
SITUATIONS. SANCTIONS FACED BY EMPLOYERS
Undeclared labor, also known as “munca la negru” in Romanian, represents a phenomenon that contemporary society grapples with, bearing negative consequences for both employees and the state budget. It manifests in various forms, involving the failure to report an employee’s activity to authorities, as well as the partial disclosure of such activity.
As Romanian legislation did not previously provide a definition for undeclared labor, penalizing only the act of hiring a person without concluding a written individual employment contract before the commencement of activities, the national legislation underwent adaptation to combat this phenomenon. Urgent Ordinance no. 53/2017 amending the Labor Code was subsequently adopted for this purpose.
According to Article 15¹ of the Labor Code, undeclared labor includes:
a) hiring a person without concluding an individual employment contract in written form on the day prior to commencing activities;
b) hiring a person without submitting the employment relationship to the general register of employee records no later than the day before commencing activities;
c) hiring an employee during the period of suspension of their individual employment contract;
d) hiring an employee outside the working hours stipulated in individual part-time employment contracts.
With the regulation of situations constituting undeclared labor, sanctions for violating the aforementioned legal provisions were also established and clarified, as follows:
According to Article 260(1) of the Labor Code: “The following acts constitute offenses unless committed under such conditions as to be considered, according to the law, crimes:
e) hiring one or more persons without concluding an individual employment contract, according to Article 16(1), with a fine of 20,000 lei for each identified person, not exceeding the cumulative value of 200,000 lei;
e¹) hiring one or more persons without transmitting the elements of the individual employment contract to the general register of employee records no later than the day before commencing activities, with a fine of 20,000 lei for each identified person, not exceeding the cumulative value of 200,000 lei;
e²) hiring one or more employees during the period in which they have their individual employment contract suspended, with a fine of 20,000 lei for each identified person, not exceeding the cumulative value of 200,000 lei;
e³) hiring one or more employees exceeding the duration of working hours stipulated in individual part-time employment contracts, with a fine ranging from 10,000 lei to 15,000 lei for each identified person, not exceeding the cumulative value of 200,000 lei;
e⁵) providing a net salary higher than that indicated in the salary payment sheets and in the monthly declaration regarding the payment obligations of social contributions, income tax, and the nominal list of insured persons transmitted to tax authorities, with a fine ranging from 8,000 lei to 10,000 lei for each identified employee in this situation, not exceeding the cumulative value of 100,000 lei;
f) performing work by a person without concluding an individual employment contract, with a fine ranging from 500 lei to 1,000 lei.
The finding of offenses and the imposition of sanctions are carried out by labor inspectors. The employer can resume activities only after paying the fine and rectifying the deficiencies that led to the suspension of activities, such as concluding the individual employment contract, transmitting the elements of the individual employment contract to the general register of employee records, or, as the case may be, terminating the suspension of the individual employment contract and presenting documents proving the payment of social contributions and income tax for the period in which undeclared labor was performed.
Resumption of activities constitutes a crime and is punishable by imprisonment for a period of 6 months to 2 years or a fine.
It is considered a crime to hire a person in illegal residence in Romania, knowing that they are a victim of human trafficking (cumulative conditions). The act is punishable by imprisonment for a period of 3 months to 2 years or a fine.
An important aspect to note is that the following constitutes a crime and is punishable by imprisonment for a period of one month to one year or a criminal fine (Article 264 of the Labor Code):
a. the act of a person who repeatedly establishes salaries below the level of the gross minimum wage guaranteed by law for employees under individual employment contracts;
b. the unjustified refusal of a person to present legal documents to competent authorities, with the aim of obstructing checks regarding the application of general and special regulations in the field of labor relations, safety, and health at work, within a maximum of 15 days from receiving the second request;
c. any form of obstruction by competent authorities from entering, under the conditions provided by law, premises, enclosures, spaces, lands, or means of transport used by the employer in carrying out their professional activity, in order to conduct checks regarding the application of general and special regulations in the field of labor relations, safety, and health at work.
Author: Atty. Ionut Sfetcu