Hammond, Bogaru and Associates January 2011 Newsletter

Romanian drivers will not be obliged to equip their vehicles with snow tires this winter.

Romanian Transport Minister said drivers who will cause accidents or block streets because their cars are not properly equipped will be fined and will be compelled to cover road-clearing costs if they get snowed in. She said insurers will not cover car accident claims in the case of improperly equipped cars.
The Government would approve an emergency decree obliging vehicle owners to equip their cars with snow tires from November 1 to March 31 effective from 2011.

The Romanian Government will no longer cover the costs with the administration and protection of private forests.

The Government says the state budget financing used to cover these costs goes against the European Union regulations.
The Forest Code currently provides annually for the administration of forests in the private sector if the respective forest property is smaller or equal to 30 hectares. Costs of the administration of private forests entail overall costs of at least EUR 5 million annually.
The Government says this type of financial aid goes against European directives regarding state aid in the agricultural and forest sectors. Thus owners will be obliged to conclude administration or forest services contracts with a forest department and pay, the costs incurred by these services.

The Romanian government agreed to work with the parliament to ensure that its emergency ordinance 50/2010 on consumer loans protects both consumer and bank rights.

“We will work with the parliament to ensure that the emergency ordinance 50/2010 improves transparency and protects consumer rights while safeguarding the stability of the financial system and guaranteeing compliance with EU Directive 2008/48/EC
“At the same time, we will ensure that the central bank is the only agency authorized to regulate banks’ lending activity,” so stated the Government. The government said that the ordinance will be amended so that it does not apply to existing contracts.
Romanian government adopted in June 2010 an emergency ordinance regarding consumer loans, which transposed EU directive 2008/EC/48 into the local legislation. The new act applies to existing loans and the banks denounced the measure as abusive. Officials of the European Commission and the International Monetary Fund repeatedly insisted Romania changed its consumer loan ordinance so that it does not endanger financial stability.

Proposed amendments to the Labour Code bring about major changes.

The draft act also reads that workers’ rights in units with 20 non-union employees can be defended by appointed employee representatives.
Under current law, employee representatives are charged with ensuring salary rights are observed according to collective work contracts, individual work contracts and internal regulations. They are also charged with protecting employees’ rights regarding working conditions, working hours and leave.
According to the draft an individual work contract is drafted by the employer, with both parties’ consent, in writing and in Romanian. The contract must be prepared before employment commences. The employer is allowed to set individual performance objectives, as well as criteria for their evaluation.
Future employees are required to present a medical certificate confirming they are able to work before signing the contract. They may not hold more than two full-time positions with the same employer. The employer may request information about a prospective employee from their previous employers, but only as regards the employee’s activity and only with their prior notice.
The trial period for new employees will be defined in the contract and may last as long as 45 days (at the moment, 30 days) for rank-and-file employees and up to 120 days (up from 90) for management positions. The professional qualifications of employees with disabilities may also be evaluated in a trial period of no more than 30 days.
When drafting the individual work contract, or while it is in effect, the parties may negotiate and add a non-compete clause, through which the employee agrees not to engage in competition against the employer, either for the employee’s own interest, or that of a third party, in exchange for a monthly indemnity paid by the employer. The indemnity will be negotiated directly, can be deducted by the employer from the profit tax and is considered taxable income for the beneficiary. The employer may independently discontinue paying this indemnity, as long as the employee receives one month notice.
The amending act repeals a provision whereby the parties may use other means to prove that contractual obligations have been undertaken and fulfilled, in case a work contract has not been prepared in writing. The act also forbids the signing of employment contracts concerning the performance of illegal activity, without reference to “immoral” activity, as per current legislation.
Discrimination on the basis of gender, sexual preference, genetic traits, age, nationality, race, colour, ethnicity, religion, political views, social origin, disability, family status or responsibility, union affiliation or activity, are also prohibited.
The selected candidate must be informed about the position’s specific risks, standard duration of work, clauses on notice and leave and performance objectives and assessment criteria. Any change to these elements while the contract is in effect will require signing an additional act, within 15 business days of the change, including cases when the change follows from legislation or the collective contract. Under the current Code, this obligation does not apply in cases where the change results from the law or the collective contract. The employer will be required to issue a document stating a current of former employee’s activity, seniority in the position, field and specialization, at the latter’s request. Foreign citizens and stateless persons may be hired through an individual labour contract on the basis of a work authorization.

