, Partner, CEE Attorneys / Boanta, Gidei si Asociatii

This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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Țuca Zbârcea & Asociații is a full-service independent law firm, employing cross-disciplinary teams of lawyers, insolvency practitioners, tax consultants, IP counsellors, economists and staff members. It also operates a secondary law office in Cluj-Napoca (Romania), and has a ‘best-friend’ agreement with a leading law firm in the Republic of Moldova. In addition, thanks to the firm’s dedicated Foreign Desks, the team provides the full range of services to international investors seeking to gain a foothold or expand their existing operations in Romania. Since 2019, the firm and its tax arm are collaborating with Andersen Global in Romania.

Țuca Zbârcea & Asociaţii is providing legal services in every aspect of business, covering all major areas of practice: corporate and M&A; litigation and international arbitration; corporate tax; public procurement; TMT; employment; insurance; banking and finance; capital markets; competition; healthcare and pharmaceutical; energy and natural resources; environmental; intellectual property; real estate; regulatory legal services.

Țuca Zbârcea & Asociaţii is a First-Tier law firm in all international legal directories and a multiple award-winning law firm both locally and internationally. It received the CEE Deal of the Year Award (DOTY Awards 2021) and the Law Firm of the Year Award: Romania (IFLR Europe Awards 2021). 

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