Moldova: Excursus on the latest update to the labour code

What's new? 

Introduction of non-compete clause for ordinary employees (Art. 53¹(1), (2), (4), (5), (6) Labour Code)

With a non-compete clause, the parties can negotiate and regulate that after the termination of the individual employment agreement, the employee will not perform, in their own interest or that of a third party, an activity that competes with the one performed at the employer before the termination. The maximum duration can be one year. After the termination, the employer will pay the employee monthly compensation as agreed, but not less than 50 % of the employee's average monthly salary.

The non-compete clause must contain (i) the territorial scope, (ii) the precise activities prohibited, (iii) the duration of the prohibition, (iv) the amount of the monthly compensation, and (v) the terms and method of payment of the compensation.

Any non-compete clause that completely prohibits the employee from engaging in their profession (according to academic background) is prohibited and considered null and void.

Unless otherwise specified in the non-compete clause the employee may terminate the non-compete clause (subject to a written notification) if the employer delays payment of the compensation by at least one month, and the employer may terminate the non-compete clause at any time subject to a written notice and payment of a termination fee equal to three monthly compensations.

Important: Non-compete clauses with managing directors remain regulated by the Civil Code, which allows the parties greater autonomy. 

KPI (Art. 211², 211³, 211⁴, 211⁵ Labour Code)

A new chapter of the Labour Code regulates employees' individual performance and evaluation. The mechanics and procedure of employees' individual performance evaluation by which the level of fulfilment of the individual performance indicators is determined must be included in the company's internal regulations, while the targets for employees must be included in the legal act(s) concluded between the employer and the employee.

Employees must be informed in writing about the initiation of the evaluation process at least five days in advance, while the evaluation cannot last more than one month. The evaluation consists in comparing the results of the employee's activity with the established individual performance indicators and in awarding a performance qualification. The procedure will provide for at least three distinct performance qualifications, correlated with the level of fulfilment of the individual performance indicators, in accordance with the grid established by the company.

The indicators are established once every three months (longer periods are also possible) and must be reasonably close to those formulated for other employees who occupy similar positions, have the same level of experience and professional training. The indicators should be (i) specific to the employee's duties, which are mentioned in the individual employment agreement, (ii) measurable – to have a concrete form of achievement, (iii) reflect the terms of fulfilment, and (iv) be achievable, i.e. to be able to be fulfilled within the stipulated deadlines and with the allocated resources.

The employee will be informed of the results of the evaluation, the qualification awarded and the reasons for its awarding in writing and the employee can challenge them within five working days from the moment the results are made known.

Failure to meet individual performance indicators repeatedly during a calendar year may constitute grounds for dismissal (Art. 86(1)(e) Labour Code). 

Maximum three consecutive fixed-term individual employment agreements between the same parties (Art. 55(3), (4) Labour Code)

According to the new provisions, at most three fixed-term individual employment agreements can be concluded successively between the same parties, which cumulatively will not exceed 60 months. Fixed-term individual employment agreements will be regarded as concluded successively if there is a time interval of less than three months between them. 

Lengthier trial period (Art. 60 (1) Labour Code)

The maximum trial period can now be set to six months. 

Additional grounds to suspend an employment agreement (Art. 76(d) Labour Code)

Following Law 243/2022, an employment agreement can be suspended if the employee is in quarantine based on a medical certificate.

Salary in foreign currency (Art. 141(2) Labour Code)

The parties can now agree to state the salary in a foreign currency in the individual employment agreement, with the mandatory payment being made in the national currency (Moldovan Leu) at an exchange rate contractually agreed by the parties and which cannot be lower than the official exchange rate set by the National Bank of Moldova for the date of payment.

Simpler to inform employees (Art. 48(1) Labour Code)

It has become simpler for employers to inform employees about terms of employment, amendments and employee transfers. Under the new legislation, the employer's duty to inform the employee (e.g. about terms of employment) is deemed accomplished upon the signing of the individual employment agreement or addendum to it.

Authors: Vladimir Iurkovski, Adriana Otean