Law 67/2006 and Employee Transfer in Build Operate Transfer

The Transfer phase of a Build Operate Transfer engagement is where the team, assets, and operational responsibilities move from the provider to the client. In Romania, this employee transfer falls under Law no. 67/2006 on the protection of employee rights in case of transfer of undertakings, businesses, or parts thereof.

Law 67/2006 transposes Council Directive 2001/23/EC (commonly known as the “TUPE Directive”). It does one thing: protect employee rights when the employing entity changes through a transfer of undertaking.

What follows covers the law’s provisions, the notification procedure, employee rights, risks I have hit managing BOT transfers in Romania, and a compliance checklist for legal teams evaluating a BOT engagement.

What Law 67/2006 provides

Law 67/2006 transposes Directive 2001/23/CE into Romanian law. It regulates the transfer of enterprises, units, or parts thereof and sets the mandatory framework for employee protection.

Scope of application (Art. 1–2)

The law applies to any transfer of an undertaking, business, or part of an undertaking or business to another employer as a result of a conventional assignment or merger. Public or private employer, economic or non-economic activity — it applies regardless.

In a Build Operate Transfer, the transfer occurs when employees move from the BOT provider (transferor) to the client entity (transferee). The transferee is either a newly established local entity or a branch of the client in Romania.

The condition under the law: the transfer must involve an economic entity that retains its identity. An IT team of 30 developers working on a specific product, with its own processes, tools, and management, qualifies as an economic entity under the law. I have run transfers where teams of 8-10 people met this criterion because they had a distinct operational function within the provider’s organization.

Automatic transfer of contracts (Art. 4)

Art. 4 para. (1) provides that the transferor’s rights and obligations arising from individual employment contracts existing on the date of transfer are transferred in full to the transferee.

What that means:

• Individual employment contracts transfer automatically, by operation of law
• Salary, benefits, seniority, and all contractual rights stay the same
• The transferee (client) assumes every obligation the transferor (BOT provider) had toward employees
• The transfer takes place regardless of either employer’s agreement or disagreement. The law is mandatory

Information and consultation obligation (Art. 5–7)

Both the transferor and the transferee must inform employee representatives or, where none exist, employees directly. The information must include:

1. The date of transfer or the proposed date of transfer
2. The reasons for the transfer
3. The legal, economic, and social consequences of the transfer for employees
4. The measures envisaged regarding employees

You must provide this information at least 30 days before the date of transfer. Both parties carry the obligation.

Prohibition of dismissal motivated by transfer (Art. 8)

The transfer of undertaking is not grounds for dismissal. Art. 8 prohibits dismissing employees on the basis of the transfer. Any dismissal carried out as a direct consequence of the transfer is null by operation of law.

The exception: dismissals remain possible if motivated by genuine, serious causes. Reorganization or economic reasons, for example. But the burden of proof falls on the employer, and Romanian courts apply a strict standard. If the dismissal occurs 2-3 months after transfer, the court will presume a causal link with the transfer. I have watched employers lose these cases because they could not break that presumption.

Joint liability (Art. 9)

The transferor and transferee are jointly liable for obligations arising from employment contracts existing on the date of transfer. CJEU (Court of Justice of the European Union) case law establishes that this joint liability lasts for one year from the date of transfer.

What that looks like in practice: if the transferee fails to pay salaries or misses contractual obligations after transfer, employees can sue both the transferee and the transferor. I have seen the transferor get sued 9 months after transfer because the transferee failed to pay contractual annual bonuses. The transferor thought the relationship was over. It was not.

Article 173 of the Labor Code

Law 67/2006 does not operate alone. The Labor Code (Law no. 53/2003, republished) contains specific provisions regarding transfer of undertakings at Art. 173.

What Art. 173 provides

Art. 173 para. (1) establishes that employees benefit from rights protection when a transfer of undertaking, business, or parts thereof occurs.

Art. 173 para. (2) directly references Law 67/2006 as the special law.

Correlation with Law 67/2006

Art. 173 of the Labor Code is the framework norm. Law 67/2006 is the special norm:

• The Labor Code establishes the general principle of employee protection during transfer
• Law 67/2006 details the procedure, obligations, deadlines, and penalties
• In case of conflict, Law 67/2006 prevails (specialia generalibus derogant)

Relevance for BOT

Art. 173 of the Labor Code confirms that employee transfer during the Transfer phase is not a “change of employer” you negotiate contractually. It is an operation governed by mandatory law, with fixed procedures and deadlines.

Any BOT contract that says employees “will be re-employed” by the transferee at transfer, instead of “will be transferred” under the law, exposes both parties to legal risk. Employment contracts do not terminate. They do not get re-entered. They transfer. I have seen BOT contracts drafted by UK law firms that used the wording “re-employment upon transfer.” That wording has no legal basis in Romania. It creates a gap between what the contract says and what the law requires, and that gap generates disputes.

Notification procedure: the 30-day deadline

Employee and representative notification is mandatory. Skip the procedure and the transfer becomes challengeable in court. You also open yourself to administrative penalties.

