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Workforce Flexibility and Government Incentives in times of Covid-19 - Romania

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

  • Working from home/teleworking
    • During the state of emergency, 16 March 2020 to 14 May 2020, when the nature of the activity permitted it, employers were obliged to implement one of these measures by a unilateral decision issued by the employer.
    • During the state of alert, from 15 May 2020 to 16 June 2020 inclusively, the employer may order, with the employee's consent, teleworking or home-working, the modification of the workplace, or the employee's attributions.
  • Flexible working hours
  • Employers with more than 50 employees may establish individualized work schedules during the alert period, without the employee's consent, to ensure that there is one hour between employees at the beginning and end of the work schedule in three hours.

  • Short working week
  • In case of temporary reduction of activity, for economic, technological, structural or similar reasons, for periods exceeding 30 working days, the employer will have the possibility to reduce the working hours from five days to four days per week, with the corresponding reduction of salary, until the situation that caused the reduction of the program is remedied.

  • Annual paid leave
  • This measure can only be taken with the employee's consent. This measure can be especially taken for those employees that have days of annual leave left untaken from previous years.

    Granting paid days off to compensate for overtime that the employee will perform in the next 12 months - with the consent of the employee;

  • Technical unemployment
  • It represents a temporary suspension of the individual employment contract in case of temporary reduction or discontinuance of the company’s activity, caused by economic, structural, technological, or similar reasons. During the state of emergency 16 March 2020 to 14 May 2020, the indemnity received by the employee targeted by the measure could have been borne by the state's budget. During the state of alert, starting with 15 May 2020 and until 31 May 2020 this financial support was prolonged. As of 1 June 2020 this measure was prolonged only in areas where the restrictions were maintained, until this restrictions are lifted.

  • Unpaid leave
  • This measure can only be taken with the consent of the employee, and according to the provisions of the collective labor agreement and/or Internal Regulation.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

  • In case of the short working week measure, the employer can implement it only after prior consultation of the union or the employees' representatives.
  • If the employer decides to draw up/adapt a/the Remote Work Policy or to set out rules and procedures for flexible working hours, it must be done by consulting with the trade unions/employee representatives.

Additionally, apart from these cases, please note that:

  • If the employer plans mass layoffs because it can no longer sustain the salaries of all its employees and opts for downsizing and restructuring, the Romanian Labor Code provides that it must previously consult with the unions/employees' representatives.
  • When implementing and developing work health and safety measures, the employer consults with the union/employees' representatives, and the occupational health and safety committee.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

Yes.

If the company temporarily needs to close its activity partially or totally due to economic, technological, structural, or other similar reasons, it can unilaterally decide to suspend all or part of the employment contracts.

During the state of emergency, if the company incurs a temporary reduction or discontinuance of the activity as a result of the effects of the SARS-CoV2 pandemic, and decides to suspend the employment contracts, the technical unemployment indemnity to which the employees affected by this measure are entitled, will be borne from the State’s unemployment insurance budget.

The state of emergency in Romania was established starting with 16 March 2020 until 14 May 2020. As of 15 May 2020, in Romania, a state of alert was established, until 16 June 2020 inclusively. Starting with 15 May 2020 and until 31 May 2020, this financial support was prolonged. As of 1 June 2020 this measure was prolonged only in areas where the restrictions were maintained, until this restrictions are lifted. The technical unemployment indemnity, which is borne by the unemployment insurance budget is 75% of the base salary corresponding to the job occupied, but not more than 75% of the gross average wage (approx €1,120). However, if the employer has the financial capacity, it has the possibility to supplement the indemnity received from the State’s budget with additional amounts representing the difference up to the minimum of 75% of the base salary, which is paid to the employee, according to his/her employment contract.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

  • Paid days-off when daycares and educational units are closed
  • If daycares and educational units are temporarily closed, employees that have children up to 12 years old, or 26 years old if the child has a disability are entitled to free paid days. During the time the employee stays at home, they shall be entitled to an allowance of 75% of their gross base salary, but not more than 75% of the average gross wage in Romania (approx €1,120). The state shall reimburse the allowances paid by the employers during these periods.

    The employees shall not benefit from free paid days if the work can be performed from home or remotely, or the other parent has paid leave/unpaid leave/benefits themselves from paid days-off when daycares and educational units are close. Additionally, the employees shall not benefit from free paid days if one of the parents has the employment relationship suspended due to the temporary interruption of the employer's activity, or if the other parent does not obtain incomes from salaries and assimilated to salaries, incomes from independent activities, incomes from intellectual property rights, incomes from agricultural activities, forestry and fish farming, subject to income tax, except if the other parent is classified as severely disabled and thus exempted from paying income tax.

    The period during which the employees are entitled to stay at home is equal to that in which daycares and educational units are closed. In 2020, this measure is applicable for the period immediately following the end of the state of emergency, 15 May, until the end of the school courses related to the second semester, 12 June.

  • Granting of state guarantees to SMEs
  • This stare guarantees refers to investment loans and/or credit lines for working capital and is up to a maximum of 80% of a financing amount up to 10,000,000 Lei (approx. €2,064,000) for investment loans and 5,000,000 Lei (approx. €1,034,380) for credit lines. The state guarantee for credit lines is up to a maximum of 90% for a financing amount of up to 1,000,000 Lei (approx. €206,000) for small enterprises and up to 500,000 Lei (approx. €103,440) for micro-enterprises.

