July brought beneficial changes for employers, with several new laws being passed.
State benefits for employers hiring the unemployed, graduates, students and others
The new Government Emergency Ordinance amends several pieces of law on occupancy in the workforce, apprenticeship and retention of higher education graduates. Companies will be eligible to benefit from State budget entitlements, as follows:
(i) 2.250 lei/month, for a period of up to 12 months, when hiring graduates under an “undetermined period of time” contract
(ii) 2.250 lei/month, for a period of up to 12 months, when hiring under an “undetermined period of time” contract the following: unemployed individuals over the age of 45 years, unemployed single parents, individuals who have been unemployed long-term (over 12 months) or in the case of hiring a NEET (young individuals aged between 16-25 years who are unemployed, not enrolled in an educational institution and are not participating in any vocational/professional training). The duration of the employment contract should be for a minimum of 18 months, in order for the company to be eligible to the entitlement.
(iii) 2.250 lei/month, payable throughout the employment period of an individual who is within 5 years of qualifying for a pension, provided that this individual is not eligible for partial retirement funds during the employment period.
(iv) 1.900 – 2.000 lei/month (equal to the value of the gross base salary agreed upon in the employment contract) when hiring young people at risk of being socially marginalized and who are benefitting from a “solidarity contract” (social support) from the unemployment agency at the time, until the expiry of such contract;
(v) 2.250 lei/month, for the duration of an apprenticeship contract
(vi) 2.250 lei/month, for the duration of a trainee contract
Government Emergency Ordinance no. 60, of July 5th, 2018, on the amendment and completion of certain enactments in the labour force, was published in the Official Gazette of Romania no. 577 dated July 9th, 2018, Part I and entered into force on the date of publication.
A legal framework for internship has finally become a reality.
Until recently, companies used varying agreements for training individuals without previous work experience, such as voluntary agreements, which often presented pitfalls from a legal and tax perspective, for employers.
Romanian legislators approved a law on internship, effective from July 2019, which aims to assist graduates or very young individuals (from 16 years of age onwards) with the transition from graduation to a workplace/profession.
Under the internship law, an intern will perform an activity for a determined period of time within a host-organization (a company). The aim of such an activity is to give interns an opportunity to apply their theoretical knowledge into practice, to improve their practical skills and/or gain new skills, abilities or competences, including familiarization of the intern with the activities of the host-organization and so on.
Some of the key considerations for organizing an internship program are:
- the host-organization should publicly announce the details of the internship as well as the selection procedure and the general responsibilities, the schedule and time frame of the internship, as well as contractual terms such as pay, annual leave, etc
- the internship contract should be signed at the latest on the day prior to the commencement of the internship program and its clauses should be in line with the rights and obligations of the parties as specified in the internship law
- the intern is entitled to an allowance of 50% of the minimum gross base salary or more, prorated over the hours effectively performed and is subject only to income tax
- interns may have a workload of maximum 40 hours/week . For interns under the age of 18 years, the maximum workload should not exceed 6 hours/day and 30 hours/week
- the duration of the internship may be a maximum of 720 hours, within a time period of 6 consecutive months
- interns can make up the sum of a maximum of 5% of company hires during a calendar year and for companies with up to 20 employees, a maximum of 2 internship contracts may be concluded at the same time.
- the employer may receive an entitlement from the State equaling 4.586 lei, once an employment agreement has been in effect for a minimum of 24 months. This employment agreement should have followed the process of hiring an intern as an employee, no more than 60 days after the internship program has ended.
- during the internship, the intern may only perform activities provided in the internship contract under the direct coordination of an advisor within the host-organization
- interns may not participate in activities specific to unskilled workers
- the host-organization is responsible for completing and sending the information from the internship contract to the Registry of Internship under the territorial agency for workforce occupancy, by the last working day prior to the commencement of the activity
- following the completion of the internship program, the parties involved may conclude an employment contract
Law no. 176/2018 on internship was published in the Official Gazette of Romania no. 626, dated July 19, 2018, Part I and entered into force on August 19th, 2018.
Tickets/Vouchers for employees
A recently passed law, effective January 1st, 2019, states that all value tickets which Romanian employers may grant their employees, are grouped within a single enactment. These expenses are tax deductible for employers.
The following value tickets may be granted to employees, electronically or in printed form: meal tickets, gift vouchers, nursery vouchers, cultural tickets, and holiday vouchers. The costs of obtaining tickets are borne by the company and there are several rules governing each ticket such as when they can be granted, the maximum value of a ticket, validity conditions and others.
Law no. 165/2018 on granting value tickets was published in the Official Gazette of Romania no. 599 dated July 13th ,2018 and will apply, as of January 1st ,2019.
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