LAW IN MOLDOVA

The law determines the order of entry and stay of foreigners in the territory of the Republic of Moldova, general conditions for issuing residence permits and visas for the entry to Moldova. This Law shall become effective from 24 December 2010Here we are going to pay attention just to some aspects of the new law. Contact us for more details or any clarifications.Article 19 of the new Law provides for the cases in which it is possible to issue long-term visas to foreigner. They can be issued for the following purposes: -         carrying out entrepreneurial activities - for foreigners investing into the national economy which are or have the intention to become stock or shareholders with the right to conduct or manage commercial undertakings in the Republic of Moldova;-         employment (however, in this case getting a working permit should be considered additionally);-         studying;-         family reunification (an application for a visa for this purpose must be accompanied by a confirmation from the Bureau for Migration and Refugees);-         for carrying out humanitarian or religious activities;-         for diplomatic or official purposes;-         for medical treatment. Long-term stay visas are granted for a period of not more than 12 months for one or more visits each of them not exceeding 90 days within the 6 months period from the date of the first entry into the country, and allow foreigners to apply for granting the right to reside in Moldova.  The right to temporary residence in the Republic of Moldova, given to a foreigner may be extended by the competent authority for foreigners, if: a) they continue to meet the conditions for the entry into the Republic of Moldova;b) during the foreigner's stay in the Republic of Moldova there was not registered any of the circumstances that would not allow to enter the territory of the Republic of Moldova;c) s/he has the documents for crossing the border, valid for the period for which an extension of the right to stay in the Republic of Moldova is sought;d) they seek to extend the right to stay for the same purpose for which the visa was initially issued and the right to    stay granted;e) the purpose for which the right to stay in the Republic of Moldova requested was observed;f) the evidence of having living premises to stay at for the whole period for which the extension is requested and medical insurance is presented. In general, the same aims are also provided for granting the right to temporary stay in the country with the issuance of a temporary residence permit. That is for in order to obtain a temporary residence permit the same requirements are set.The right to permanent residence in the Republic of Moldova may be granted to a foreigner - the holder of the right to temporary residence if s/he meets all of the following conditions: a) has stayed legally and continuously in the Republic of Moldova under the right of temporary residence for at least 3 years - for foreigners married to Moldovan citizens (or 5 years, if the duration of the marriage is less than 3 years);b) has stayed legally and continuously in the territory of the Republic of Moldova for at least 5 years - for other categories of foreigners;c) confirms availability of sufficient livelihood; this provision does not apply to persons married to citizens of the Republic of Moldova;d) possesses living premises;e) can speak the state language at a satisfactory level;f) continues to meet the conditions for entry into the territory of the Republic of Moldova;g) during the foreigner's stay in the Republic of Moldova there has not been registered any of the circumstances that do not allow to enter the territory of the Republic of Moldova;h) did not had any criminal records over the past 3 years. We should also indicate here the time periods for which foreigners are not allowed to enter Moldova in case they previously breached the time limits for staying in Moldova: 1 year - in the case of illegal residence for the period of 3 months to 1 year;2 years - in the case of illegal residence for the period of 1 to 2 years;3 years - in the case of illegal residence for the period of 2 to 3 years;5 years - in the case of illegal residence for more than 3 years;3 years - in the case of illegal employment;5 years - for providing false personal information;5 years - in the event of previous expulsion. This post is part of the newsletter prepared by our law firm. You can download its full text in .pdf from here.

