Taking into account the developments in the labor market and in the employer-employee relations and taking into account the need to improve the degree of protection of employees, ensuring the creation of conditions for the development of the business environment based on fair competition, while ensuring the level of protection for employees, on October 5, 2021 was published in the Official Gazette the Emergency Ordinance no. 117/2021 for the amendment and completion of Law no. 53/2003 - Labor Code.

This Emergency Ordinance makes changes such as:

• Defining the concept of “gray work”;

• Sanctioning employers who practice this phenomenon;

• Compensation for overtime work paid overtime in the next 90 calendar days after performing it;

• Sanctioning employers who are late in making salary payments by more than one month from the date of payment of salary.

1. "Gray work" - undeclared work

In the context of current economic developments, the phenomenon known as gray labor has been identified - a concept defined as the legal notion of undeclared work.

"Gray work" or undeclared work, says the legislator, is the granting of a net salary higher than that established and highlighted in the payroll statements and in the monthly statement on the obligations to pay social security contributions, income tax and personal records insured, transmitted to the tax authorities.

By defining and introducing this concept in the Labor Code, the legal basis is created for sanctioning employers who practice this phenomenon.

Underreported work affects both the tax system by committing the crime of tax evasion, the taxed amount (declared by the employer) being less than that actually received by the employee, and the rights of employees in terms of social contributions, which will be paid on a calculation basis inferior to the real one.

The legislator also provided the sanction for this deed of the employers - the fine from 8,000 to 10,000 lei for each employee identified in this situation, without exceeding the cumulative value of 100,000 lei.

2. Compensation for additional work

As this institution was regulated until the new changes took place, overtime could be compensated by paid overtime in the next 60 calendar days after the overtime.

By Ordinance 117/2021, the term was amended and extended to 90 calendar days, in order to make labor relations more flexible by creating the possibility of compensating for additional work with appropriate free time in a longer period of time and ensuring the activity of employers in good conditions.

Basically, the additional work of an employee will now have to be compensated by offering paid hours off, within a period of 90 calendar days from the date of work.

3. Sanctioning employers who are more than one month late in paying their wages

According to the Labor Code, the salary is paid in cash at least once a month, on the date established in the individual employment contract, in the applicable collective labor agreement or in the internal regulations, as the case may be.

By Ordinance 117/2021, the violation by the employer of this obligation to pay the salary is sanctioned by being delayed by more than one month from the due date of payment of the salary.

The sanction that intervenes is the fine from 5,000 to 10,000 lei for each person who was not paid the salary, except for the situation in which the employer is under the incidence of Law no. 85/2014 on insolvency prevention and insolvency proceedings.

These are the essential changes brought by the Government Emergency Ordinance no. 117/2021. It is interesting that the legislator waited so long to regulate a phenomenon that was already of great magnitude in Romania, but which worsened even more in the context of the pandemic. In any case, it is an initiative that we welcome and that will certainly change the ever-dynamic relationship between employers and employees.

Author: Attorney at law Elena Manea, Law Office Grecu & Partners.

This is native content supported by Grecu & Partners.