Subsidies, aid and good intentions in the package with bureaucracy, confusion and incompetence of the system

The Romanian state has a lot of concerns to help the private sector, which is to be appreciated. In particular, we refer to the facilities it offers to companies to stimulate the employment and/or maintenance of employees.

Unfortunately, the whole state, in its dedness, proves that it fails to put into practice all these regulations which are thus merely declarations of good intentions.

Discouraged by the lack of enforcement rules, excessive bureaucracy, confusion in interpreting provisions and contradictions even between state institutions, entrepreneurs and private managers often give up implementing the law (requiring the state to respect its own rights).

It would be normal for the state, through paid employees, to come and inform, ask companies to implement the measures ordered by law, to facilitate the implementation of such decisions. That would be normal. As this is unfortunately not the case, the role of consulting companies becomes all the more relevant.

So let’s go back to facilities. We have drawn up a list, for interested employers, with the current subsidies, aids and facilities. We invite you to go through it and contact us if you want details.

• As there are more and more registered unemployed in the recent period, the state subsidizes private companies to hire long-term unemployed. This implies the permanent employment of the long-term unemployed. The provisions of Law 76/2002 apply in this case.

The advantage: Employers receive monthly, from the date of signing the agreement with the employment agency, over a period of 12 months, for each employee of these categories, an amount of 2.250 lei, with the obligation to maintain the employment/service relations at least 18 months after the date of employment. These are unemployed persons who are registered at work agencies for more than 12 months in the case of persons aged 25 or over a period of six months, in the case of persons aged between 16 and until reaching the age of 25

• The unemployed, who are the only supporters of single parent families, are also supported by the subsidy granted to the companies that employ them. The granting of the subsidy involves the employment of this category of unemployed for an indefinite period, based on Law 76/2002.

The advantage: Employers receive for 12 months a sum of 2.250 lei for each employee of this category, with the obligation to keep their employment or service relations for at least 18 months from the date of employment.

• Subsidies for the employment of the unemployed over 45 years old and for the employment of the unemployed close to retirement. Law 76/2002 provides that those employing persons over 45 years of age and unemployed persons who, within five years from the date of employment, meet the conditions to claim partial/old-age early pension, receive monthly support, during the period of employment, until the date on which the respective conditions are fulfilled, of an amount of lei 2.250 per person.

A number of facilities are also granted to the youngest, as follows:

• The organization of apprenticeship schemes allows employers to benefit from a grant for the conclusion of apprenticeship contracts. The apprenticeship law no. 2792005 stipulates that the employer receives, upon request, a sum of 2.250 lei per month from the unemployment insurance budget within the limit of the funds allocated to him
• For higher education graduates, the state provides employers with a grant for traineeships. This is reflected in the conclusion of a traineeship contract concluded in accordance with Law No 335/2013. The advantage for the companies that sign such a contract is the granting, on request, during the period of the traineeship contract, of a sum of 2.250 lei per month from the unemployment insurance budget, within the limit of the funds allocated to this destination.

But if you hire graduates of some educational institutions on an indefinite basis, the subsidy provided for by Law no. 762002 will count on the monthly grant of 2.250 lei per person per 12 months for each graduated school.

