Tips and tricks for labor disputes. Remedies applied to the crucial problems identified by our practice
Year 2020 and year 2021 showed us that in most of the cases where companies deal with financial difficulties, the first area where they cut down on spending is on staff expenditure, for the purpose of setting the business back on track. This also explains the fact that in the past 2 years, in our dispute resolution department there has been an increase in the activity of the teams specialized in labor disputes and this tendency does not seem likely to change any time soon.
The most frequent cases that reach the court are the ones concerning collective redundancies, or redundancies for reasons not attributable to the employee. However, there are also a significant amount of cases that concern redundancies for disciplinary reasons. In most of the instances, the cause of these disputes is the failure by the employer to comply with the procedural requirements specific to these types of redundancies, or the employee’s opinion that the redundancy was made based on subjective reasons (related to his or her person) and not by the will of the employer to restructure the business. In our activities, we have been faced with a considerable number of dismissal decisions issued with the nonobservance of the mandatory legal provisions. Although it might seem hard to comprehend as the employer is the most likely party to have access to the support of professionals in the employment and human resource field, it is quite common to see dismissal decisions affected by flaws for different reasons (an attempt to speed up the process of dismissal, the refusal of the management to accept the point of view of the qualified HR and legal advisors, wrong computation of terms).
Therefore, in most of the cases, the matter that lies at the root of cancelling the dismissal decision by the specialized courts for the settlement of labor disputes is related to the activities performed prior to the issuance of the dismissal decision or the way in which the dismissal decision is drawn up (which often does not fully and in an accurate way show the reasons that led to the dismissal).
Thus, it is useful to determine from the outset whether the procedures and formalities established by the Labor Code were strictly observed, because otherwise any formal error that affects the act issued by the employer can lead to the cancellation of the dismissal decision in court, even if all the other aspects of the procedure were followed accordingly.
The courts which deal with labor disputes are particularly careful to consider issues like: compliance with the minimum notice period, compliance with the limitation period for the issuance of a sanction, the existence of all mandatory particulars provided by the Labor Code for the content of the sanction decision and the compliance with all internal procedures prior to the measure.
A particular feature of employment law, as compared to the other areas of law, is the fact that if at the time of signing the individual employment contract, both parties (the employer and the employee) are in equal positions, then following the execution of the contract, the employee becomes subordinated to the employer, therefore becoming the weaker party to the contract.
On this basis, the law establishes the fact that in labor disputes, irrespective of the position that it holds on the case, the employer is the party that has the burden of proof (art. 272 of Law no. 53/2003 regarding the Labor Code). This creates a rebalancing at the procedural level of the unequal positions that the parties to the individual employment contract have.
Moreover, with regard to the resolution of the labor disputes, the court, which in other types of disputes is bound to observe the principle of equality of the parties, is playing a much more active role than in other types of litigation, precisely in view of the fact that the employee is the weaker party in the legal employment relationship.
Another aspect of the rebalancing of the unequal footing that the parties to the individual employment contract have, in the execution of the contract, is the exemption from the judicial stamp fee in labor disputes.
Next, we will show some of the problematic aspects we have dealt with when representing our clients in labor disputes. We will deal first with a number of practical issues of interest, specific to dismissals ordered as a result of disciplinary actions, then we will refer to certain problematic issues concerning redundancies ordered for reasons not attributable to the employee, in order to finally note that in practice, certain problems can be common to the two types of redundancies that have been approached in this article.
A. Mistakes made by employers in applying disciplinary sanctions. The role of the court.
With regard to dismissals ordered for disciplinary misconduct, we have recently experienced the omission of the specification of the date/length of time during which the disciplinary offense was committed, in the circumstances in which there had been several disciplinary offenses committed within a longer period of time.
Article 252(2) of the Labor Code lists 6 (six) mandatory requirements, which must be included in the dismissal decision, the failure of including any of these mandatory requirements resulting in the nullity of that decision. Although there is no explicit mention among these requirements of the obligation to include the date of the disciplinary misconduct, according to case-law, this is equivalent to the absence of the description of the factual situation.
Another issue we are often faced with is the reassessment of the disciplinary sanction by the court vested with the judgment of the challenge. It is useful to note that although the employer has, according to labor law, the prerogatives of disciplinary action, under a judgment passed by the High Court of Cassation and Justice on an appeal in the interest of law, the Supreme Court has stated that the judge solving labor disputes shall have the right of assessing the seriousness of the sanction and may order a lighter sanction than that adopted by the employer.
B. The difficulty of proving the real and serious character of the reorganization by eliminating positions
As regards the dismissal decisions issued for reasons not attributable to the employee (reorganization), one of the flaws in the collective dismissal procedure implemented by the employer is the absence of notification during the consultations with the Trade Union or with employees' representatives, the Territorial Labor Inspectorate and the Territorial Employment Agency.
Another issue that generates problems in practice and which we have encountered on several occasions is the way in which the duties of the redundant position migrate to other jobs in the organizational chart of the employer. A formal disappearance of the job from the company organizational chart is not sufficient to meet the conditions applicable to dismissal for objective reasons, because the reorganization must be based on an analysis aimed at finding solutions for improving the work activity and making the work more efficient/reducing costs.