A number of modifications were introduced into the Labour Code aiming to eliminate discrimination in the workplace by various criteria. Besides, there was extended the confidentiality period, that is employees' and employers' obligation not to disclose the information acquired while the individual employment contract between them was effective from three months up to one year. There have been increased the allowed periods of suspension of employment contracts with persons engaged in long-term care for sick children and children with disabilities. Likewise, the period of possible technical idle time during which the employment contract may be suspended has been increased up to 6 months. From para. (1) art. 85 of the Labour Code, which provides for the right of employees to resign on their own volition, has been excluded the mention of contract concluded for an indefinite period. Thus, the right to terminate at any time the employment contract was also given to employees with whom fixed-term contracts are concluded. There have been lifted the restrictions to get women with children under three years involved in overtime work, work on weekends and holidays and shift work. The obligation of employees who have undergone professional training or internship to work for a certain period of time for the respective undertaking has been excluded from the Labour Code. One of the most significant modifications concerns the possibility of dismissals of pregnant women. It is worth reminding that previously dismissals of pregnant women were forbidden, except for the cases of liquidation of the enterprise. On the one hand, it gave them an additional safeguard against possible abuses by employers who were trying to get rid of them. On the other hand, it has often served as the ground for multiple abuses (sometimes quite serious) on the part of pregnant women themselves who neglected their duties and lacked discipline being under protection of the labor legislation provisions. This situation was decided to be changed. Now, pregnant women can also be dismissed on common grounds in case of infringements committed by them that relate to the discipline and observance of law in the workplace. Finally, some significant changes have been made with respect to the time limit within which an employee can lodge a claim with the court in case of violations of his rights. This term has been reduced from one year to three months. Now the employee, in case of dismissal, will not be able to wait for the whole year before applying to the court with a claim regarding reinstatement in the position. This post is part of the newsletter prepared by our law firm. You can download its full text in .pdf from here.

Recently I wrote about registering a limited liability company in Moldova. It was said then that LLC is the most common form of companies in Moldova. Today’s post is dedicated to another form of companies that are less spread, however, very important - joint-stock companies (JSC). Under art. 2-(1) of the Law on Joint-Stock Companies JSC (societate pe actiuni, or SA) is a company whose share capital is divided up into stock shares and whose obligations are secured with its property. The main peculiarity of joint-stock companies comparing to other types of companies (limited liability companies in the first place) is the right to issue securities that can be traded at stock exchange - stock shares and bonds, though there is a number of other differences. Although JSCs are less spread than LLCs, certain types of companies can only be registered under this form like, for example, banks, insurance companies, investment funds. Likewise, limited liability companies that have more than 50 shareholders should be reorganized into JSCs within 6 months period (or consolidated to reduce the number of shareholders, or liquidated).  A JSC can be founded by one or more natural persons or legal entities. Constituent documents are: constituent agreement (in case of founding by 2 or more persons; or declaration on the foundation of the company in case of one founder) and articles of association. The first document stipulates the conditions during the establishment of a new company whereas articles of association are company's basic document providing for all major conditions of company's activity and structure. The minimum share capital of a JLC should not be less than 20 000 (twenty thousand) Moldovan lei (about 1270 euro), what determines the minimum volume of company's net assets.   One of the most important stages in creating a joint-stock company is the initial stock placement. The stock shares of a newly created company is divided between its founders. The money paid for stock shares is introduced into the temporary bank account. After the money is introduced the constituent meeting may take place in which all founders should take part. During the meeting all necessary decisions on the company registration, election of its managing bodies, etc. should be taken. After the meeting the respective documents (bylaws, decision on the registration and so on) are submitted to the State Registration Chamber which adopts the decision on JSC's registration.  The company is considered created from the moment of its registration. However, unlike in limited liability companies for which all major constituent proceedings are finished at the moment of its registration, in case of joint-stock companies some further actions are required. Within 15 days a package of respective documents should be submitted to the National Commission on Financial Market for the state registration of stock shares placed when creating the company. Failure to perform this obligation gives rise to the right of any stockholder to lodge a claim with the court for the dissolution of the company.  In case no inaccuracies are revealed the state registration of stocks is carried out, what includes declaring the stock subscription valid, conferring a state registration number to each class of stocks placed and introducing the respective records into the state securities registry.  After that, within 15 days from the state registration of stocks, the company must ensure the formation of stockholders registry, provide first records therein on stockholders, their legal representatives and nominal stockholders.

