The Year in Review: Romanian Law Highlights in 2022
Explore 11 legal topics and developments in 2022 that have spurred significant change.
CORPORATE (Law 265/2022): Simplification of the registration procedures with the Trade Register
The end of 2022 has brought a new legislative framework for the Trade Register and the entries in the Trade Register. The changes intend to modernize and automatize as much as possible the specific operations of the Trade Register. Many of the amendments to the new legislation have operated as simplifications during the COVID-19 pandemic and have significantly eased both the work of the Romanian entrepreneurs and the work of the Trade Register’s personnel.
The main changes can be divided in three main categories:
- changes aimed at reducing bureaucracy, in the sense that registration procedures no longer require certain documents (such as declarations and specimen signatures);
- changes affecting the very legal framework for the operation of companies, such as waiving the unanimity requirement for amending the articles of association of limited liability companies; and, finally
- changes to the operating framework of the Trade Register: new powers are introduced, such as the verification of the legality of merger and division operations or those concerning the liquidation and dissolution of companies by the Registrars of the Trade Register;
As the changes introduced by Law 265/2022 only entered into force at the end of November, it is difficult to quantify the impact these changes will have in the long term. The transition period since the entry into force of the amendments has brought uncertainty and disorganization to the work of the trade register offices which have not been prepared for the uniform implementation of the changes.
RENEWABLE ENERGY (Law 254/2022): New benefits to investors in renewable projects
Recent amendments to the land law bring new benefits to investors in renewable projects, allowing them, under certain conditions, to develop energy production projects from renewable resources extra muros.
Although the benefit to investors in renewable projects is significant, it is not unlimited – the derogations introduced are limited in time, until December 31, 2026. Given that the operating licenses for energy projects go well beyond the 4-year exemption, it remains to be seen what real benefit these changes bring.
TRADERS AND CONSUMERS (Ordinance 140/2021): New
legislative framework on contracts for the sale of goods
2022 started with the entry into force of a new legislative framework on contracts for the sale of goods. The new regulation provides for rules on the conformity of goods, corrective measures in case of non-conformity and commercial guarantees offered by sellers.
Trying to keep up with digitization, the new regulation makes the provisions applicable to digital products much more stringent – sellers must deliver compliant goods to consumers whose subjective and objective compliance requirements are met. In the case of digital products, this includes the seller’s obligation to ensure that the consumer is informed of updates and that updates are delivered to it.
The sanctions provided by the new regulation for infringements of its provisions do not differ significantly from the old regulation (maximum fines amount to EUR 5,000) and are disproportionate to the power of large economic operators.
AMENDMENTS TO THE LABOR CODE (Law 283/2022): New rights for employees and update of the employment contract framework model
European efforts to ensure a work-life balance for employees have led to several changes at a national level, with a corresponding update of the employment contract framework model.
In conjunction with the new rights recognized to employees, employers are obliged to inform and implement the changes internally – thus
- additional requirements for internal rules,
- new prohibitions on dismissal,
- new days off/leaves granted to employees,
- additional rules on probation and access to a vacancy
have been introduced.
The general terminology used, taken as such also in the framework model of the employment agreement, however, creates practical difficulties for employers in terms of the content and/or extent of the information they should provide to existing employees / to be included in new employment agreements. In this context, the position of labor inspectors will be an important benchmark in setting guidelines in practice.
OTHER CHANGES TO EMPLOYER-EMPLOYEE RELATIONSHIP: Employers have to implement internal procedures in line with the new requirements
Paternal leave (GEO 117/2022)
by extending the duration to 10 working days, with additional 5 days for each child (for fathers who have obtained a certificate of completion of the infant care course), the aim is to ensure that fathers participate in caring for their newborn child and to make it easier to reconcile work and family life.
Child-raising leave (GEO 164/2022)
aimed at implementing at a national level a minimum standard for child-raising leave in accordance with the European requirements, the amendments applicable from January 1, 2023 mainly concern:
- an increase in the non-transferable period of leave in the case of a parent who did not initially request this right,
- an increase in the level of taxable income that can be earned by the parent during the leave period,
- reduced notice granted by the employee to the employer,
- the introduction of the accommodation leave in the case of adoption.
