- Following amendments to the labour regulations, the number of overtime hours performed in one year may now be extended beyond the maximum of 240 permitted prior to the COVID-19 pandemic for employees in specific categories or industries, with the approval of a special governmental commission.
- In addition, it is now possible to compensate overtime with time off during the 30 days following the performance of the overtime if such possibility is provided for in the relevant collective bargaining agreement or the individual employment agreement.
The COVID-19 pandemic forced the Moldovan authorities to accelerate the modernisation of the legal framework, especially with respect to labour regulations. For example, certain matters such as remote work had to be regulated in order to adapt to the current reality. Many aspects still need to be addressed by the legislature before the labour code can catch up with the needs of the business environment (eg, the implementation of electronic signatures or the acceptance of electronic communications which express parties' consent). However, the amendments that have been implemented to date should have a significant positive impact on company activities.
One area of the law which was amended was the regulation of overtime. Arguably, this was one of the most important characteristics of labour relationships worldwide over the past year – particularly, in the medical industry, but also in what have become other essential industries during the pandemic (eg, distribution, delivery and IT).
While the changes implemented are not groundbreaking or even sufficient to normalise the regulation of overtime, they are nonetheless a good start.
In brief, the former regulations provided that overtime:
- could not exceed 120 hours a year which, under special circumstances, could be extended to 240 hours a year with the prior approval of the employees' representatives;
- could be compensated only financially;
- could not, with certain exceptions,(1) be imposed by the employer without the specific written agreement of at least the relevant employees (in certain cases, the approval of the employees' representatives was also required); and
- could be imposed by the employer only by formal order (properly justified in writing) and with the relevant employees' acknowledgement (under signature).
Compliance challenges during COVID-19 pandemic
These provisions proved limiting to the proper functioning of companies in almost all industries even before 2020. However, in 2020 these provisions became almost impossible to comply with. For example, the emergency health rules required certain industries to move to a remote working structure which was incompatible with paper documentation. Further, employers were forced to request employees to perform overtime and, since this was possible only under the actual signature of the relevant employees, employers found themselves unable to comply with this primarily paper-based system.
However, the most important impediment during the COVID-19 pandemic may have been the maximum number of hours of overtime that could be performed during one calendar year and the financial pressure put on employers in a period of obvious economic downturn with respect to the compensation of such overtime.
In order to better understand the limitative nature of the Moldovan legal provision on the abovementioned maximum number of overtime hours which could be performed in one year, it is important to note that under EU law (Article 6(b) of the EU Working Time Directive (2003/88)), the maximum number of overtime hours which can be performed in one year can be extended to 416.
During 2020, these provisions generated significant issues for the medical industry as, in Moldova, human resources are limited and impossible to supplement, which generated a need to extend the work schedule of all medical workers. Due primarily to these acute issues, the relevant provisions of the labour laws had to be amended so that overtime hours could be extended in emergency situations (whether medical or military).
Amendments
The amended law does not limit the categories of employee who may be requested to perform overtime past the maximum 240 hours a year, but it does establish that such limitations may be extended per category of employee or industry with the approval of a special commission. Although these new provisions do not specifically indicate what such new limitations may be, and although they do not have a generic and universal applicability with regard to the ability to increase the number of maximum overtime hours which may be performed in one calendar year, they arguably create the basis for further negotiations with the authorities with respect to, at a minimum, the implementation of the EU rules on this topic.
Another improvement concerns the compensation of overtime. As discussed above, the previous provisions of the Moldovan labour code expressly prohibited the compensation of overtime with paid time off. This not only encouraged employees to delay the performance of their duties, but also disregarded the effects of long-term overtime on employee health. This proved especially complicated for employers when most non-essential activities moved to an almost completely remote system during 2020.
For a better understanding of the issue, in Moldova, overtime is paid at a rate of at least:
- 150% of the employee's hourly average base salary for the first two hours of overtime; and
- 200% of the employee's hourly average base salary for the following hours.
The law is not explicit with respect to how overtime hours should be counted: should the first two hours be construed as referring to the first two hours of overtime performed during one calendar month or the first two hours of overtime performed during one day? This has raised issues of interpretation for employers and practitioners alike, as the difference in financial compensation could be significant. However, since Moldovan labour regulations must always be construed in favour of employees, regrettably, this provision could be construed as referring to the first two hours of overtime performed during one calendar month.
Upon the specific request of the business environment in 2020, the government amended the labour code to allow overtime to be compensated with paid time off during the 30 days following the performance of such overtime. While the period set by the law is not as long as in other countries in the region (eg, Romania), it does address some of the pressing financial issues faced by employers, especially during these times.
The wording of the provision created confusion for employers which employ a global time management system (ie, employers which use as a reference base for the assessment time worked versus time off in the entire calendar year) given that, in theory, for such employers, the existence of overtime may be asserted only at the end of the calendar year (it is somewhat impossible to balance throughout the year the number of worked hours with the number of paid unworked hours if the uptakes and downturns in activity are unpredictable due to the nature of the activity).
However, these amendments not only significantly improve the relationship between employers and employees with respect to work efficiency, but also remove a significant burden from employers' shoulders.
Endnotes
(1) These exceptions generally refer to national defence or the remedy of emergencies concerning essential grids or systems (eg, the electricity grid, the water supply, telecoms systems and the sewage grid), but do not address emergencies that affect the medical system.