Mandatory steps

Mandatory notification content

The notification must contain at a minimum:

1. Transfer date — exact date or proposed date
2. Reasons for transfer — example: completion of the Operate phase and assumption of operations by the client
3. Legal consequences — employment contracts transfer automatically, the employer changes, contractual rights remain unchanged
4. Economic consequences — wage structure stays the same, benefits are maintained, payroll moves to the transferee’s budget
5. Social consequences — place of work, schedule, working environment. If anything changes, specify it
6. Envisaged measures — if the transferee plans post-transfer organizational changes, communicate them now

Common notification errors

I keep seeing the same mistakes:

• Notification sent less than 30 days before transfer. Result: procedural nullity
• Notification that omits economic consequences. Result: defective notification, contestable by employees
• Notification signed only by the transferor, without the transferee’s signature. Result: incomplete procedure
• Notification sent only by email, without proof of receipt. At the Labor Inspectorate (ITM), an email without delivery confirmation gets you nowhere. I advise clients to use signed acknowledgment or registered mail every time

Collective labor agreements in transfer

The baseline rule (Art. 6 of Law 67/2006)

The transferee observes the provisions of the collective labor agreement until the date of its termination or expiration, renegotiation, or entry into force of another collective labor agreement.

What this means in practice

If the BOT provider (transferor) has a collective labor agreement (CLA) with employees, the transferee (client) takes over that CLA in full. The transferee cannot:

• Reduce salaries provided in the CLA
• Eliminate collectively bargained benefits (meal vouchers, private health insurance, additional leave days)
• Modify collectively negotiated work schedules
• Ignore clauses regarding working conditions

The typical BOT scenario

In Romania’s IT sector, company-level collective labor agreements are rare. Unionization rate in IT is under 5%. Most BOT providers operate on individual employment contracts and internal regulations.

The risk shows up in specific situations. The BOT provider operates in a location with an active trade union. The provider is part of a company group that has a group-level CLA. Or employees unionize during the Operate phase and negotiate a CLA before Transfer.

In any of these cases, the transferee takes over the CLA at transfer. Due diligence must verify the existence of any applicable CLA. I participated in a transfer where the provider’s group-level CLA stipulated 28 leave days instead of 20. The transferee had not checked. They found out after transfer when employees requested the additional 8 days. That is an extra week of leave per employee per year, paid by the transferee, and it was binding.

Duration of the obligation

The obligation to honor the CLA is not permanent. The transferee observes the CLA until:

• The CLA’s expiration date (CLAs in Romania have a maximum duration of 2 years)
• Renegotiation of the CLA with the union or employee representatives
• Replacement with a new CLA negotiated at the transferee level

Employee rights during transfer

Rights that transfer automatically

Under Art. 4 of Law 67/2006 and Art. 3 of Directive 2001/23/EC, all of these transfer:

• Base salary — the amount in the individual employment contract
• Contractual allowances and bonuses — night shift allowance, performance bonus with a fixed formula, contractual annual bonus, any contractually stipulated amount
• Seniority — all seniority accumulated with the transferor is recognized by the transferee
• Job title and duties — the job description stays the same
• Work schedule — including remote work arrangements if contractually stipulated
• Annual leave entitlement — the number of leave days and any unused leave carry over
• Contractual non-salary benefits — meal vouchers, private health insurance, subscriptions if stipulated in the individual employment contract or CLA
• Accrued entitlements — outstanding salary, outstanding bonuses, any amount owed

Rights that do not transfer automatically

Some benefits lack a contractual basis and do not transfer by operation of law:

• Benefits the employer offered unilaterally without a contractual clause (participation in corporate events, for example)
• Stock options or equity plans granted by the BOT provider’s parent company, not by the local employing entity
• Confidentiality agreements and non-compete clauses do transfer, but non-compete clauses need individual review. A clause that prohibited working for the transferor’s competitors may no longer be proportionate relative to the transferee’s business. I flag these in every transfer due diligence because they are the clauses most likely to end up in court

The employee’s right to refuse transfer

Romanian law does not give employees a right of objection. The transfer operates by force of law.

An employee who does not want to work for the transferee has one option: resign. They cannot be forced to work, but they also cannot compel the transferor to keep them after the transfer date.

Directive 2001/23/EC leaves member states the latitude to regulate this. Romania chose automatic transfer, no right of objection. Know this before you brief the team, because employees will ask.

Protection against unilateral changes

The transferee cannot unilaterally modify core contractual conditions (salary, job title, schedule) on the basis of the transfer. Any modification requires:

• Individual agreement with the employee (addendum to the employment contract)
• A genuine cause, and that cause cannot be the transfer itself

If the transferee substantially modifies working conditions and the employee resigns for that reason, the court can reclassify the resignation as abusive dismissal. I saw this happen when a transferee relocated the team from Cluj to Bucharest 2 months after transfer without employee consent. The employees resigned, the court treated it as dismissal, and the transferee paid damages.

Hidden risks and legal pitfalls

1. The “intermediary employer” risk

Some BOT structures use a staffing company as the formal employer during the Operate phase. At transfer, the client thinks it is assuming employees from the BOT provider. But the legal employer is the staffing company.

