New coordinates of social dialogue in Romania – key elements that every employer should know

Authors: Cristina Tudoran (Counsel), Bianca Chera (Senior Associate), Mădălina Cristache (Associate)

Promulgated in December 2022 more than 3 years after its initiation, the new law on social dialogue, Law no. 367/2022, has the declared aim of facilitating social dialogue and the exercise of certain employee rights.

To achieve this objective, the new regulation puts in place a number of new and vigorous mechanisms aimed at encouraging trade union organisation and association and opening up access to social dialogue for non-representative trade union organisations, imposing additional obligations on employers to inform and consult employees, emphasising multiple levels of collective negotiations and reintroducing the collective labour agreement at national level. At the same time, the new law tightens the system of administrative sanctions and neutralizes multiple prerogatives of employers.

As the changes introduced by Law no. 367/2022 have already gained notoriety, this material is focused on those key issues that are really problematic to employers in terms of their activity and that have already become subject to different interpretations in practice.

1. The obligation of collective negotiation and redefinition of the social dialogue partner

The draft of the new law on social dialogue proposed, in 2018, to address the situation of more than 1,285,000 employees who, working in companies with a total number of less than 21 employees, were excluded from the collective negotiation of the collective labour agreement. The law’s version entered into force requires all employers with at least 10 employees to initiate collective negotiation, under an administrative penalty between RON 15,000 and RON 20,000.

At the same time, the law establishes specific mechanisms meant to encourage employees, through their representative bodies, to take up employers’ invitation to collective negotiation:

1. A trade union can be validly established with 10 members within the same employer;
2. The threshold of representativeness at unit level for a trade union dropped to 35% of the total number of employees (compared to 50% plus one pursuant to the old regulation). This will allow two representative trade unions to exist within the same employer (in which case collective negotiation will take place with both trade unions).
3. If, however, the trade union is not representative, collective negotiation will be conducted with the trade union federation to which the non-representative trade unions in the unit are affiliated, if these trade unions together account for at least 35% of the total number of employees in the unit.
4. Collective negotiation will be conducted with all non-representative trade unions, insofar as they are not affiliated to a federation, or the minimum threshold of employee members is not met.

The law contains significant inconsistencies regarding the possibility of employees’ representatives to participate in the collective negotiation, specifying, on one hand, that they will constitute the social dialogue partner in the units where there is no trade union, and, on the other hand, that negotiations are considered valid and can only continue with the trade unions if employees’ representatives are not elected to participate in negotiations, which could lead to the interpretation that in the units where employees’ representatives are elected to participate in collective negotiations, they should continue both with the trade unions and with employees’ representatives. An interpretation to the contrary of the new law, in which preference and exclusivity would be granted to non-representative trade unions to the detriment of employees’ representatives, could undermine the employees’ ability to express their real will, since 50% + 1 of the total number of employees is required to elect their representatives, and a trade union can be validly constituted with only 10 members, regardless of the total number of employees. Thus, the very effectiveness of collective negotiations conducted with this social dialogue partner will be arguable.

The operational and logistical difficulties that may be entailed by the obligation to negotiate with multiple trade union organizations (e.g. two representative trade unions or, as the case may be, all non-representative trade unions constituted at employer level and possibly together with the elected employees’ representatives) will lead to a high difficulty in reaching a consensus on the collective labour agreement. It is noteworthy to stress that the law does not penalise the employer if it fails to conclude a collective labour agreement, but only if it does not initiate collective negotiation, i.e., does not convene the parties entitled. Specifically, if employers encounter a deadlock in the collective negotiation process, they shall record this in the relevant minutes and declare the negotiations closed. Naturally, in such case, the employer’s exposure to a potential collective labour dispute would increase, therefore all parties must remain reasonable and act in good faith in dealing with the other parties.