It is not an overstatement to say that a complex competition regulation is usually a feature of a country with the developed market economy. So, it is not a surprise that the rules on competition and anti-monopoly regulations in Moldova are still at their initial stage of elaboration. However, for the last several years competition law has become more apparant and feasible for many Moldovan companies. And with the lapse of time more and more complicated competition rules are likely to gain ground as compared to other branches of economy regulation. The first law in Moldova that governed the issues of monopolistic and anti-competitive behaviour was the Law no. 906-XII of 29 January 1992 "On the limitation of monopoly behaviour and the development of competition". It first introduced the definition of a dominant position in the market, provided for some rules designed to prevent the abuses of dominant position, etc. Though not formally anulled this law does not play any significant role in the market regulation any more since the Law on the Protection of Competition no. 1103-XIV of 30 June 2000 came into force in the end of 2000.  Basic principles of the Law on the Protection of Competition: The Law on the Protection of Competition is a basic legal act in the Republic of Moldova laying down the rules of competition between market participants in the Republic of Moldova. Competition as such is defined by this Law as a contest between undertakings in which their independent activities effectively limit each other's possibility to influence unilaterally the general conditions of goods turnover in the respective market. Unfair competition is defined as any actions performed by undertakings to gain unfair benefits what causes or can cause damages to other undertakings or harm their business reputation.  Articles 2 and 4 of the Law stipulate the principles of competition regulation in Moldova. They provide for the state to recognize fair competition as a key factor in developying the economy. The state implements the policy designed to ensure free entrepreneurship and protection of fair competition. It is forbidden to use one's rights for the purpose of limiting competition, abuse dominant position and infringe legitimate consumers' interests. The state should contribute to developing and protecting fair competition and protect undertakings and citizens (consumers) from monopolistic activities and unfair competition. The Law stipulates certain types of anti-competitive activities: 1. Monopolistic activity:    - abuse of the dominant position in the market;    - anti-competitive agreements.2. Unfair competition.3. Public authorities' activities limiting competition. These types of anti-competitive activities will be explained and considered in other posts. However, it is worth mentioning here the definition of dominant position which plays a pivotal role in competition regulations in all countries. The dominant position in the market is considered (by virtue of art. 2 of the Law) as an exclusive position of an undertaking in the goods market that enables it to influence decisively (solely or together with other undertakings) the general conditions of goods turnover in the respective market or to hamper the access to the market for other undertakings. For a company to be declared as holding the dominant position it should have a market share of not less than 35 %. At the same time the term goods should be interpreted broadly as the same art. 2 of the Law includes works and services into its definition. The main public authority created to implement the state's competition policy is the Agency for the Protection of Competition. And though the Law providing for the establishment of the Agency was adopted in 2000 it was only in 2007 when the Agency's board was approved and it started it activity. The Agency is entitiled to control the functioning of the markets, their structural modifications and the creation of transnational corporations and financial and industrial groups. It carries out supervision of certain types of mergers and acquisitions and also may, under certain cicumstances, lodge applications with the court for undertakings division. And it is the Agency that should intervene in cases of violations of competition regulations committed by undertakings. Coming back to the definition of the dominant position it is necessary to mention that beside the existence of the definition in the Law on the Protection of Competition, there has not been yet approved a clear methodology for determining it. The Agency elaborated the methodology and uses it, however, this methodology was not officially published as a legal act in the Official Monitor of the Republic of Moldova, and many lawyers claim it cannot have any enforceable legal power. In any case the methodology has been actively used by the Agency in order the dominant position of many companies in various markets.  So far, the competition regulation in Moldova lacks clarity and foreseeability. Representatives of many companies claims that the Agency's policy is inconsistent. This mostly happens because of 2 reasons: 1 - insufficiency and lack of clarity of existing acts governong the rules of competition, and2 - lack of necessary experience of the Agency, which only recently started to actively implement any competition regulations in Moldova. However, the situation is likely to change in the future, particularly under the influence of the EC competition policy and regulations that would be implemented in the Republic of Moldova.

xAn important issue that Moldovan companies (or their foreign partners) should take into consideration when carrying out international transactions is the existence of a number of rather strict rules on the repatriation of export proceeds, goods and services received as a result of foreign transactions. This issue is governed by the Law No. 1466-XIII of 29 January 1998 "On the regulation of the repatriation of money, goods and services received as a result of foreign transactions". The Law stipulates the obligation of companies registered in Moldova:to ensure the receipt of export proceeds or the return of advance payments for non-delivered import to their accounts in the banks in the Republic of Moldova;  to fulfil the import of goods and services after the performance of import payments; and to repatriate the proceeds or the assets received as a result of other foreign transactions. The general terms within wich the repatriation should be performed are stipulated as follows:in case of sales contracts, barter and export commission sales contracts - within the terms stipulated by the contracts, but not more than 1 year from the date of the goods dispatch or the date of the payment for goods or services (18 months for contracts of purchasing vine and fruit planting stock). for processing contracts - within 60 calendar days from the day of finishing the technological cycle indicated in the contract. for leasing contracts - within the terms established according to the contract but not less than once a year. The repatriation is controlled by the fiscal and customs authorities. The penalty for not complying with the rules on repatriation is 0.1 % of non-repatriated sums (costs) for every day of delay, but not more than the respective sum of money or the cost of goods or services that are due to be repatriated.

