Legal & Tax Updates

NNDKP Employment Flash No.4/2024 – Latest news in the labor law field

Amendments to the Labor Code to transpose the EU Directive on adequate minimum wages

Law no. 283/2024 on the amendment and completion of normative acts, for the establishment of adequate minimum wages was published on November 14^th, 2024, in the Official Gazette Part I no. 1139 (the „Law”).

The Law mainly amends the Labor Code, thus transposing Directive (EU) 2022/2041 on adequate minimum wages in the European Union.

Thus, the most important addition brought by the Law is the new legal framework for establishing the procedure for application of the mechanism for establishing and updating the minimum gross base salary guaranteed in payment.

This procedure mentioned by the Law is approved by Government Decision and establishes the assessment of the adequacy of the minimum gross base salary, depending on its share in the average gross wage and includes the following:

• the modalities for setting and updating the minimum gross base salary level guaranteed in payment;
• the criteria for setting and updating the minimum gross base salary including at least the following elements: (i) the purchasing power of the minimum wage, taking into account the cost of living; (ii) the general level of wages and their distribution; (iii) the rate of wage growth; and (iv) the long-term national productivity levels and trends;
• the national statistical indicators communicated by the National Statistical Institute and the National Commission for Strategy and Forecasting related to the criteria set out in points b) and d);
• the set of annual indicators for monitoring and evaluating the impact on the economic and social environment;
• the method to carry out the supporting analyses and monitor the evolution of the minimum gross base salary guaranteed in payment, according to the indicative level, between 47% – 52%, of the share of the guaranteed minimum gross base salary in the average gross earnings, considered as a benchmark for the assessment of adequacy.

Moreover, it presents and clarifies the concepts of “minimum gross base salary” which is the minimum amount to which employees are entitled for the work performed, established by normative act or by collective labor agreement and “minimum gross base salary guaranteed in payment” which is the amount established annually by Government Decision.

In this regard, it is stipulated that the level of the minimum gross base salary per country guaranteed in payment, corresponding to the normal working hours, shall be established and updated on the basis of the procedure for the application of the mechanism for establishing and updating the minimum gross base salary per country guaranteed in payment and shall apply starting January 1^st of the following year.

Also, according to the Law, the fines for failure to pay the minimum salary established by normative act or collective labor agreement increase significantly, establishing a fine of RON 3,000 to RON 5,000 for each person identified in this situation, with a maximum fine of RON 200,000.

Note that the provisions of the Law will be supplemented by a future Government Decision that will provide the concrete mechanism for establishing and updating the minimum gross base salay in the country.

The Romanian version of this newsletter is available here.