The placing of outdoor advertising could be banned in Romanian parks, on trees, on the headquarters of public institutions, on roadways and in other spots deemed improper by the local administration.

These restrictions could be applied through a bill drafted by the Ministry of Regional Development and Tourism.
The list of restricted locations includes natural landmarks, parks and nature reserves, public bodies, “except ads informing on the activity performed inside,” trees, on roadways, artistic and historical monuments, cemeteries, churches and public gardens, intersections, roundabouts, underground and overhead passages, the lower part of bridges, or poles supporting road signs. Buildings “in an advanced state of deterioration” will also be off-limits to advertising meshes or banners, but only if the buildings’ stability and the integrity of their elements are threatened by the advertisements.
Local authorities will have a series of new obligations once the bill enters force. They will be required to decide where advertising signs can be placed and the rules binding those locations’ owners. Authorities will also have to install panels “destined for the display of advertising and classifieds,” to be cleaned weekly by a specialized department, ensuring that the ads are up to date.

The Romanian Parliament adopted the IMF-required pension law, requiring that the retirement age be set at 63 for women and 65 for men.

The bill was adopted with 172 votes in favour and the only amendment was brought to the article regarding retirement age, as the president had requested. The bill needs to be designed by President Traian Basescu into law.

The Romanian Government forbids public authorities and institutions to purchase cars, furniture and office equipment in 2011.

The act debated by the Government extends the public spending cut measures implemented in 2009 and 2010 through 2011. In April 2009, following negotiations with the International Monetary Fund on cutting public spending, the Romanian Government banned public authorities and institutions from purchasing cars, furniture and office equipment. The ban did not apply to newly set up bodies or projects financed with non-reimbursable external funds.
The measure remained valid in 2010, but data on the first four months of the year showed that state-run companies and state institutions bought cars, laptops and mobile phones worth over EUR 100 million and earmarked a further EUR 24 million for similar purposes.

Romania’s Constitutional Court stated that a no-confidence motion, once submitted, has to be debated and put to the vote.

The Court said that the Government may continue its procedure for the adoption of the education bill, which the Parliament has so far hindered by refusing to set a date for debates on a no-confidence motion submitted by the opposition within the required term. The Government sought a confidence vote in Parliament on October 28 to pass the education bill and the opposition then submitted a motion of no-confidence.
Liberal lawmakers then withdrew their signatures from the motion and the motion no longer had enough supporters to be debated and put to the vote. The Parliament’s standing offices also decided to send the education bill back to the Government together with its request for a vote of confidence to pass the bill into legislation.
Constitutional Court rulings are final and mandatory and are communicated to the president, prime minister and the heads of the two chambers of Parliament.

Romania’s Health Minister said that pensioners and revolutionaries will be required to pay 5.5% as contribution to the social health insurance system, as of next year.

The Romanian Government has approved an emergency ordinance whereby pensioners earning more than 740 lei and people who took part in the 1989 revolution, except those who were wounded, will pay 5.5% of their income to the social health insurance system.
The ordinance, as discussed, excluded the husband, wife and parents without their own income, who are in the care of an insured person, from the category of people receiving healthcare without paying a contribution. According to the Government, 937,000 people would have no longer been insured through the public healthcare system, as of January 1, 2011. The ordinance has not been published in the Official Journal yet.

Companies will be able, starting 2011, to pay social security contributions and income taxes through a single statement, submitted online to the National Fiscal Administration Agency (ANAF).

At the moment, employers must file five tax forms: two for ANAF and three for contributions to the health insurance, unemployment and pension systems. Starting with next year, companies will fill out a single statement on social security contributions and income tax, to be filed with ANAF and the Ministry of Finance will forward all the necessary data to the healthcare, unemployment and pension systems.

The deadline for the submission of VAT refund requests for 2009 by taxable companies, which are not established or registered for this purpose in Romania, has been extended to March 31 2011.

The Decision, which amends the Fiscal Code, was approved after the EU adopted, on October 20, a Directive extending the deadline for the submission of VAT fund requests by taxable persons established in a member state other than the member state of refund. The amendment will apply to companies located in Romania, which may request a refund of VAT paid last year in other member states.
The Directive was adopted following delays and technical issues affecting the development and operation of some member states’ electronic portals.