One the first major things that many foreigners have to work out when starting a business in Moldova is getting the right to come and stay in Moldova. The issues of getting a residence permit and to stay legally in the territory of Moldova become a problem for many. This post will cover some of these issues. Visas and visa prolongation Moldova established the visa regime for visitors from most of the countries. Only representatives of certain states may enter Moldova without a visa. These are most of the CIS countries, EU members and some other European countries (Iceland, Norway, Swiss Confederation), US and Canada and Japan. Recently it was announced about lifting visa requirements for Israeli, Andorra, Monaco and Liechtenstein citizens from 01 March 2010 (see the full list of countries of which citizens may enter Moldova without a visa as well as the list all Moldovan Consulates abroad on the web site of the Ministry of Foreign Affars). In any case, even the citizens of those countries that do not require a visa to Moldova have a limited right to stay in Moldoa for a long period of time. Without getting a residence permit you can only stay in Moldova for not more than 90 days (overall) during 6 months period. In case you're in Moldova on a visa and you need to prolong it for certain reasons you should address the Ministry of Information Technologies and Communication. There are no strict and clear criteria for visa prolongation, hence this issue is totally left at the authorities' discretion. The application for visa prolongation should be submitted no later than 72 hours before your visa expires. Labour migration and residence permits for business owners. Starting a business and registering a company in Moldova provides you with addtional possibilties to get a residence permit to stay in Moldova for longer periods of time. However, various legaislative acts have provided differing rules for same categories of persons in terms of stipulating clear criteria for granting residence permits. As we say particularly about the persons who registered a company in Moldova in order to carry out certain business activities here, the latest official act regulating this issue is the Law on Labour Migration (No. 180-XVI of 10 July 2008; in force - since 01 January 2009). Though owning and managing a company may not necessarily fall under the term "labour" in its literal sense, business owner are regarded by this Law as labour migrants. As a general rule labour migrants in Moldova may undertake their labour activity on the basis of the work permit and the temporary residence permit. The work permit is granted by the Nationl Employment Agency, and the decision on granting the right to stay temporarily in the territory of Moldova is taken by the Ministry of Home Affairs on the basis of the work permit issued by the National Agency. Following the positive decision of the Ministry of Home Affairs on providing the right to stay in Moldova the Ministry of Information Technologies and Communication issues the temporary residence permit for working purposes. In order to hire foreign employees the employer should ask the National Agency for the approval. However, in case of foreign citizens who have founded a company in Moldova may receive the work permit without such an approval by the Agency. The followig documents should be presented to the Ministry of Home Affairs in order to get the work permit and the right to the temporary residence: 1) Company's application to the National Agency and to the Ministry of Home Affairs to issue working and residence rights; 2) The migrant's application form/questionnaire; 3) Company registration documents (the company's registration certificate, the extract from the State Legal Entities Registry, and the respective licence - if relevant); 4) Documents confirming the company's activity (the State Principal Fiscal Inspection on the lack of debts to the public budget, a copy of the financial statements for the recent period, if this period exceeds three months); 5) Individual labour contract (if relevant); 6) the copy of the foreign citizen's national ID (passport) with the respective stamp of the Border Service on crossing the border of Moldova; 7) Medical certificate from the respective Moldovan medical institution confirming that the applicant is not AIDS/HIV positive; 8) Documents about the applicant's living conditions (e.g. renting contract); 9) two recent photos (50x60 mm); 10) the certificate on the lack of previous criminal records from the applicant's country of origin (apostilled or legalized). The general term of the temporary residence rights granted to companies owners is 1 year - with the right to prolng it (the decision on granting the right to reside in Moldova should be taken by the authorities within 30 days period). Some categories of persons that made the investments for the sums that follow may be provided with the residence permits for longer periods of time (with the right of prolongation): - USD 10 000 - 100 000 - up to 2 years; - USD 100 000 - 250 000 - up to 3 years; - more than USD 250 000 - up to 5 years. For these categories of persons the decision is taken within 15 days.

