Significant changes in Romanian legislation in PPPs and employment fields
Mona Musat
Musat & Asociatii
Bucharest
Mona Musat (Bio)
In Romania, Public-private partnerships (PPP) have been successfully used in several public sectors, such as: health, transport, infrastructure development, construction, agriculture, environment, energy, etc. The concept of PPPs was first established in Romania in 2002, under Government Ordinance No. 16/2002 (GO 16/2002), but various types of arrangements between public authorities and private entities, particularly with respect to concession of public assets, emerged in the mid-1990s.
Following Romania's accession to the European Union on January 1 2007, the existing Romanian enactment regarding PPPs (i.e. GO 16/2002) was repealed and other enactments impacting PPPs were issued, to be in line with EU regulations.
In the context of the current economic and financial global crisis, all EU countries faced competition to attract the financing available on the market; thus it was highly important to attract private investments in public interest projects at a national and local scale. It was therefore considered imperative to adopt an enactment establishing a simple and transparent legal framework for the endorsement of PPP projects in Romania. As a consequence, the PPP has been regulated in 2010 by the provisions of Law No. 178/2010 (the PPP Law), which was substantially amended at the beginning of 2011 so as to reflect the continuously changing economic reality and demands entailed by the status of EU member.
The new regulations aimed to give special attention to combining aspects of PPP projects involving co-financing with structural and cohesion funds – the eligibility of project types, eligibility of expenditures, potential co-financing rates, state aid and the possibility of obtaining unexpected revenue. In accordance with the provisions of the PPP Law, such projects result in a PPP agreement. The PPP agreement is concluded between a contracting authority (which may be any public central or local authority) and any Romanian or foreign business entity, legally established under its state of registration. PPP agreements are materialised by the incorporation of a project company, aimed to ensure the means of enforcing the effects of such agreement.
The project company must be created as a commercial entity whose share capital is held by the public partner and the private investor. Under Romanian law, there are several types of companies, such as a joint-stock company, limited liability company, limited partnership etc. While in the past, the most commonly used company for a PPP was the limited liability company, as of the entry into force of the most recent amendments to the PPP Law, project companies may only be incorporated as joint-stock companies. Project companies are set up for the operation and management, in accordance with the economic principles, of all phases of the PPP agreement.
In regard to the selection of investors, one may note that these are selected through an open procedure (performed in one stage, in which any interested investor may submit an offer) or a competitive dialogue (which takes place in two stages, in which bids are submitted only after the evaluation of the letters of intent of selected investors).
Finally, it is worth noting that awarding decisions and any other decisions adopted by the public partner during the period of the awarding procedure may be challenged by any interested person incurring damages as a direct consequence of an illegal awarding procedure and/or decision of the granting authority, by way of: an administrative challenge lodged with the public partner issuing the awarding decision; an administrative challenge lodged with the National Council for Challenges' Settlement; or a claim before the Appeal Court (filed in accordance with the provisions of Law 554/2004 on administrative litigation).
New employment regulations
A flexible approach to the socio-economic realities of the labour market dynamics, which faced many difficulties during the economic crisis, was considered to be appropriate and necessary. Thus, the main enactment in the employment field, i.e. the Labour Code, was significantly modified at the beginning of 2011. The amendments mainly aim to achieve flexibility for the labour market, together with the harmonisation of the employment regulations with European Directives. The new Labour Code establishes more flexible working relationships in order to create the necessary conditions for business development, while ensuring the protection of employees. Many previous regulations have been revised or supplemented to achieve these ends.
Important modifications were made in the penalties field by introducing new penalties or rendering the already existing ones more severe. Employers are now sanctioned for refusing to register employees' resignations and for failing to keep track of working hours and provide them to labour inspectors. More severe penalties were introduced for those employing up to five people without an individual employment agreement and criminal liability in this regard was also established.
One of the other main amendments resulted in changes to the application of non-competition clauses. Thus, employers were granted the right to waive the benefit of a non-competition clause, should they consider that their economic and commercial interests are not harmed by the activity of the former employee bound by such clause.
In addition, in order to increase the degree of competence and expertise of employees and in order to achieve the EU principles in the field, the employer was granted the right to establish individual performance objectives and assessment criteria for the achievement of such objectives.
Modified criteria were also considered in case of collective redundancies. Thus, the main criteria considered under the new Labour Code for the collective dismissal procedure are now performance and achievement of objectives and, in subsidiary, the social criteria.