In the context of all these changes, employers will have to implement internal procedures in line with the new requirements, which will also allow them to continue their activity in the normal regime and parameters, even in the absence of the employees concerned, while respecting the employees’ rights.
OVERTAXATION OF PART-TIME LABOR AGREEMENTS
After a series of changes with a negative impact on the tax regime applicable to part-time agreements (GO 16/2022), where it was initially decided that the employer would pay social security contributions at the level of the minimum wage, there was a need to balance the situation generated in practice.
This was the context for Order 1.855/2022 of the Ministry of Finance, which established the exceptions and the procedure for paying social contributions in proportion to the employee’s actual income, including in the case of part-time agreements.
Successive amendments have, however, led to instability among employees and the part-time agreement segment, initially by reducing these types of agreements, then by migrating to full-time agreements or using staff already employed and avoiding such new hirings.
NEW OBLIGATIONS FOR MICRO-ENTERPRISES WITH UP TO NINE EMPLOYEES
As a result of Law 275/2022 rejecting previous amendments to the Labor Code, the internal rules and job descriptions for these companies have become mandatory again.
Although it is useful to draw up such documents – by virtue of employers’ general obligations to inform employees in this way – successive legislative changes have in practice put employers who had appealed for the simplification of internal documentation in the situation of having to reintroduce certain internal practices, thus generating organizational instability.
DIGITAL NOMADS (LAW 22/2022)
With the aim of attracting financial resources to the country and adapting to changes and dynamics in the labor market, the introduction of the notion of digital nomads at the beginning of 2022 is welcome and topical in the current era of digitization.
Given the documents required and the conditions to be met by foreigners to obtain a visa (including means of subsistence), the process of obtaining a visa is, however, a cumbersome one; in addition, the tax regime for digital nomads, for which no special provisions have yet been adopted, remains to be clarified.
RO E-TRANSPORT SYSTEM (GEO 41/2022)
As part of the digitization process, the system is designed to ensure the traceability of goods classified as high tax risk (such as cast iron, iron and steel, salt, sulfur, earth and stones, plaster, lime and cement, beverages, vegetables, plants etc.) and to help reduce tax evasion.
Having an impact on import/export operators, the system generates several obligations for the operators concerned, including the declaration of the consignments in question in e-Transport, where required by law, regardless of the type of business relationship (B2C, B2B).
Given the successive changes, both in terms of the postponement of the application of sanctions (currently consisting of fines of up to Lei 100,000 lei for legal persons and the confiscation of undeclared goods) and the fact that it is first optional, during a transitional period, and then mandatory, it remains to be seen whether such a procedure will be easy for operators to implement, i.e. whether it will be easier or more difficult to operate.
JOINT LIABILITY OF CONTRACTORS FOR THE PAYMENT OF WAGES TO THEIR SUBCONTRACTORS (GEO 66/2022)
The amendments concern certain areas (such as construction), with effects for contracts concluded after the entry into force of this GEO (12.05.2022).
New obligations are thus provided for in subcontracting chains in which the contractor and the subcontractor are established in the territory of Romania – we are talking about the payment by the contractor to his subcontractor’s employee of the part of the net outstanding salary corresponding to the minimum gross basic salary in the country, only (i) within the limit of the activity performed by the employee in the framework of the direct contractor – subcontractor relationship and (ii) if the contractor has not paid its own outstanding obligations to its subcontractor.
In practice, the contracting partners will also have to agree on the recovery of such payments.
TRANSPOSITION OF WHISTLEBLOWER DIRECTIVE
Although the transposition of the European Whistleblower Directive (on the protection of whistleblowers and reporting/resolution procedures) is not yet finalized, with two separate draft laws due to be enacted in the course of 2022, private employers may have to, as appropriate, regulate their own rules and procedures either by internal rules or by separate procedures.
Despite the impossibility for employers to finalize and implement their internal policies until the entry into force of the law in question, it is advisable for private employers to take steps in this direction, to avoid any sanctions that may ultimately be provided for.