It's now more than two years passed since this blog had been last updated. There were many different reasons for that.  However, I've decided to re-start it, though with certain changes. I want to change the topics that this blog will focus on. From now on there will be very few general discussions on legal system of Moldova and the blog will mostly concentrate on Moldovan business law issues.  I really want it to be useful for the readers containing the information on various issues of business activities, "how-to's", legal requirements for companies, etc. I have changed the name of the blog (as you have probably mentioned) and deleted a lot of old posts (leaving just some of them).  So, I do hope that you find this blog in its new format more interesting and hopefully really useful for you.

Introduction.As my permanent readers know I periodically recur to the issues related to development of competition law in Moldova and activity of the newly created National Agency for Protection of Competition. A lot of different opinions have been expressed since February this year when the Agency's Board members were approved. For several months there were almost no information on its activity. However, autumn showed that the Agency is not going to remain a mystery anymore. In September-October period the Agency adopted several prominent decisions that have attracted significant attention and raised a lot of questions.Orange.The first decision that attracted media's attention was the declaration of Orange-Moldova as a mobile operator holding a dominant position in the market. The former Voxtel company renamed in spring 2007 into Orange - an internationally known brand name - according to the official data takes a market share of 64.5 % as to the number of clients and 70 % of the number of transactions.Further developments.After Orange it looked that the Agency was going to examine the cases of other companies that took dominant positions in their respective markets like Union Fenosa or Moldtelecom. However, this wasn't the case. Instead of being engaged in getting things put in order in noncompetitive market (fixed telephony, energy, etc.) in the end of October the Agency fastened its eyes on some other areas that resulted in a number of "loud" decisions and actions:1. Sun Communications.The Agency took a decision to fine the Sun Communications company, the largest cable TV operator in Moldova, to the sum of 2.5 mln lei (about USD 220 thousand). According to the General Director of the Agency (cited by the Infotag news agency) the Sun Communications with the help of the Acces-TV company intended to oust its competitor - the CTC-Alfa company out of the Chisinau market.A 30-thousand fine was imposed on Acces-TV. The amount of penalties was determined following the companies' profits.The Sun Communications' representative stated that the Agency's accusations harmed the image of the company. At the moment the decision is studied by lawyers and the Company reserves its right to appeal against it to a competent judicial authority.2. The supermarket "Bomba".The "Bomba" supermarket is one of the leading retail chains of electric household appliances. It was fined by the National Agency for Protection of Competition to the sum of 9 mln lei (about USD 780 thousand). According to the Infotag agency the ground for the Decision was the fact that the company having got the authorization to open only one outlet in Chisinau in fact has opened 7 shops in the capital and 1 in Balti thereby violating the Law on Protection of Competition. The Agency also mentions the lack of an agreement between the main shop, to which the authorization was granted, and other shops of the chain.The just mentioned decision was followed by some accusations in media that it had been "stimulated" by a big Ukrainian retail company being alleged to clear the market away.3. The Union of Sugar Producers of Moldova.Within the same period of time the Union of Sugar Producers of Moldova (hereinafter - the Union) accused the Agency of attempts to discredit the organization and put it under pressure, as well as of blockading the organization's activity for 5 months. According to the Union's statements the Agency has not examined since May 18 its application to review the new version of the organization's articles of associations.Despite the fact that the application was annexed with all documents provided by law the Agency required to present additional documents, financial and statistical reports that had nothing with the application's subject-matter. The Deputy General Director of the National Agency stated for the media that the Agency may demand the liquidation of the Union because the presented documents contain certain evidences of violation of fair competition rules, in particular, the amendments to the articles of association that provide creation of a special aid fund for enterprises.According to the Union the actions by the Agency are provoked by the Union representatives' participation in examination of the new version of the Law on Protection of Competition, who repeatedly pointed out that the amendments elaborated by the Agency do not conform to democratic and market principles.Reflections and Conclusions.So, as you see the activity of the Agency so far has been fairly controversial. And it has prompted a number of questions and ruminations about the prospects and problems related to the Agency's future activity:1. Lack of information.So far, I think the main problem about the Agency has been the lack of information about its activity and decisions adopted by it. The general public still knows very little about the above mentioned controversial decisions. No access to the texts of decisions, no information about the facts and grounds following which those decisions have been adopted and evidences that support the facts.The involvement of competition authorities into companies' activities may have a very significant impact upon the whole