By Roxana NEACȘU, Senior Associate, GRUIA DUFAUT Law Office
As part of its efforts to transpose into national law the European regulations applicable to the posting of workers, Romania has recently passed a new law on transnational posting of employees. Law no. 16 as of 17 March 2017 was published in Official Journal no. 196/21.03.2017 and will become effective within 60 days from its publication, namely on 20 May 2017. As of this date, the currently applicable law, namely Law no. 344/2006, will be repealed.
Basically, the new law supplements rather than amends the former regulation, by transposing a series of European legal provisions which had not been included in national law.
One of the main elements stipulated by the new law is the legislator’s intention to prevent abuse and circumvention of the law. This intention is materialized by the introduction of an assessment procedure, to be performed by the territorial units of the Labor Inspectorate. This procedure aims at determining the genuine character of a transnational posting from other EU/SEE Member States to Romania.
As per article 7 of Law no. 16/2017, in order to identify transnational posting situations, the Labor Inspectorate performs a general assessment of all factual elements which characterize transnational posting. This assessment focuses particularly on (i) the activities carried out by the company that posts workers, in Romania and in the Member State of establishment (in order to analyze if the said company actually carries out significant activities in its State of establishment) and on (ii) the work and the status of the employee posted in Romania (in order to analyze whether the employee usually works in the State of establishment of his/her employer).
The specific factual elements to be analyzed during this assessment procedure will be established by the implementing regulations of Law no. 16/2017. Nevertheless, Directive no. 2014/67/EU mainly refers to the place where the company has its registered office and management and where it carries out its main business, the place where the posted workers were recruited and the place where they are posted, the law governing the contracts concluded by the company and its employees, clients, as well as the number of contracts performed and/or the turnover obtained in the Member State of establishment. It remains to be seen how these factual elements will be transposed into national law, knowing that the last two criteria – the number of contracts performed in the Member State of establishment and the turnover obtained therein – are, in practice, the most problematic for companies.
The introduction of the new assessment procedure creates, at least in terms of legislation, the starting point for preventing and sanctioning (where appropriate) transnational posting operated by companies created in a Member State for the sole purpose of circumventing the law and obtaining tax advantages, often at the expense of their employees. Pursuant to article 7 (3) b) of Law no. 16/2017, the factual elements based on which the authorities will perform the assessment are indicative. This means that those who perform the assessment will have a rather wide margin of discretion, which, at least theoretically, may generate inconsistencies in interpretation.
In such case, there is a risk that the supervisory authority interprets the law differently than the employer has and considers that the posting operation performed by the employer in question is not genuine. Or, we know from our experience that the vague wording of a law leads to litigations and it has the potential to limit a company’s business.
Therefore, practice will demonstrate whether the law is sufficiently clear and uninterpretable, so that the activities of companies are not drastically limited.