New Amendments to the Labour Code

30/08/22

In brief

The Parliament of the Republic of Moldova has approved a series of amendments and supplements to the Labour Code with the aim of modernising labour relations. The major changes concern the regulation of the non-compete clause in employment relations, the extension of the probation period, fixed-term employment agreements and limiting the compensation owed by employers for unlawful dismissals or job changes.

In detail

Employment agreement

Non-compete clause

The Labour Code has been supplemented with provisions regulating the non-compete clause in employment relations, according to which the employer has the right to negotiate with the employee an agreement whereby the employee undertakes not to perform, in own interest or for a third party, an activity that competes with the activity performed at the employer, for a maximum period of one year as of employment termination.  

In exchange for compliance with the non-compete clause, the employer pays a monthly allowance, which is negotiated with the employee but cannot be lower than 50% of the employee’s average monthly salary, for the entire period of the non-compete clause availability.

Non-compete clauses that prohibit employees from fully exercising their professions (according to their qualifications) are not allowed. Such restrictions cause the non-compete clause to be invalid.

It is mandatory to indicate expressly the geographical area in which the non-compete clause applies, the activities for which it is valid, the period for which it is effective, the amount, the term and the method of payment of the allowance.  

For breaching the non-compete clause, the employee has to return the allowance and compensate the employer for any damage caused.

Probation period

The probation period has been extended from three to six months for all full-time employees hired for an indefinite term, except for unqualified workers, for which the probation period remains unchanged.

Fixed-term employment agreement

For certain specific situations, the right to conclude fixed-term employment is restricted to a maximum of three successive agreements between the same parties, the cumulative term of which cannot exceed 60 months.

Fixed-term agreements are considered to have been concluded successively if there is a time interval of less than three months between them.

Dismissal

Dismissal based on the grounds that the employee does not fit the position held or the work performed due to poor qualifications has been replaced by the grounds of failure to reach individual performance indicators repeatedly during the year.

Dismissal based on such grounds can occur if the following conditions are met:

  • The employee has been subject to prior evaluation, based on the procedure established under the collective bargaining agreement, the collective labour agreement or, in the absence thereof, under an internal regulation.
  • The employer provided the employee with appropriate instructions, a written warning and a reasonable period in which to improve their performance.

Forms of salary payment

Under the employment agreement, the employer and the employee may agree on the following:

  • Establishing the salary amount in foreign currency with payment in national currency at a rate of the Moldovan leu agreed by the parties, available on the payment date. That rate cannot be lower that the official rate of the Moldovan leu established by the National Bank of Moldova.
  • Establishing the (foreign) currency for salary payment (other than the Moldovan leu) if the employee performs the job from abroad.

The salary can be paid either in cash or by transfer to the employee’s account with the payment service provider.

 

Overtime work

The maximum duration of employees’ working time is set at 48 hours per week, including overtime hours. This duration can be exceeded in exceptional circumstances, provided that during a period of four calendar months the average working hours does not exceed 48 hours per week.

A new provision has been introduced stating that for overtime compensated with time off, the employee receives the ordinary payment established per unit of time and time off paid according to the basic salary for the overtime.

Annual paid leave

Employees are now required to notify the employer in writing 15 business days in advance of their intention to return earlier from partially paid childcare leave or additional unpaid childcare leave.

It has been clarified that the year of work for which the annual leave is granted means twelve calendar months calculated as of employment commencing. Further new provisions have been introduced establishing that the duration of the annual leave is calculated in proportion to the time worked in one year of work.

The following changes regarding the scheduling of the annual paid leave have been made:

  • The possibility to grant annual leave outside the established schedule, upon employee request in writing.
  • The possibility to change the period and duration of the scheduled annual leave, upon employee request, subject to the employer’s consent.
  • The employer is required to inform employees of the established annual leave schedule within ten business days as of its approval, under their signature or in another way that allows confirmation of receipt or notification;
  • The employer’s obligation to inform employees two weeks prior to the start date of annual paid leave according to the established schedule has been removed.

Partial childcare paid leave

As of 1 September 2022, the following provisions on partial childcare paid leave until the age of three will enter into force:

  • The possibility to opt to grant this type of leave to one of the parents, one of the grandparents, another relative that directly takes care of the child or to the guardian.
  • The possibility to use this leave by both parents alternatively, in parts, according to their availability, provided that the parts do not overlap. The leave is granted in parts, within 30 days as of the request, for the period requested.

Obligations, terms and methods for informing employees

Under the amendments, employers may inform employees of the amendments and supplements to the bargaining labour agreement and available vacant positions by email or through another means of communication which can be accessed by every employee.

It has been clarified that the employer’s obligation to inform the selected candidate, prior to hiring, or the employee, prior to changing the position or working conditions, is considered met upon the signing of the employment agreement or of the addendum therein, as the case may be.

The time frame for informing employees about the content of the staff handbook has been extended from five to ten business days as of the date of its approval or of the changes therein.

The time frame for informing employees of the shift-work schedule has been reduced from at least one month to at least 14 days before its implementation.

Evaluation of employee performance

The Labour Code has been supplemented with a new chapter regulating the evaluation of the employee’s individual performance.

The evaluation stages and procedures must be approved by the employer under an internal regulations.

The employer establishes by decision the categories of staff subject to evaluation, the evaluation period and the list of evaluators.

The employer establishes the individual performance indicators no more than once in every three months after consulting with the employee. The employee must be informed of the established performance indicators in writing.

Individual performance indicators must:

  • be reasonably close to the indicators established for employees with similar positions with the same level of experience and professional training;
  • be specific to the employee’s duties according to the employment agreement;
  • be measurable;
  • indicate the time frame for fulfilment;
  • be achievable.

The employer is required to inform the employee in writing five days in advance of the initiation of the evaluation.

The employee has the right to provide explanations regarding the fulfilment of the performance indicators and to challenge the evaluation results both beforehand with the employer and later in court.

The evaluation results are considered upon promotion, dismissal, establishing the needs of professional development or financial or for non-financial stimulation of employees.

Other provisions

In the event of unlawful job change or dismissal, the compensation that must be paid by the employer to the employee is limited to a maximum of 12 average monthly salaries of the employee for the entire period of forced absence from work.

As of 1 September 2022, new provisions regarding flexible work arrangements will come into force representing work programmes offering the employees the opportunity to adapt their work schedule, including by way of remote work, working from home, flexible work and a part-time or compressed work week.

Flexible work arrangements are established by mutual agreement between the employee and the employer, at either’s request, upon employment or after the conclusions of the employment agreement for a fixed or indefinite term.  

The adjustment of the work schedule can be requested by the employee at most once every six months, in writing, by submitting a request including the date, the flexible work arrangement requested and the date on which the modification of the work schedule would start. The employer is required to respond within 30 days as of receipt of this request and to state the reasons thereof.

[Source: Law no. 243 dated 28 July 2022 on the amendment of certain normative acts, published in the Official Monitor no. 267-273 dated 26 August 2022; Law no. 195 dated 14 July 2022 on the amendment of certain normative acts (in force as of 1 September 2022)]

The takeaway

Some legislative provisions entered into force on 26 August 2022. They introduced important amendments to the labour legislation.

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Tax Manager, PwC Moldova

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