economy. This impact may be both positive and negative. Taking into consideration that the very notion of fair competition and antitrust regulation is very new and uncommon for Moldova any action of the Agency may have a deep resonance in society and cause very negative reaction even if the actions of the Agency would be legal and sound.And this is actually what has happened. The Agency's decisions were quite shocking both because of the amount of penalties imposed on companies (that are really huge for Moldova, and the Agency has not still explained why the penalties are so big and how they have been calculated) and because of the lack of information about the facts and evidences.Therefore, the Agency must explain in details almost every step it takes. Only in such conditions there will be enough confidence in legality of the Agency's actions and a high level of transparency will be secured. At the moment the transparency is probably the Agency's weakest point.2. Inconsistency.The second problem that follows the first one is inconsistency in the Agency's activity. After the declaration of the Orange's dominant position it could be expected that the Agency would attend to the natural monopolies' activities.As I previously stated it wasn't the case. Instead of this the Agency placed the emphasis on particular cases of alleged violations. I'm not saying it should not have done this. What I say is that it looks (at least for me) a bit inconsistent. And consistency is crucial at the moment for the Agency as it is only in the process of building its reputation. By the moment the Agency seems to have started with a series of scandals what is probably not the best way of creating a trustful image.3. The prospects for the nearest future.The way the Agency started its activity may lead to two different conclusions: it was either lack of experience (what is normal and can be changed in the nearest future) or their actions were a result of negligence and lack of professionalism (what is much worse).I'm not saying here about the allegations that the Agency lacked impartiality when adopting the above decisions. I cannot assert it without any strong evidence. However, the activity of the Agency must be improved in order to avoid such allegations in future (or at least to diminish grounds for them). I also hope that the Agency will not turn into another source of collecting funds for the public budget by imposing huge penalties. We do not need another "tax inspection".What is evident is that in the nearest future the role of the Agency may become very important in regulating the Moldovan market. The business community will face the necessity to follow the Agency's instructions that may be both complicated and strict. A number of disputes and litigations may as well arise as a result of the Agency's decisions. That will definitely send a challenge to lawyers working in the field of business law. The legal professionals in Moldova are not still used to notions and regulations of competition/antitrust law and the ones who will get used to them will definitely have certain market advantages...

Support of foreign investors is a very good and useful thing. But can the measures of such support create an inequality and a favourable regime for certain investors without providing them to others? And are such measures legitimate?As you remember in my last post I told about the ECHR's judgment against Moldova basing on the Law on Foreign Investments that had already been abrogated at the moment of its pronouncement.In 1992 the Law on Foreign Investments was enacted in Moldova. This law provided to foreign investors certain incentives and facilities. One of the guarantees of those facilities was stipulated in para. 2 of art. 43 of the Law providing the guarantees in case of changes in legislation. It stated that foreign investors and enterprises with foreign capital that had enjoyed customs, tax and other facilities were allowed to benefit from those facilities and after the new modifications having come into force.And basing on this provision of the Law the European Court of Human Rights adopted its judgment in the case BIMER SA vs. Moldova that I wrote about.In 2004 the Law on Foreign Investments of 1992 was abrogated by the newly adopted Law on Investments to Entrepreneurial Activity that is still in force. This law does not provide any particular incentives/facilities for foreign investors as the Law of 1992 did. And by abrogating that law it also repealed all those facilities contained in it. However, the new law contains a very interesting provision in para. 2 art. 25:"Foreign investors that made their investments and enjoyed certain guaranteesand facilities under the Law on Foregn Investments of April 1, 1992, may stillenjoy in future all those guarantees amd facilities provided by that Law.""So what?" - you may say.Let me explain my view on this. Fisrt of all, I'm not sure that it is fair enough to provided certain benefits to a person without providing them to another simply because the first one started its activity earlier. And this is what actually happens. A foreign investor that made investments before the new Law has been enacted still enjoys the same privileges even after they have been abolished at the time when new-comers can't do this thereby being in a less favourable position.Secondly, I doubt the fairness of providing to foreign investors more privileges and facilities than to the local ones. If a Moldovan company and a foreign one either make an investment of USD 1 mln, then what is the difference between these investments?I understand an extraordinary importance of foreign investments for Moldovan economy. And I really support and welcome them. However, I suppose that the best way to attract foreign investments to Moldova is not to provide them any particular benefits, but to create the conditions for their stability and safety regardless of the political party being in power at any particular moment...