The transferor under Law 67/2006 is the staffing company, not the BOT provider. If the BOT provider runs the notification and procedure instead of the staffing company, the entire procedure is flawed. Check who signs the individual employment contracts. That tells you who the legal employer is. I have caught this issue in due diligence more than once, and every time it would have invalidated the transfer if it had reached execution.

2. The hidden wage debt risk

Joint liability under Art. 9 means the transferee inherits exposure to existing or potential labor disputes at the time of transfer. Due diligence must cover:

• Pending labor disputes
• Complaints filed with the Territorial Labor Inspectorate (ITM)
• Back pay, uncompensated overtime
• Unpaid or miscalculated social contributions

I saw a case where the transferor had 4 active labor disputes and disclosed none of them. The transferee found out 3 months after transfer when it received the lawsuits. At that point, it was already jointly liable.

3. The REVISAL risk

REVISAL (General Register of Employees) must be updated on the transfer date. The law requires recording the transfer as a change of employer, not as termination followed by new hiring.

The most common error: the transferor closes contracts in REVISAL, the transferee opens new ones. This creates a discontinuous employment history and triggers ITM penalties of 5,000 to 8,000 RON per contract under Law No. 108/1999 republished. For a team of 30, that is 150,000-240,000 RON in penalties. I brief every client’s HR team on this because the instinct to “close and reopen” is strong, and it is wrong.

4. The tax risk at transfer

If the BOT provider grants bonuses or retention payments before transfer, these are taxable wage income. The transferor must withhold personal income tax (10%), social insurance contribution (CAS, 25%), and health insurance contribution (CASS, 10%).

Total tax burden on the retention bonus: 45% of the gross amount. If these amounts get recorded as “consulting expenses” or another non-taxable category, the tax risk falls on both parties. ANAF verifies these transactions, especially when the total amount is significant.

5. The risk of BOT contract clauses vs. mandatory law

Clauses in the BOT contract that contradict Law 67/2006 are void. Examples from actual contracts I have reviewed:

• Clause providing that “employees will be re-employed” instead of transferred. Void
• Clause providing for salary reduction at transfer “to align with the transferee’s wage grid.” Void
• Clause conditioning transfer on individual employee consent. Inapplicable; transfer operates by law
• Clause providing for a probation period at the transferee. Void. The employee has seniority. They are not a new hire

Every one of these came from contracts drafted outside Romania by firms unfamiliar with Law 67/2006.

6. The risk of absence of local legal entity

The transferee must have a legal entity in Romania on the transfer date. Either a commercial company (SRL or SA) or a branch. Without a local entity, transfer cannot proceed.

Establishing an SRL in Romania takes 5-10 business days. A branch requires 15-30 days. These timelines must align with the 30-day notification deadline. I have seen transfers delayed by 2 months because nobody started the entity establishment procedure early enough. Start it before anything else.

BOT transfer compliance checklist

Pre-transfer (at least 60 days in advance)

1. Verify the existence of the transferee’s legal entity in Romania (SRL, SA, or branch)
2. Perform due diligence on individual employment contracts: salary, benefits, special clauses
3. Verify the existence of an applicable collective labor agreement
4. Check for pending labor disputes or complaints at ITM
5. Verify the transferor’s REVISAL record for completeness and accuracy
6. Identify employee representatives or union, if any
7. Verify whether the transferor is the real employer or if an intermediary company exists

Notification (at least 30 days in advance)

8. Draft written notification per Art. 5 of Law 67/2006
9. Include all 6 mandatory elements (date, reasons, legal consequences, economic consequences, social consequences, measures)
10. Get both signatures on the notification: transferor and transferee
11. Communicate notification to employee representatives or employees directly
12. Obtain proof of receipt (signature, minutes, or postal confirmation)
13. Begin consultation with employee representatives
14. Prepare minutes of consultations

On transfer date

15. Transfer individual employment contracts. Do not terminate and rehire
16. Update REVISAL as a change of employer, not a new contract
17. Assume obligations from CLA (if any)
18. Assume accrued leave and any outstanding wage payments
19. Assume complete personnel files
20. Notify tax authorities of the change of employer

Post-transfer (first 12 months)

21. Respect existing contractual conditions. No unilateral modifications
22. Monitor joint liability (transferor + transferee, 12 months)
23. Resolve any inherited labor disputes
24. Upon CLA expiration, negotiate a new collective agreement if applicable

Frequently asked questions

Conclusion

Law 67/2006 and Art. 173 of the Labor Code set a mandatory framework for employee transfer. In a Build Operate Transfer engagement, the Transfer phase is an operation governed by law, with deadlines, procedures, and penalties.

Employment contracts transfer automatically. They are not terminated and renegotiated. The 30-day notification is mandatory, with every element required by law. Collective labor agreements are assumed in full by the transferee. The transferee cannot unilaterally modify working conditions after transfer. Joint liability between transferor and transferee lasts at least 12 months. The transferee must have a Romanian legal entity on the transfer date.

Legal due diligence before transfer is not optional. Legal teams that treat the Transfer phase as a contractual formality without applying Law 67/2006 expose the client to litigation, penalties, and delays.

For a discussion about BOT transfer compliance in Romania, get advice from our team.