AMENDMENTS TO THE LABOR CODE - THE IMPACT ON BUSINESSES

11.03.2011

The Government proposed in Parliament 107 changes to the current Labour Code. The opposition filed a motion against the bill and a vote will be casted on 16^th of March. If the motion is approved, the Government falls. If the motion is rejected, the law will be most likely submitted to the control of the Constitutional Court and then sent to the President for enforcement. Current expectations are that the motion will be rejected, the only unknown factor being the reaction to street pressure, as the unions have organized several meetings against the bill in the days to come.

Following is an Executive Summary regarding the changes which are expected to be most relevant for the businesses. More details on the main changes can be read on the Publications page.

Proposed changes with the highest impact on businesses:

Options to react to increased demand or to downturns: i) total weekly work time can be increased over 48 hours as long as this number is maintained as an average at 4months; the reference period can be increased through collective agreements (CLAs) to 6 month or in special conditions up to 12 month ii) individual labour agreements (ILAs) can be suspended with base pay reduced to 75% in case of reduction of activity, not only in case of temporary closure as it is now; iii) 4 days work schedule for no more than 30 days; iv) time in lieu in advance: paid days off now compensating overtime in the following 12 months, (v) work norms do not require agreement of the unions anymore; this measure this needs to be correlated with the National CLA which speaks still of this approval;
CLAs signed after the entry into force of the changes (expected after 20^th of April) cannot last longer than 31^st December. After that, the term will be set in the new Social Dialogue Code scheduled for this summer. One thing is certain: CLAs cannot disappear as they are regulated in the Constitution and in EU legislation. For more comments on this matter please refer to the section below;
Fixed contracts and agency work will be more flexible allowing longer periods (36 months and even longer under certain conditions) and better financial offers from work agents;
Probation periods increased from 30 to 90 days for non-management and from 90 to 120 days for management;
If a need to have a broader work place and therefore using a mobility clause, the employers will have to specify clearly what is the allowance for this (the current practice is to include it in the base pay);
Training agreements are left for the parties to structure (currently an employee who attended a 60-day course for more than 25% of the daily schedule has to pay it back if it leaves within 3 years from graduation)
Content of ILAs and reporting obligations become more cumbersome for employers, plus fines increase;
Collective dismissals based on performance criteria, but regulated in an ambiguous manner;

The night work allowance has been increased and the protection of union leaders is being decreased. However, in fact there is no change on these 2 matters because of other existing legislation or the National CLA which remained unchanged.