  • Legal extensions for the payment of the tax
  • If taxpayers pay the tax on buildings, on land and means of transport until 30 June 2020, included, they will benefit from a 10% discount.

    Taxes that are due and outstanding as of 21 March 2020, are not considered to be outstanding tax liabilities; thus, interest and late payment penalties are not calculated and due. This measure shall cease within 30 days from the end of the state of emergency (14 May 2020 included).

  • Payment suspension of the bank installments
  • Both natural persons and legal entities can request the payment suspension of the bank installments, interest, and commission for up to nine months, but no longer than 31 December 2020. To benefit from this measure, the debtors send a request to the creditors in this regard by 15 June 2020, at the latest.

  • Amenities for the payment of rent - during the state of emergency and a month after
  • Compared to last year's average, companies whose activity has been interrupted or whose revenues have decreased by at least 15% in March 2020 may postpone on request, without payment of interest and penalties, the payment of rent for their headquarters or working points. At the tenant's request, the payment of rent will be made by the competent territorial fiscal authorities. To benefit from this provision, the rent must be less than or at most equal to the one for February, and cannot be higher than 10,000 Ron (approx. €2,060) for each location. The tenants must pay the rent paid by the competent territorial fiscal authorities, in equal instalments until 31 December 2020.

  • Tax amenities
  • Taxpayers paying corporate tax and those who owe income tax for micro-enterprises, the rent income is taxable only in a proportion of 80% of their value, if they reduce the rent for the year 2020 by at least 20% compared to the rent for February.

  • The State bears part of the salary
  • Employees who had their employment contract suspended and benefited from the financial support granted by the Romanian Government consisting of the technical unemployment indemnity may benefit from the settlement of a part of the salary from the State.

    The settlement amounts to 41.5% of the gross base salary corresponding to the job occupied, but not more than 41.5% of the average gross salary in Romania (approx €1,120).

    This possibility is also available for those employees who had their employment contracts suspended without benefiting from the State's financial support.The 41.5% financial support can be granted only to persons who had their employment contract suspended for a minimum of 15 days during the state of emergency or alert and benefited or not from the technical unemployment indemnity granted by the Romanian State.

    The measure applies for three months, starting with 1 June 2020, but the employer must maintain the employment contract with these employees until 31 December, 2020. Otherwise, the employer will have to return the amounts received plus interest. This financial support from the State is not available for those employers who are in bankruptcy, dissolution, liquidation or who suspended or have activities restricted for other reasons than those generated by SARS-CoV-2.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

  • Technical unemployment indemnity
  • To benefit from this state aid, employers must submit the following documents in the current month for payment of the previous month's indemnity:

    • Request;
    • Affidavit issued by the company’s legal representative declaring that the company incurs a temporary reduction or discontinuance of the activity;
    • List of employees receiving compensation;
    • The documents shall be filed electronically with the county work force agency where the company has its registered office, using the platform provided by the Government at https://aici.gov.ro/. The Romanian authorities have adopted the template for these documents, which are available on this platform. The indemnity payment will be made from the unemployment insurance budget within a maximum of 15 days from the submission of the documentation. The employers will make the indemnity payment to the employees within a maximum of three days from the date they received the amounts from the unemployment insurance budget.

  • Paid days-off when daycares and educational units are closed
    • The request for reimbursement is submitted online at the county agency for employment in whose territorial area the employer or its branch / working point carries out its activity; the application must be filled in accordingly with the data required, including the bank account, e-mail address, and the total amount to be reimbursed.
    • The list of employees who have been granted the days off, as well as the indemnity provided, with copies of the payroll documentation attesting that the compensation has been granted;
    • Affidavit issued by the company’s legal representative declaring that the list of employees contains only eligible employees for the granting of paid days off;
    • The proof of payment for the social contributions and taxes for the month in which the compensation has been paid;The request shall be sent electronically to the county agency for employment, and the reimbursement shall be made in 60 days from the date of registration of the request. According to new provisions recently adopted, as of 22 May 2020, the reimbursement shall be made in 15 days from the date of registration of the request.
  • Amenities for the payment of rent - during the state of emergency and a month after
  • Request;

    Lease contract and the addendum through which the parties agree:

    • the postponement of rent payment, the period of postponement, the rent,
    • the parties identification data,
    • the bank account of the lessor,
    • date and signature of the parties;
    • Any document through which the tenant proves the impossibility of paying the rent during the postponement.

  • The State bears part of the salary
  • To benefit from this financial support, employers fully bear the salaries for those employees who benefit from this financial support, and subsequently, starting with the first day until the 25th of the month following the reporting period to which the income is related, they submit the following:

    Request;

    Affidavit issued by the company’s legal representative;

    List of employees receiving the incentive;

    The documents shall be filed electronically with the county work force agency where the company has its registered office. The Romanian authorities have not yet adopted the template for these documents. The payment will be made from the unemployment insurance budget within a maximum of 10 days from when the employer fulfills its obligation to declare and pay the tax and contributions for those salaries.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 04 June 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.