The economic environment can experience moments of uncertainty. Economic growth can be followed immediately by a downturn, and companies need to be prepared for this aspect.

The legislation offers quite a few solutions to entrepreneurs wanting to risk as little as possible in conditions of uncertainty. One of the usual practices is to use employees with fixed-term employment contracts, which leaves the freedom of the entrepreneurs to transform them or not into employment contracts for an indefinite period, depending on the performance of employees but also depending on the economic climate.

The form of the fixed-term employment contract, as in the case of a permanent contract, must be written. This is a condition of validity, the lack of a written form of the contract attracting its nullity.

The Romanian Labor Code transposes Council Directive 1999/70 /EC of 28 June 1999 on the framework agreement of the ETUC, UNICE and CEEP on fixed-term work. The peculiarity of the Romanian Labor Code is that it introduces additional conditions for concluding a fixed-term employment contract, aspects that the European Directive does not contain. These conditions, which are listed below, make the Romanian legislation more restrictive than the European one regarding fixed-term employment contracts.

Cases in which fixed-term contracts may be concluded

The Labor Code provides for the possibility for companies to hire people for a certain period, but only in certain cases, which are listed in Article 83:

• during the suspension of the employment contract of an existing employee,
• during the period of increasing the employer’s level of activity,
• for carrying out seasonal activities, as well as in other more special cases provided by law.

If the employment contract is concluded to replace an employee, it must contain the name of the employee it replaces and the job temporarily replaced.

Another interesting aspect of fixed-term work is that it does not allow replacing an employee with a suspended employment contract by replacing it with an existing employee, changing the term of his contract from indefinite to fixed-term and replacing the latter with another fixed-term employment contract. This phenomenon is called “cascade employment” and is illegal.

The jurisprudence of Romania shows that courts tend to reclassify fixed-term employment contracts into indefinite-term employment contracts, if it is found that the situation in which they were concluded did not exist in reality. The conclusion is that the provisions of Article 83 of the Labor Code regarding the limiting cases in which a fixed-term employment contract can be concluded must be thoroughly proven.

The logic of this article of the Labor Code is to provide short-term solutions in order to repair or prevent possible imbalances. During the controls carried out by the Labor Inspectorate over time, we noticed the discouragement of transforming this practice (usage of many fixed-term contracts) into a current one, however, if the legal provisions are respected, there are no sanctions that can be granted.

Duration of the fixed-term contract

An important aspect provided by the Labor Code, which is of interest to entrepreneurs, is the duration that these employment contracts can have. The general rule is that  these contracts may not exceed a maximum period of 36 months.

This period may be achieved thru one or more employment contracts are concluded, provided that the maximum number of fixed-term employment contracts that an employer can enter into with the same employee is 3 (three).

The ban on concluding more than 3 fixed-term employment contracts remains in force even if the period for which they are concluded is shorter than 36 months.

Obligations of the employer towards the fixed-term employee

The Labor Code provides for a series of obligations that the employer using a person with a fixed-term contract has. Among these we mention the obligation of the employer to inform the employee with a fixed-term contract about the vacancies or jobs that will become vacant and to offer equal conditions with those of the employees hired for an indefinite period.

Probationary period for fixed-term contracts

It depends on the duration of the employment contract concluded:

• for contracts under 3 months: 5 days;
• for contracts between 3 and 6 months: 15 days;
• for contracts over 6 months: 30 days in the case of executive positions and 45 days in the case of management positions.

Notice period for fixed-term contracts

The Labor Code does not provide for differences in the length of notice, both for dismissal and resignation, between a fixed-term and an indefinite employment contract, resulting the period of notice to be same in both cases.

Note: The text is valid on the date of its publication, is for guidance purposes and is an interpretation of the specialists of the company Cont Consulting, without intending to replace the legal provisions in force. We are not liable for any damages caused by the use of this material for legal purposes or as evidence in any dispute.