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  • Tax & Legal nr. 31

Tax & Legal nr. 31

19 August 2020

Law no. 172/2020 for the amendment and completion of Law no. 16/2017 regarding the secondment of employees in the provision of transnational services

In the Official Gazette no. 736 from 13 August 2020 was published the Law no. 172/2020 for the amendment and completion of Law no. 16/2017 regarding the secondment of employees in the provision of transnational services, which entered into force on 16August 2020.

The present law clarifies:

-       the maximum period in which an employee can be seconded from the territory of Romania in case of a transnational secondment. Thus, an employee can be seconded for a limited period, but not more than 24 months;

-       the tax treatment applied to the allowance specific to the transnational secondment. Thus, it is more clear that the maximum non-taxable threshold of the allowance will be 2.5 times the level established by Government decision for the daily allowance for Romanian personnel sent abroad for temporary missions;

-       the remuneration applicable on Romanian territory and the remuneration applicable on the territory of a Member State of the European Union, other than Romania or on the territory of the Swiss Confederation, in case of a transnational secondment. Thus, seconded employees to Romania have the right to benefit from the minimum remuneration according to national legislation including bonuses for night working hour/ overtime/ public holidays etc., while employees seconded from Romania will benefit from all the constituent elements of remuneration in accordance with the laws of the State where they are seconded.

Seconded employees to Romanian territory also benefit for allowances or reimbursement of transportation, accommodation and meal expenses incurred by them when are required to travel to and from their usual workplace from Romania or if they are temporarily sent by their employer from their usual workplace to another workplace in Romania, in accordance with the applicable national legislation and/or collective working agreement. The same provisions apply in the case of employees seconded from the Romanian territory, in accordance with the applicable legislation of the host state.

If the effective duration of secondment exceeds 12 months, employers guarantee to the seconded employees, in compliance with the principle of equal treatment, all employment conditions applicable to them under national law and collective working agreements with general application, except:

a)    the procedures, formalities and conditions for concluding and terminating the individual employment contract, including the non-compete clauses;

b)    supplementary occupational pension schemes.

However, the period may be extended up to 18 months, by sending a motivated notification to the territorial labor inspectorate by the company no later than the day before the 12 months period has met.

The method of calculating the secondment period has been amended. Therefore, for secondment duration a reference period of one year from the start date shall be taken into account. The duration calculation will also take into account the periods in which the position was occupied by another employee in the provision of transnational services. If a seconded employee replaces another seconded employee and performs the same job task in the same job, the secondment duration shall be calculated by summing the periods of secondment of each of the employees concerned.

The provisions related to secondment allowance are amended to make it clear that the granted allowance during secondment is part of the remuneration, except the part which cover the secondment expenses (e.g. accommodation, transport and meals) for which the employer has the obligation to reimburse it to employees according with the national legislation applicable to the employment report.

The companies which secondee employees on the Romanian territory have the obligation to make available to the control bodies documents from which to result:

a)    the total amount of the remuneration applicable on the Romanian territory for which the employee will benefit during the secondment period, with the distinct highlighting of the specific secondment allowance;

b)    the secondment costs and their granting modality or their reimbursement, respectively how will be provided transport, accommodation or meals, as appropriate, in accordance with national law applicable to the employment report and/or national practices applicable to the employment report, respectively the employment conditions applicable to it.

The new provisions clearly specify that in case when the legislation and/or collective working agreements applicable to seconded employees to the Member State or the Swiss Confederation / Romania provide for more favorable working conditions, those regulations apply.

If the employee, employed by a temporary employment agency, is placed at the disposal of a user company established or operating in Romania and is seconded by the user company on the territory of another Member State, in the context of the transnational provision of services, he shall be deemed to be seconded by the temporary employment agency with which he is in a direct employment report. In this case, the user company must inform the temporary employment agency at least 30 days before the start of the activity in that State.

At the same time, if the employee who has been placed at the disposal of a user company by a temporary employment agency located on the Romanian territory must carry out his activity on the territory of a Member State, other than the one in which he normally works for the user company, in the context of the transnational provision of services by the user company, the employee shall be deemed to be seconded to the territory of that Member State by the temporary employment agency member with whom he is in an employment report. The obligation to inform the employee about the workplace changing lies with the temporary employment agent.

A series of sanctions are introduced for non-compliance with the obligations regarding the information of salaries/enterprises as mentioned above.

Within 60 days from the date of entry into force of this law, the methodological norms will be submitted for approval.