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Costs of dismissal in Romania, among the lowest in Europe - Deloitte survey

Costs of dismissal in Romania, among the lowest in Europe – Deloitte survey

Romania counts among the countries with the lowest costs of dismissal for employers in Europe, either due to individual or economic reasons, according to the fourth edition of the International Dismissal Survey published by Deloitte Legal, represented in Romania by Reff & Associates.

The analysis compares six costs of dismissal in 45 countries. The survey data represents three separate cases with different seniority and remuneration packages.

“Our survey shows that the costs of dismissal in are generally lower than in other countries and are not influenced by the variable seniority. An explanation for this is found in the provisions of the Romanian Labor Code, which makes no distinction in the dismissal conditions due to seniority,” said Florentina Munteanu, Partner and head of the employment law practice at Reff & Associates. “Many employers have regulated dismissal conditions within collective bargaining agreements and from our experience we can confirm that seniority is a variable influencing the severance package. However, such agreements are of limited applicability (at employer or sector of activity level), therefore we cannot consider this practice as generally applicable at the level of employers in Romania.”

According to Raluca Bontas, Partner Global Employer Services Deloitte Romania, the computation base is an explanation for which Romania ranks with lower dismissal costs in the case of the employees with medium pay, as the survey shows.

”Besides the ranking, one has to also look for how dismissal is translated into local legislation of the countries surveyed, which varies a lot,” Bontas added.

What is also interesting to see from the results of the survey is that there are a number of countries where post-dismissal review by the courts cannot result in reinstatement of the employees and in those countries costs of dismissal are among the highest. In Romania, as well as in France, Germany, Greece, Italy and many other countries, the courts of law may reinstate the employee upon an illegal or unfair dismissal decision and such a decision will ultimately have an influence to the total cost of the dismissal. Nevertheless, such cost cannot be anticipated in advance and it is difficult to quantify it from the beginning.

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