Terminating Employment Contracts in Romania: A Guide for Employers

Ending an employment relationship in Romania is a formal process governed by the Labour Code. Whether the reason is linked to the employee’s conduct or the company’s economic situation, employers must follow strict legal procedures to avoid disputes and penalties.

Legal grounds for dismissal

Romanian law recognises two broad categories of dismissal. The first covers reasons related to the employee, such as serious or repeated breaches of workplace rules, professional inadequacy, or physical or mental incapacity (confirmed by a medical examination). The second covers reasons not related to the employee, such as the abolition of the position due to economic difficulties, technological changes or restructuring.

For dismissals based on employee conduct, the employer must first conduct a disciplinary investigation. The employee must be notified in writing, given the opportunity to present a defence, and the dismissal decision must be issued within one month of the employer learning of the misconduct. A disciplinary dismissal is effective immediately and no notice period is required.

Notice periods and procedure

For dismissals not related to the employee’s conduct, the law grants a notice period of at least 20 working days for management positions and 15 working days for other roles. Individual employment contracts or collective agreements may provide for longer periods. The notice must be given in writing and must state the reasons for dismissal, the duration of the notice and the legal criteria applied in selecting the employee for redundancy.

Employers must also consider whether the dismissal is part of a collective redundancy. If not, it is treated as an individual dismissal and the employer must simply respect the notice period and formalities.

Collective redundancies

Romanian law defines collective redundancy based on employer size and the number of dismissals within a 30-day period. A collective redundancy occurs when at least five employees are made redundant in a company with 20 to 99 employees, at least ten in a company with 100 to 299 employees, or at least 30 in a company with 300 or more employees.

Collective redundancies trigger additional obligations. The employer must consult trade union or employee representatives, notify the territorial labour inspectorate and the employment agency, and apply transparent selection criteria. The employer must also offer outplacement services and give the authorities at least 30 days’ notice before issuing dismissals.

Severance pay

Unlike some European countries, Romanian law does not impose a minimum statutory severance payment for ordinary dismissals. However, individual employment contracts or collective agreements commonly include such payments, especially for senior roles or in sectors with strong union representation. Employers should check the applicable collective agreement carefully.

Practical checklist

• Identify the correct legal basis for dismissal and gather evidence.
• For disciplinary dismissals, follow the investigation procedure exactly.
• For economic dismissals, prepare a clear justification and selection criteria.
• Issue written notice with the correct notice period.
• If collective redundancy rules apply, consult and notify the authorities in advance.
• Document every step to defend against potential challenges.

Getting the procedure right is essential. A dismissal that fails to meet legal formalities can be annulled by a court, forcing the employer to reinstate the employee and pay back wages.