Romania: The Supreme Court issued a new decision stating the period the Security Fund can make payments to the employees of a company in case of insolvency

In order to ensure a safety option in case of insolvency, companies contribute to a Security Fund that can substitute itself to the employer in case of insolvency and pay the salaries to the employees affected by the insolvency. The Supreme Court was called to issue a general decision on the period the Fund can make these payments.

The maximum period the Fund can make the payments to the employees is 3 months. However there were a number of contradictory court rulings on the timeframe for the payments. The Decision no. 16/2018 of the Supreme Court states that the Fund can make payment for a period of 3 months that should be limited to the 3 months prior to the date of the beginning of the insolvency procedure and the 3 following months after the beginning of the procedure. Payments for unpaid salaries for any other period exceeding this timeframe cannot be made by the Fund, meaning that if during the 3 months prior to the beginning of the insolvency and the 3 months after the beginning of the insolvency the employer made salary payments and was unable to make such payments outside this timeframe, the Fund cannot substitute itself.

For more information on these articles or any other issues involving labour and employment matters in Romania, please contact Magda Volonciu and Associates
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