Amendments to the law on international posting of workers

The law amending and supplementing Law no. 16/2017

The law amending and supplementing Law no. 16/2017 on international posting of workers is to enter into force on 30 July 2020 (1) . However, the law is still being considered in the Chamber of Deputies. According to the bill, significant changes will take place and employers should prepare in advance. Please see below a summary of the main changes.

1000
Mădălina Racovițan

Tax Partner, Taxation Services, Head of People Services

KPMG in Romania

Email

Related content

1. The concept of “minimum wage” is replaced by the concept of “remuneration”

According to Law 16/2017, during the period of posting in a EU Member States or in Switzerland, workers have certain rights, such as the right to the minimum wage defined by the legislation and / or practice of the host member state, including compensation or payment of overtime.

As of 30 July, posted workers shall be entitled to the remuneration applicable in the host State, as defined by law, including overtime pay, except for supplementary occupational pension schemes, not only to the minimum wage applicable in that State.

What is the difference between “minimum wage” and “remuneration” in the case of posted workers to / from Romania?

  • The remuneration applicable in Romania is the amount of money, including the minimum wage as defined by law, overtime rates, compensation for work during weekly rest days, compensation for work during public holiday days, compensation for night work, other compensation and allowances which are mandatory under national legislation, as well as those stipulated in collective bargaining agreements with general applicability.
  • The remuneration applicable in an EU Member state, other than Romania, or Switzerland is the amount of money, determined by the national law and/or practice of the Member State where the worker is posted, representing all the constituent elements of remuneration rendered mandatory by national law, regulation or administrative provision, or by collective agreements or arbitration awards which, in that Member State, have been declared universally applicable or otherwise apply in accordance with Article 3 paragraph 8 of Directive 96/71/EC.

KPMG comment

Thus, the remuneration applicable during the international posting period may include, in addition to the minimum wage, a number of bonuses or allowances such as holiday allowances, industry-specific allowances, staff-specific allowances, etc., in accordance with the legislation of the host member state.

As a consequence, for Romanian employers who second employees to another EU Member State or to Switzerland, it will be extremely important to determine, prior to the start of the secondment, what the remuneration applicable in that state is, for each employee, taking into consideration the above.

2. New rights are added for poster workers

In addition to the rights mentioned by Law 16/2017, posted workers , in the framework of the provision of services, will also benefit from the working conditions established by the legislation of the state on whose territory the services are provided, regarding:

  • The conditions relating to accommodation, when they are sent to temporarily perform job related tasks outside their usual place of work.
  • Allowances or reimbursement of travel, board and lodging expenses, when they are sent to temporarily perform job related tasks outside their usual place of work, in accordance with domestic legislation or collective bargaining agreements with general applicability.

3. The possibility of including assignment related allowances in the remuneration granted to posted workers has been clarified

Any allowance specific to the posting is considered to be part of the remuneration, unless it is paid as reimbursement of expenditure actually incurred on account of the posting, such as travel, or board and lodging.

It is considered that the entire allowance is paid in reimbursement of expenditure incurred on account of the posting if the employer does not make a separate distinction between the amounts granted for travel, board and lodging and those which are part of the remuneration.

4. Additional obligations are introduced for employers in case of long term assignments

Where the effective duration of a posting exceeds 12 months, employers must guarantee, respecting the principle of equal treatment, all the applicable terms and conditions of employment which are laid down in accordance with domestic legislation or collective bargaining agreements with general applicability, except for:

  • Procedures, formalities and conditions of the conclusion and termination of the employment contract, including non-competition clauses. 
  • Supplementary occupational retirement pension schemes.

KPMG comment

Such additional obligations may include granting certain industry-specific working conditions, sick leave entitlements, age related leave entitlements, additional maternity rights or other similar conditions and rights, in accordance with the law of the host member state.