• Broadening the information and consultation framework

As a novelty, employers are now required to invite the representative trade union (or the representative jointly appointed by non-representative trade unions and employees) to participate in the discussions of the board of directors or other equivalent body when matters of professional and social interest with an impact on employees are discussed. Issues such as the adoption, modification or withdrawal of benefits, business reorganisations, organisational changes or business transfers, restructuring and any other issues with an impact on employees could be considered as falling into this category. Failure to comply with the obligation may be sanctioned with administrative penalty between RON 15,000 and RON 20,000.

Furthermore, the general obligation of information and consultation (under Law no. 467/2006 on the general framework for information and consultation of employees) is detailed and accompanied by specific sanctions:

• Informing and consulting employees on recent and expected developments in the activities and economic situation of the unit will be initiated by the employer after reporting the financial statements for the previous year. If the employer does not initiate the process, it will start upon the written request of employees. The refusal to initiate the procedure following such a request may be sanctioned with administrative penalty between RON 15,000 and RON 20,000.
• Informing and consulting employees on decisions that may lead to significant changes in labour organisation, contractual relationships or employment relationships will be initiated by the employer prior to the implementation of such decisions. If employees consider that there is a threat to their jobs, they may request in writing that the information and consultation process begin, which must take place no later than 10 days after the request is communicated.

In line with its mission to encourage employees to join trade unions, the new law further stipulates that, in the units where trade unions are not established, the employer shall allow a public information session on the individual and collective rights of employees to be held at least once a year, at the request of the trade union federations in the collective negotiation sector of the respective unit, with representatives of these federations being invited.

• Updating the collective negotiation levels

Among the most controversial novelties is the reintroduction of the national collective labour agreement. In this context, it should be stressed that the last collective labour agreement concluded at national level expired in 2010, while the possibility of concluding a collective labour agreement at his level was abolished in 2011 with the entry into force of the former social dialogue law.

As the Constitutional Court held in Decision no. 574 awarded on 4 May 2011, which deemed this level of collective negotiations as unconstitutional, collective negotiations must ensure a fair balance between the interests of employers and the interests of trade unions, as there are areas at national level where economic and social conditions allow the conclusion of collective labour agreements that are much more favourable to employees, while other areas have rights negotiated at a lower level. However, a collective labour agreement concluded at national level may lead to an automatic guarantee of rights at a higher level than would objectively be allowed in each field, which would affect the economic viability of employers in that sector.

The legislator’s option to reintroduce the possibility of concluding a collective labour agreement at national level did not exist in the original draft of the law, and the reasons for this change of approach are therefore missing. Such measure is all the less explicable given that the arguments for renouncing the collective labour agreement concluded at national level are even more stringent in the current socio-economic background, characterised by extremes and massive imbalances in the various sectors of activity.

Negotiation at this level remains, however, an option for the social dialogue partners, as the collective labour agreement concluded at national level will produce effects for all employees in the establishments of the national economy for which the collective labour agreement concluded at national level has been concluded and which belongs to the employers’ organisations which are signatories or have subsequently adhered to the collective labour agreement concluded at national level. However, concerning the collective negotiation at sectoral level, employers may even be required to adhere to the collective labour agreements concluded at this level. Thus, if the employer has representative trade unions which are members of the federations which are signatories to the collective labour agreement at sectoral level, then employees may strike if the employer refuses to adhere to this collective labour agreement, even if there is a collective labour agreement in force at unit level.

Last but not least, the sanctions provided by the new Law on social dialogue for employers, aimed at guaranteeing employees the exercise of the right to free trade union organisation and association are also of high importance. The employer’s hindering the exercise of this right may be sanctioned with administrative penalty between RON 30,000 and RON 50,000, and certain infringements of trade union activity (such as constraints or conditions aimed at limiting the exercise of the duties of the members of the trade union organisation governing bodies) or to the exercise of the right to strike (such as the recruitment of employees to replace striking employees) may be sanctioned by imprisonment.

In conclusion, although the purpose of the new law on social dialogue is salutary, it cannot be applied in a unitary manner due to the numerous inconsistencies and conflicts between the regulated institutions (generated mainly by the legislative technique used). Therefore, in order to ensure transparency and uniformity, the provisions of the new law should be reviewed by the legislator before any subsequent alignment of other provisions of the labour law.