• A newer facility targeting a particular category is the grant for the employment of NEETs. This involves the employment of people aged 16 to 25 who are not in employment, are not in education or are not in vocational training. The applicable Regulation is Law 76/2002. The advantage is that the employers receive monthly, from the date of signing the agreement with the agency for a period of 12 months, for each employee of these categories, an amount of 2.250 lei, with the obligation to maintain the employment or service relations for at least 18 months.
• Clearly, the concern for the employment of young people at risk of marginalization who are beneficiaries of solidarity contracts comes in the package with the subsidy offered to employers who, on the basis of employment contracts, benefit each month for each employee in this category from an amount equal to the basic salary fixed at the time of youth employment, but no more than 2.000 lei, until the duration of the solidarity contract expires. We remind you that according to Law no. 76/2002, they are young people at risk of marginalization, those who:
  • is in or coming from the child protection system;
  • have disabilities;
  • they have no family or families whose families cannot maintain them;
  • have dependant children;
  • have served one or more custodial sentences;
  • they are victims of human trafficking.
• Special rules shall also be maintained for the employment of persons with disabilities. In practice, the state provides subsidies to employers who, in relation to the number of employees, have fulfilled their obligation under the law to work for disabled people, as well as to employers who do not have this legal obligation but who employ persons with disabilities indefinitely. Law 76/2002 stipulates that employers receive a sum of 2.250 lei per each month for a period of 12 months, with the obligation to keep their employment or service for at least 18 months.
• Important help for companies that organize admission programs is regulated by Law No 176/2018. The subsidy for employed dormitories consists in granting a fixed amount of 4.586 lei (almost 1.000 euros) to companies that employ their Internship for at least two years.

We note, however, that these subsidies cannot be combined in the same person. For example, the grant for apprentices, for trainees and for employed internals. Or the incentives under Law 76/2002 are not cumulated with the partial settlement of the salaries of certain unemployed employees according to the OUG 220/2020.

The coronavirus pandemic has put the state into tough tests. Once it had to intervene by supporting private companies in the effort to keep employees, but also by encouraging firms to hire some of the unemployed victims of this harmful period. Below is a summary of some of the measures taken during the crisis to support the economy and to increase or maintain employment:

• The OUG 220/2020 introduced partial settlement of certain unemployed employees’ salaries between 1 January and 1 September 2021. The state will pay 12 percent (maximum 2.500 lei) of their wages for 50 months. The rules shall apply to persons over 50 years of age whose employment relationships have ceased for reasons not attributable to them during the period of emergency or alert status, people between 16 and 29 years old and romanians made redundant abroad in 2020 of the two age categories mentioned. The condition is for these people to be officially registered as unemployed. The amount given by the State is not cumulated, for the same person, with the incentives in Act 76/2002.
• A similar rule is given for seasonal employment. The State partially pays the salaries of seasonal workers for a period of three months, at the choice of the employer.

The Regulation applies to employees who work for three months at the most, while employers can ask for the settlement of 41,5% of the gross wage, but no more than 41,5% of the average gross wage gain in 2020, that is 2.253 lei. The facility provided for by the 132/2020 OUG is valid until 30 June 2021.

• The subsidisation of the technical unemployment is another measure introduced by the OUG 30/2020 and the OUG 120/2020.

In all areas of activity where there are business restrictions due to the coronavirus epidemic (including employers with suspended activity due to coronavirus infections), the state continues to subsidize, upon request, the technical unemployment benefits paid by employers to suspended employees. The money is requested monthly for the previous month. The allowance is 75% of the suspended employee’s gross salary, but the state covers no more than 75% of the average gross wage in 2020, that is no more than 4.072 lei. The measure is valid until 30 June.

• The allowance Kurzarbeit regulated by OUG 132/2020.

The Kurzarbeit program is applicable in companies that have to temporarily reduce their activity due to the establishment of an alert, emergency or siege state, By up to 50% of the previous program in individual employment contracts, state aid consists of 75% compensation of the difference between full wages and reduced wages for employees who are reduced working time. The provision is valid from 30 June 2021.

• A measure applicable to areas with restrictions also provided for by the OUG 132/2020 is partial settlement of the remuneration of the day’s service.

For three months of their choice, for day-to-day workers in areas where the epidemic is stopped or reduced, employers can ask for 35% of their daily remuneration to be paid.

• Partial settlement of wages for unemployed employees in the period from 1 January to 1 September 2021 provided for by the OUG 220/2020.

It is about the monthly settlement for 12 months of 50% (maximum 2.500 lei) of the wages of unemployed employees between January 1 and September 1, 2021. This category includes persons over 50 years of age whose employment relationships have ceased for reasons not attributable to them during the period of emergency or alert, persons between 16 and 29 years of age, including romanians made redundant abroad in 2020 out of the two age categories mentioned.