The posting period may be extended by a maximum of 6 months provided that the posting undertaking submits a notification justifying the extension to the labor authorities where the posted workers carry out their activity, in accordance with the domestic legislation of the host Member State (in Romania’s case, no later than one day before the 12-month period is completed).

KPMG comment

This does not mean that the posting is limited to a period of 12 or 18 months or that after this period a local employment contract must be concluded in the host country. The employee is still seconded to the host country, but he/she has certain additional rights specific to national legislation and collective agreements with general applicability in the host country.

Most probably, the procedures for registration / notification of secondments to the authorities in the host country will also be modified, precisely to cover the situations in which the secondment is extended or is set as of the beginning for a period exceeding the above mentioned threshold.

In Romania’s case, when determining the 12 month period, the periods prior to 30 July 2020 are not taken into consideration. Other countries have different approaches to setting this period and therefore it is important to check the host country’s approach for all postings in progress as at 30 July 2020.

5. New administrative requirements for employers

Undertakings located in a Member State, other than Romania, or in Switzerland, posting workers to Romania, are required to make available to the labor authorities, at their request, documents demonstrating the following:

a) The total remuneration that the posted worker will benefit from throughout the posting, showing separately the allowance specific to the posting.

b) Expenditure incurred for the posting, such as travel, board and lodging and the method for granting or reimbursing this expenditure, as well as the method for ensuring travel, board and lodging as appropriate, together with the applicable working terms and conditions.

Undertakings located in Romania posting workers to a Member State, other than Romania, or Switzerland are required to notify in writing the posted worker, prior to the posting, with reference to the following:

a) Constituent elements of the remuneration the posted worker is entitled to, in accordance with the local legislation in the host Member State and the corresponding amounts.

b) The total remuneration granted to the posted worker throughout the posting, demonstrating separately the allowance specific to the posting when granted.

c) Expenditure incurred for the posting, such as travel, board and lodging and the method for granting or reimbursing such expenditure, as well as the method for ensuring travel, board and lodging as appropriate.

Details of the single official national website created by the host Member State in accordance with Article 5, paragraph (2) of EU Directive 2014/67.

6. Clarifications have been made to situations where employees are hired out by temporary work agents

Where a foreign work agent hires out personnel to a user undertaking in Romania and the user undertaking decides that the activity is to be carried out in a Member State other than that where the worker normally works, it is considered that the employee is posted to that Member State by the work agent with which he or she is in a contractual relationship. In this case, the user undertaking in Romania is required to notify the temporary work agent which hired out the employee, at least 30 days prior to the employee’s start of activity in the other state.

Similarly, where a Romanian work agent hires out personnel to a user undertaking in another Member State and the user undertaking decides that the activity is to be carried out in a Member State, other than that where the worker normally works, in the framework of the transnational provision of services, it is considered that the employee is posted by the work agent with which he or she is in a contractual relationship. The Romanian work agent is required to notify the employee about the changes related to the place of work, following the provisions of the Labor Code.

7. Applicability for the road transport sector

The law applies to posted drivers in the road transport sector (2) , with the exception of the articles that refer to:

  • Remuneration granted, allowances or reimbursement of travel, board and lodging expenses.
  • Posting period.
  • Hiring out a posted worker by a posting agent.

Posted drivers who come within the legal framework for transnational provision of services benefit from the minimum wage defined by the legislation and/or practice of their host Member State, including overtime rates, irrespective of the legislation applicable to the employment relationship.

 

1) Law no.16/2017 transposes Directive 96/71/EC concerning the posting of workers in the framework of the provision of services. Directive 96/71 / EC was amended by Directive (EU) 2018/957. As a result, member states must implement the Directive (EU) 2018/957 into their national legislation by 30 July 2020.

2) Road transport sector is regulated separately. The latest developments: on 9th July 2020, the European Commission welcomed the social improvements of the Mobility Package I voted by the European Parliament. More details here.

© 2021 KPMG Tax SRL, a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today