Consequences of the pandemic on employment relationships

In the current context, the whole of humanity is affected by the SARS-CoV-2 pandemic, which generates borderline situations to which the authorities of each country react differently, adopting their own strategies to mitigate its spread and the adverse consequences it could have on citizens.

The state of an emergency involves measures of a political, economic, social, and law and order nature, affecting in practice most individual areas of concern to citizens, to the detriment of the greater interest of the ‘common good’.

According to Article 50 para. (1), lit. f, for the entire period of force majeure, the individual employment contract is suspended by law; thus, the effects of this suspension concern both the employee’s work and the employer’s obligation to pay wages.

In this case, the natural question is whether the pandemic caused by the coronavirus is indeed a case of force majeure likely to lead to the suspension of the individual employment contract. As we pointed out in the article concerning The effects of the spread of SARS-CoV-2 on contract performance, force majeure is assessed on a case-by-case basis according to the specific features of each situation.

Force majeure leads to a condition in which the person obliged to act based on an individual employment contract, whether employer or employee, is objectively unable to fulfill his obligation. In these circumstances, the omission in question is not the act of that person, but the result of a cause beyond his control, which is why force majeure excludes his fault, even if the failure to fulfill obligations may have negative repercussions for the parties.

Consequently, to the extent that the work undertaken under an individual employment contract cannot be carried out because of infection with the COVID-19 virus or imminent risk of illness, this constitutes force majeure, leading to the automatic suspension of the contract.

Emergency Ordinance no. 30/2020, published in the Official Gazette on 21.03.2020, established the conditions under which employers affected by measures to interrupt or reduce activity due to the pandemic may implement a first option for suspending individual employment contracts at the initiative of the employer: technological unemployment subsidized by the Romanian state at a rate of 75% of the average gross salary.

What does technical unemployment involve, and under what conditions can employers benefit from this measure?

The following needs must be met cumulatively:

• total or partial suspension of activity in accordance with decisions issued by the competent authorities or reduction of activity due to the effects of the pandemic. Employers may benefit from the payment of the allowance at a maximum of 75% for employees who, on the date of entry into force of this Ordinance, have active individual employment contracts. Payment of the allowance will be made based on an affidavit stating that the employer has experienced a decrease in receipts compared to the previous month by at least 25% compared to the average tickets for the period January-February 2020 and that it is financially unable to pay the salaries of all employees under these conditions. Concerning the allowance, social security contributions, health insurance contributions, and income tax are paid. However, no insurance contribution is levied for work as provided for in Article 220 of the Tax Code.

• holding a certificate of emergency status provided for in Article 12 of the Decree of the President of Romania No 195/2020, issued by the Ministry of Economy, Energy, and Business Environment, according to the methodology approved by order.

What do I have to do to benefit from technological unemployment?

Firstly, we are considering issuing the decision to suspend individual employment contracts under Art. 52 para. 1 lit. c of the Labour Code – for employees who will become technically unemployed. This decision will be communicated to the employee, and a registration number will be given.

Secondly, a file will be drawn and sent by e-mail to the County Employment Agency.

Other important issues:

• the allowance is paid from the unemployment insurance budget
• the allowance is subject to taxation, and compulsory social security contributions
• the calculation, withholding, or payment of the tax is made by the employer from the benefits received from the unemployment insurance budget
• no labor insurance contribution is due for unemployment benefit

avocat Bogdan Blaj