Also, with regard to the decisions to abolish positions, there have been situations in practice, when the courts have analyzed the economic consequences of the decision to abolish a job, concluding that it is not legal to dismiss the employee due to reorganization reasons, because the hiring company does not have financial losses, but they are making a profit in that activity. In our opinion, it is wrong for a court to interfere and censor this prerogative of the employer to reorganize its business, based on the fact that the company has no loss or does not have solvency and cash flow problems. Our view, confirmed by some courts, is that even a fall in profit margin/profitability is a sufficient argument for a company to order the abolition of some jobs in the organization chart.
In practice, we have also encountered problems caused by giving shorter notice periods than the minimum period contractually agreed, followed by the communication of an addendum indicating the correct period of notice. In the respective case, we have managed to “save” the dismissal decision by taking advantage of a decision given by the High Court of Cassation and Justice, on an appeal in the interest of law, which states that what is essential is that the employee actually be given the correct notice period, irrespective of the formal aspects mentioned in the deeds issued by the employer.
C. Other issues identified in labor disputes
Beyond the above, certain issues often arise in labor disputes, regardless of the grounds of the dismissal decision (disciplinary or for reorganization grounds).
A first point to consider is the question of paying overtime. It is quite common, for the employee to challenge in court the dismissal decision and to ask also for the payment of overtime. Therefore, the employer should pay particular attention to the record of overtime and the proof of payment for supplementary work, because, in particular in the period following the termination of the individual employment contract, the employee is trying by judicial means not only to obtain the recognition of the illegality of the dismissal – where that is the case – but also the payment of the salary rights, to which the employee considers himself or herself entitled and in respect of which he or she considers these have not been granted.
Firstly, the employer must implement an appropriate timesheet system, because aside from the fact that in labor disputes the burden of proof lies with the employer, according to the provisions of Article 119(1) of Law No 53/2003 of the Labor Code, the employer is obliged to keep at work, records of the daily working hours worked by each employee, with an emphasis on the start and end hours of work.
Also on this matter, it is important to establish clear rules in the Internal Regulations under which the employee will perform additional work, whether the initiative on providing supplementary work comes from the employee or from the employer.
Secondly, on the issue of disciplinary dismissal and dismissal for reasons not attributable to the employee it is essential that the employer has a clear and consistent strategy when choosing one of these two types of dismissal. Thus, if according to the Labor Code, the individual employment contract and the internal regulations, the employer has sufficient grounds to order dismissal for disciplinary reasons, it is wrong to choose the solution of dismissal by abolishing the position. This is because, whenever there is a “mix-up” of the reasons that led to dismissal, the specialized court in labor disputes will try to determine the real reason for the dismissal. And if the reason for the termination of the individual employment agreement is unclear, or mixed reasons are invoked by the employer, which circumscribe both cases of dismissal, doubts arise as to the real reasons for the dismissal.
Another issue of interest, in many legal disputes concerning the legality of dismissal, is the issue of moral damage which, as a general rule, employees are asking for when filing the challenge against the dismissal decision, citing moral harassment in the workplace. Legal practice constantly notes that termination of an individual employment agreement by dismissal naturally implies a certain degree of moral suffering which will be borne by the employee. However, exposure of the employee to this inherent moral distress does not automatically mean the right to compensation for the employee's moral injury, for this purpose it is necessary for the employee to prove that he has suffered such damages (as an exception to the general rule on burden of proof), and to also quantify the damage. What is essential is that, in proving the supplementary claim on the obligation of the employer to pay moral damages, witness evidence is admissible, which both the employee - who tries to prove the existence, (possibly) the extent of the moral damage and the causal link - and the employer (e.g. to prove that the moral distress has had other causes) can use.
As a conclusion with regard to the above, we consider that for the employer, the preparation of dismissal procedure must be sound and guided by employment law professionals, whether they are part of the human resource department, the legal department or external lawyers, because the financial exposure of the employer, on the assumption of the upholding of the claim brought by the employee (and of the finding of the illegality of dismissal) is relatively high. That is because, most often the employee requests not only the cancellation of the dismissal decision, but also his or her reintegration, with the obligation of the employer to pay to the employee all the salary rights, computed from the time of dismissal until the time of actual reintegration, but also legal costs (both the legal costs incurred by the employer and the employee) and other possible additional claims (such as moral damages). Thus, depending on the amount of the salary and of the other rights to be paid to the employee and depending on the length of the dispute, the amounts to which the employer may be liable for at the end of the trial may be significant.
Or, the employer's objective, when laying off for reasons not attributable to the employee – in general, that of optimizing work and reducing staff costs – will not only not be achieved (if dismissal is not in accordance with the legal requirements), but, on the contrary, the company will incur costs much higher than the amount the employer had hoped to save as a result of such dismissal. Besides, we must not forget the damage to the corporate image and the precedent that will be involved in the loss of such a labor dispute. We have met clients for whom, beyond the financial aspect, the loss of the labor dispute in court would have been a significant problem for their corporate image in the market and in the employees' perception of the management.
Kindly note that the English text is not a full translation but a summary of the most important points in the Romanian original.
 An appeal in the interest of law is a judiciary procedure by which the Supreme Court of Justice (the High Court of Cassation and Justice, in the Romanian legal system) solves a disputed matter concerning the interpretation of the law, most oftenly when the caselaw of the courts is contradictory (when the courts give different interpretations to one and the same legal provision). After a decision is rendered in an appeal in the interest of the law, the interpretation which has been accepted by the High Court of Cassation and Justice becomes compulsory for all courts, in all pending or future litigations concerning the interpretation of the said legal provision.