Technical Unemployment – A Guide

A. Notion

The term “technical unemployment” does not have a legal definition, but starting from the reason on which it is based, it can be defined as the suspension of the individual employment agreement, on the initiative of the employer, based on the temporary reduction or interruption of his activity, but without ceasing the employment relationship (the employer having the possibility of ordering the resumption of work at any time).

According to art. 52 paragraph (1) of Law no. 53/2003 regarding the Labor Code, the cases of suspension of the individual employment agreement at the initiative of the employer are:

  • during the preliminary disciplinary research;
  • the situation in which the employer lodges a criminal complaint against the employee, respectively, is sent to court for criminal acts incompatible with the position held, the suspension operating until the final stay of the court decision;
  • during the period of temporary reduction or interruption of the activity, without ceasing the employment relationship, for economic, technological, structural or similar reasons;
  • during the posting period;
  • during the period in which the competent authorities suspend the issuance of the opinions, authorizations or certifications necessary for the exercise of the professions.

From all the cases of the individual employment agreement suspension, the third is relevant from the perspective of the legal regime of the technical unemployment.

Parag. (3) of the same article provides for the exceeding 30 working days temporary reduction of the activity, the possibility for the employer to reduce the work schedule from 5 days to 4 days per week, with the corresponding reduction of the salary, until the situation which caused the reduction of the activity has been remedied, after a prior consultation of the union / employees’ representatives.

In this regard, the Constitutional Court emphasized by decision no. 383/2011 paragraph 2.6 the decision to reduce the work schedule is not an arbitrary one, but conditioned by economic, technological, structural or other similar reasons that exceed 30 working days, with the obligation for the employer to consult the employees’ union. Moreover, this appears as a measure of protection of the employee, compared to the solution of the dismissal for the same reasons.

B. The act by which it is ordered the suspension of the individual employment agreement

The suspension of the individual employment agreement is made by a decision of the management body of the company, which must include the reasons that led to the adoption of such a measure and the period during which it produces its effects, so that it cannot be questioned.

The decision of the employer to suspend the employment relationship is based as long as it is based on Decree no. 195/2020 regarding the establishment of the state of emergency on the territory of Romania and on the Emergency Ordinance no. 11/2020 regarding medical emergency stocks, as well as some measures related to quarantine.

Based on this generic decision, individual decisions regarding each individual employment agreement will be issued.


C. The term for which the individual employment agreement may be suspended

The term of suspension must be a determined one and may coincide with the period of the state of emergency set up at national level or may have another period expressly included in the suspension  decision.

The determined character of the individual employment agreement suspension results from the employer’s obligation to communicate both the start date and the end date of the suspension to the General Register of Employees (REVISAL), but also from the need for the employer to demonstrate that the suspension period it responds to the needs of the company and is not abusive, in the event that an employee would challenge the decision.

At the moment when the employer’s activity can be resumed, he will issue a decision to stop the suspension of the individual employment agreements suspension and recalls the employees to the workplace. The measure may be ordered even before the expiration of the suspension period provided for in the decision.

D. Allowance

During the period when the employer’s activity is reduced or interrupted, the employees involved benefit from an allowance that cannot be less than 75% of the basic salary corresponding to the occupied job. This allowance does not benefit to the employees of whom work schedule have been reduced, those will receive a reduced income.

According to O.U.G. no. 30/2020 for the amendment and completion of some normative acts, as well as for establishing measures in the field of social protection in the context of the epidemiological situation determined by the spread of SARS-CoV-220 virus, the allowance of 75% of the gross average income in case of suspension of individual employment agreements it is supported by the unemployment insurance budget, following the difference, up to the basic income corresponding to the job occupied by the employer.

To this end, the employer must be in one of the following situations:

  • discontinues its activity in whole or in part based on the decisions issued by the competent public authorities according to the law, during the emergency state decreed, and holds the certificate of emergency situations issued by the Ministry of Economy, Energy and Business, provided in art. 12 of the annex no. 1 to the Decree no. 195/2020 regarding the establishment of a state of emergency in the territory of Romania;
  • it reduces its activity due to the effects of the COVID-19 epidemic and does not have the financial capacity to pay all employees’ salaries; in this case the employer can benefit from the payment of the allowance for a maximum of 75% of the employees who have individual labor agreements active at the date of entry into force of the ordinance.

In order to prove the second situation, the employer must give a statement on his own responsibility, stating that he records a decrease in the revenues from the month preceding the submission of the statement, with a percentage of at least 25% compared to the average of the incomes from January-February 2020, and that it does not have the financial capacity to pay all employees.

The calculation, withholding and payment of income tax, state social security contribution and health social security contribution are made by the employer from the benefits received from the unemployment insurance budget.

The indemnity is subject to taxation and payment of compulsory social contributions, payment and statement term of tax obligations being 25, inclusive, of the month following the month in which the payment from the unemployment insurance budget is made.

In order to obtain the payment of the technical unemployment allowance, the employers must submit by electronic means to the County Employment Agency (AJOFM / AMOFM) Bucharest from the registered office of the Company, the following documents:

  • the request for the settlement of the allowance value for technical unemployment (annex no. 1 to the O.G. no. 30/2020);
  • the list of persons who will benefit from the technical unemployment benefit (annex no. 3 to O.U.G no. 30/2020).

E. Termination of the individual employment agreement on the initiative of the employee – resignation and on the initiative of the employer – dismissal, during the suspension of the individual employment agreement

The employee can unilaterally denounce any individual employment agreement at any time, without being obliged to justify his decision. In this case, the term of notice established by the law in favor of the employer no longer has its meaning in the context of reducing / ceasing the activity, the latter being able to renounce it.
Likewise, the employer has the right to summon the employee for dismissal, but must issue a decision in advance to terminate the individual employment agreement suspension.

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