Romania: International Secondments - How To Apply The Law

Last Updated: 4 November 2013
Article by Amalia Surugiu and Oana Manuceanu

Employee's mobility is on many employers' agenda for a wide number of reasons, including limited qualified resources and a need to access new labour markets, requirements for experience exchange, focus on encouraging cultural diversity, exposure to the global market, and entering new territories.

Romanian companies are no exception to this rule. While the trend at the beginning of the 2000's was to have inbound assignees, during the past few years the phenomenon has reversed: Romanian employees are being assigned to work abroad.

From the various options used for formalizing such assignments, we address the legal issues involved in international secondments, the approach commonly used when temporarily assigning an employee to work for the benefit of another employer, either for a fellow Group company or a third-party. This analysis addresses the contractual arrangement, working rights, and salary rights associated with international secondments.

These issues are presented based on the questions a Romanian employer will face deciding to second an employee: are the contractual provisions compliant with the host country/EU legislation? How should Group policy be implemented in the secondment documentation? Who is going to bear the secondment-related costs and what are the tax liabilities that have to be settled? How is the employee's social security protection maintained? What are the rights of the employee? The employer?

Contractual arrangement

Within the European Union, transnational secondments (postings) are regulated by the 96/71/CE Directive (96 Directive), which was implemented in Romanian legislation with reference to EU employees seconded to work in Romania (inbound assignees). No specific provisions were introduced for Romanian employees seconded to work abroad, the general provisions in the Labour Code (applicable for secondments between Romanian employers) being the only ones regulating these situations. Given this general framework, employers interpret and apply the legal provisions in very differing manners in practice.

Even with the lack of specific legal provisions governing secondments from Romania to other countries, Romanian firms should not to just strictly follow the general approach set by the Labour Code, but should also give consideration to potential implications in the broader context detailed below.

Secondments between Romanian employers usually imply that the employment contract between the sending employer and the employee is suspended and that salary payments are implicitly transferred to the host employer; in the case of international secondments, keeping the home employment status active can have certain advantages.

However, as the law is silent with regard to specific regulations applicable for outbound assignments from Romania, employers often use the common structure related to domestic secondments and choose to suspend the employment contract. Such a decision has implications in terms of applicable social security legislation for secondments to other EU countries, as set by the EU Regulation 883/2004. As a direct consequence of the suspension, the employee would no longer qualify for a coverage certificate (A1 form)1 and becomes subject to the social security legislation of the host country. Although in most of the EU countries maintaining an active employment contract in the home country is not a condition for obtaining an A1 form, a different rule applies in Romania: the Romanian employer has to continue paying the seconded employee's salary and must make the social security contributions, which implies an active employment contract.

Another element to be considered is the duration of the secondment. Under Romania's Labour, Code the duration of domestic secondments is limited to one year. Secondment can be extended further for 6-month periods for objective reasons and on the basis of the employee's consent.

This rule differs from that in the Regulation 883, which stipulates an initial secondment period of 24 months. Thus, if an employer wants to second the employee for two years but still does not want to become exposed to any risk for the employee challenging such decision, the administrative procedure for the A1 form would need to be carried out twice, once for obtaining the document and again for extending it.

Employment authorization

Another area in which the practices and regulations applicable in the Western EU countries and those in Romania differ concerns employment authorization (or working permit). If a Romanian employer recruits a foreign (non-EU citizen) individual whom it intends to hire and afterward seconds him/her to work abroad for another company within the Group, employment authorization is required in Romania despite the fact that the individual will not work on Romanian territory. This is because Romanian law assimilates the employment authorization with the conclusion of a Romanian employment contract.

In some Western European countries, employment authorizations are only required if work is performed on that country's territory. Although it may seem a minor issue, it may influence whether a Group of companies decides to set up an employment company in Romania. Many multinational companies that have a high degree of transnational employee mobility opt to have such an employment company for ease of administration.

Salary rights

Another challenge for Romanian employers, especially when they are part of a multinational Group, lies in designing the salary package. When a Group company's international policy is to apply a tax equalization for the employees on secondment, special care should be paid when implementing this in the Romanian contract/addendum to the contract.

A tax equalisation policy means that the employee is protected from the tax costs in the various jurisdictions where he/she works and the same net salary is guaranteed by the company for the assignment duration as if the employee would have remained in their home country. Implementing such policy is equivalent to a hypothetical tax being withheld from the employee's salary, namely the tax usually due in their home country. This is just a convention for assessing the employee's net in-pocket earnings. This hypothetical tax is usually used by the employer to finance the fiscal costs in the host country.

Formalizing this rule in a Romanian employment contract is difficult and risky, considering the restrictions in the labour law, which does not allow any withholding from employee's salary except for strict situations and conditions set by the law. Any other withholding can be easily challenged by the employee, as well as by the labour inspectors. Moreover, the salary in the employee's labour contract must be a gross amount.


The legal framework in Romania has specific limitations that prevent employers from applying certain practices related to international secondments that are well known in the Western European countries. Employers should pay attention to structuring and documenting the terms of international secondments, considering both the applicable EU Directives and Regulations, as well as domestic legislation and practice.


1 The A1 form allows, as a matter of exception, for the employee to remain subject to the social security legislation of the home country during the period of temporary secondment to another EU member state.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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