New internship program benefits for employers
July brought beneficial changes for employers, with several new laws being passed.
State benefits for employers hiring the unemployed, graduates, students and others.
A new Government Emergency Ordinance amends several pieces of existing legislation on occupation within the workforce, apprenticeships and retention of higher education graduates.
Companies will be eligible to benefit from State Budget entitlements, as follows:
(i) 2.250 lei/month, for a period of up to 12 months, when hiring graduates under an “undetermined period of time" contract;
(ii) 2.250 lei/month, for a period of up to 12 months, when hiring under a "undetermined period of time" contract unemployed persons over the age of 45, unemployed single parents, individuals who have been unemployed for over 12 months or in cases of hiring an NEET (a young person aged between 16-25 years who is unemployed, not enrolled in an educational institution and is not participating in any vocational/professional training). The duration of the employment contract should be at least 18 months in order for the company to be eligible for the benefit;
(iii) 2,250 lei/month, payable during the five years of qualifying for a pension which is not eligible for partial retirement funds during the employment period;
(iv) between 1,900 and 2,000 lei/month (equal to the value of the gross basic salary agreed in the employment contract) when hiring young people at risk of being socially marginalised and benefiting from a "solidarity contract" from the unemployment agency at the time and continuing until the expiry of such contract;
(v) 2.250 lei/month for the duration of an apprenticeship contract; and
(vi) 2.250 lei/month for the duration of a trainee contract.
Government Emergency Ordinance no. 60, dated 5 July 2018, on the amendment and completion of certain enactments in the labour force, was published in the Official Gazette of Romania no. 577 dated 9 July 2018, Part I and came into force on the date of publication.
A legal framework for internship has finally become a reality
Until recently, companies used a variety of agreements for training individuals without previous work experience, such as voluntary agreements, and these often presented pitfalls for employers from a legal and tax perspective.
With effect from July 2019, Romanian legislators approved a law on internship that aims to assist graduates, or very young individuals (aged 16 years and up), with the transition from graduation to work.
Under the new law, an intern will perform an activity for a determined period of time within a host-organisation (ie. a company). The aim of such an activity is to give interns an opportunity to apply their theoretical knowledge in practice, to improve their practical skills and/or gain new skills, abilities or competences, including familiarisation of the intern with the activities of the host-organisation.
Some key considerations regarding internship programmes are:
- the host-organisation should publicly announce the details of the internship, as well as the selection procedure, the general responsibilities, the schedule and time frame of the internship, as well as contractual terms such as pay, annual leave etc.;
- the internship contract should be signed, at the latest, on the day before the commencement of the internship programme and its clauses should be in line with the rights and obligations of the parties as specified in the internship law;
- the intern is entitled to an allowance of 50% of the minimum gross basic salary or more, prorated over the hours effectively performed and is only subject to income tax;
- interns may work a maximum of 40 hours per week. For interns under the age of 18, the maximum hours of work should not exceed 6 hours per day or 30 hours per week;
- the duration of the internship may be a maximum of 720 hours, within a time period of 6 consecutive months;
- interns can make up a maximum of 5% of company hires during a calendar year and, for companies with up to 20 employees, a maximum of 2 internship contracts can be entered into at the same time;
- the employer may receive a pay out from the State equalling 4,586 lei, once an employment agreement has been in effect for a minimum of 24 months. This employment agreement must have hired an intern as an employee, no more than 60 days after the end of their internship programme;
- during the internship, the intern may only perform activities provided for in the internship contract and under the direct supervision of an advisor within the host-organisation;
interns may not participate in activities specific to unskilled workers;
- the host-organisation is responsible for completing and sending the relevant information from the internship contract to the Registry of Internship, under the territorial agency for workforce occupancy, by the last working day prior to the commencement of the internship programme; and
- following the completion of the internship programme, the parties involved may enter into an employment contract.
- Law no. 176/2018 on internship was published in the Official Gazette of Romania no. 626 dated 19 July 2018, Part I and came into force on 19 August 2018.
Tickets/Vouchers for employees
A recently passed law, effective from 1 January 2019, states that all value tickets which Romanian employers grant their employees are to be grouped within a single enactment. These expenses are tax deductible for employers.
The following value tickets may be granted to employees either electronically or in printed form: meal tickets, gift vouchers, nursery vouchers, cultural tickets and holiday vouchers.
The costs of obtaining tickets are borne by the employer and there are several rules governing each ticket, such as when they can be granted, the maximum value of a ticket and validity conditions to name a few.
Law no. 165/2018 on granting value tickets was published in the Official Gazette of Romania no. 599 dated 13 July 2018 and came into force on 1 January 2019.