Directive 2001/23/EC which stipulates this matter at EU level was transposed into national legislation by Law No. 67/2006 on the protection of employees’ rights in case of transfer of undertakings, businesses or parts of undertakings or businesses and the Labor Code.
The provisions of Law No. 67/2006 and the provisions of the Labor Code apply to:
- transfers of undertakings, businesses or parts thereof located in Romania, regardless of the nature of their share capital;
- all cases in which the transfer of undertakings, businesses or parts thereof results from a share transfer or from merger;
- all individual employment agreements (regardless of their type).
The national law does not apply to:
- the transferor under insolvency proceedings;
- merchant navy crews.
Law No. 67/2007 defines transfer as “transfer by the transferor to the transferee of ownership of undertakings, businesses or parts thereof, aimed to continue the main or secondary activity, whether intended for profit or not.”
Compared to Directive 2001/23/EC, Law No. 67/2007 conditions the existence of a transfer of undertaking on the existence of a transfer of ownership, which is a much narrower scope than with the Directive.
However, to the contrary, the Alba – Iulia Court of Appeal, by Decision No. 77/2008, established the following: “The condition of a transfer of undertaking is fulfilled in all cases where there is a change regarding the person that operates the undertaking and thus acquires the obligations related to the relationship with the employees, whether the change/assignment involves the transfer of ownership or not. In this interpretation, the norm is incidental even if a lease agreement is involved.”
According to Law No. 67/2007, terms and expressions have the following meanings:
- transferor – the person that ceases to be the employer for the employees of the undertaking, business or parts thereof;
- transferee – the person that becomes the employer for the employees of the undertaking, business or parts thereof;
- employee – any person employed under an individual employment agreement;
- employees’ representatives – union representatives or, where there is no union, persons elected and mandated to represent employees under the law.
3. Effects of the transfer of undertakings
Law No. 67/2006 regulates the automatic nature of the transfer of a legal employment relationship. The transfer occurs automatically by law, and the unilateral or bilateral expression of the parties’ will is not needed.
The transferor’s rights and obligations arising from the individual employment agreements of employees affected by the transferred economic activity are automatically taken over by the transferee, under the law, from the date of activity transfer.
As in the Directive, in national legislation the transfer shall not constitute grounds for collective or individual dismissal of employees by the transferor or the transferee.
If the transfer involves a substantial change of working conditions to the detriment of the employee, the employer is responsible for the termination of the individual employment agreement.
The transferee has to comply with the collective bargaining agreement applicable at the date of the transfer until its termination or expiry.
Law No. 67/2006 stipulates the same provisions as Directive 2001/23/EC regarding effects on collective labor relations and the obligation to inform and consult.
A. Effects on collective labor relations
The transferee has to comply with the provisions of the collective bargaining agreement applicable at the transfer date, until termination or expiry or until another collective agreement enters into force or is applied. By agreement between the transferor and employees’ representatives, the provisions of the collective agreement valid at the transfer date can be renegotiated, but not earlier than one year from the transfer date.
Where, following the transfer, the undertaking, business or part thereof does not preserve its autonomy and the collective bargaining agreement applicable to the transferee is more favorable, the more favorable collective agreement will be applied for the transferred employees.
If the undertaking, business or part of an undertaking or business preserves its autonomy, the status and function of the representatives or of the representation of the employees affected by the transfer shall be preserved on the same terms and subject to the same conditions as before the date of the transfer by virtue of any law, regulation, administrative provision or agreement, provided that the conditions required for the constitution of the employee’s representation are fulfilled. If the conditions required for the constitution of the employee’s representation are not met, the transferred employees shall choose their representatives under the law.
If the term of office for the representatives of the employees affected by the transfer expires as a result of the transfer, such representatives shall continue to benefit from protection provided by the laws, regulations, administrative provisions or practice of the Member States.
B. The obligation to inform and consult
The transferor and the transferee shall inform the representatives of their respective employees affected by the transfer or, if they are not established or appointed, shall inform any staff members concerned, at least 30 days before the transfer date, with respect to:
- the date or proposed date of the transfer;
- the reasons for the transfer;
- the legal, economic and social implications of the transfer for the employees;
- any measures envisaged in relation to the employees.
The transferee must provide such information to the representatives of its employees in a timely manner, and in any event before the employees are directly affected by the transfer as regards their working and employment conditions.
4. Legal liability
Law No. 67/2006 states that any failure to comply with the obligations stipulated by the Law is misdemeanor and is punishable by a fine between RON 1,500 and RON 3,000. Misdemeanor and fines are determined by labor inspectors.
5. Employees’ right of refusal
CJEU practice constantly states that there is a right of refusal for employees regarding the transfer of their employment agreements in the context of a transfer of undertaking.
Both the doctrine and practice tend towards a recognition of the employee’s right to refuse the transfer of his/her employment agreement to the transferee, but there is no uniform opinion on the legal effects of such a refusal and on the practical consequences arising from this.
However, the Romanian Labor Law (art. 3 para. (2) of the Labor Code) establishes the principle of “free choice of employment” (and hence of the employer), and also that the automatic transfer of the employment agreement from the transferor to the transferee is performed for the benefit of the employee, as a protection measure in case of a transfer of undertaking, therefore the employee may refuse to benefit from this right.