I’m really sorry for such a long standstill in my blog. The reason of it you’ll know in the next post…In my last post I promised to continue and come up with ideas on how to resolve some employment-related problems. Alexander Culiuc and Alex Railean in their comments guessed precisely the topics that I was going to talk about further. That means that I’ve touched upon really significant issues both for employees and employers. So, let me continue…Insure your investments.In order to be successful in your business you usually need the employees around you that are highly competent and trained for achieving the goals you set before your organization. The present day reality is such that it’s not enough anymore to find a highly competent employees. Your team members need a permanent improvement of their skills. And wise employers always make investments in this process of raising the level of their employees’ skills and knowledge. But they also want to be sure that their investments won’t be spent in vain. You as an employer may want that either your trained employees to work for you for a certain period of time or to recover all money and efforts invested into them in case they leave you. Let’s find out how we can do it…Alexander Culiuc described in his comment to the previous post one of the most widely spread mechanisms: employers provide sponsorships for their employees so that they could pass the studies and gain certain knowledge and skills required by employers under condition that employees either work for their employers for a certain period of time or return back the costs of their studies paid by employers. A very attractive scheme, isn’t it? But we need clear legal frames for it.Art. 214 of the Labour Code provides the right of employees for professional training. It may be realized by signing additional contracts to a labour contract: a contract of professional qualification or a contract of continuing professional training.The contract of professional qualification (art. 215 of the Labour Code) is a special contract concluded in a written form under which an employee undertakes to pass a course of professional training organized by an employer in order to obtain a professional qualification. At the level of an enterprise such training may be carried out by an instructor or an instruction expert appointed by the employer from among the qualified employees having a professional experience and a permission received in accordance with procedures established by law.The law (paras. (3) and (4) of art. 216 of the Labour Code) does not provide a clear definition of the contract of continuing professional training. However, following the definition of the contract of professional qualification I consider that we may interpret the former one in the same way with a remark that a contract of continuing professional training is concluded for a longer period of time. At the same time we have to take into consideration certain limitations imposed by para. (4) of art. 218 of the Labour Code. In case of employees passing a continuing professional training the following is forbidden:- work in heavy, damaging or dangerous conditions;- overtime work;- night work;- detachments not related to the training.The legal provision that can be of the most interest for employers is contained in para. (2) of art. 214 of the Labour Code, which states that an employee who has passed a course of professional training or an internship can not resign during the certain period of time stipulated in the contract of professional training except for the cases specified in the contract.So, as we’ve clarified earlier you can’t simply retain your employees for a certain period of time, BUT if you provide some training to them you can agree that your employees have an obligation to work for you for a certain period of time. The law doesn’t say how long this period may be. It should be agreed upon between employer and employee in their contract. However, this period should be reasonable and commensurable with the training provided to employee. The last statement is not directly stipulated in the Labour Code, however, it is important and may be taken into consideration by court in case of a dispute.Then, the following question may arise: What if an employee after having got necessary training and signed an additional agreement that obliges him to work for the current employer for a certain period of time refuses to do this? Can any sanctions, penalties be applied in such cases? The law doesn’t give a direct and clear answer. At the same time it doesn’t prohibit to include a term into the contract under which the employee undertakes to recover the costs of training borne by the employer. As far as the Labour Code prohibits employers to charge the lost profit from employees and in order to avoid possible disputes regarding the amount of compensation I would advise to assess the costs of training in advance and to indicate the sum in the contract.Now let’s see if there are any other schemes of recovering the investments made into employees.Art. 214, paras. (3) and (4) provide that if the initiative of participation in any form of professional training organized outside of the enterprise with interrupting of the work comes from an employee, the employer may examine employee’s written request together with the employees’ representatives. And within the period of 15 days the employer takes a decision under which conditions he may permit the employee to pursue his professional training and whether the employer is going to cover (partly or in full) the related expenses and costs.At the same time the law doesn’t prohibit employers and employees to sign contracts of loan according to general provisions of civil law. In this case they would sign a loan contract for a specified purpose, and namely the loan provided by employer to employee on order that the latter one could pursue professional training.According to art. 871 of the Civil Code the repayment of loan is subject to the terms stipulated in the contract. As far as in case of a loan agreement the parties have a wider possibility to determine the terms of the contract it is more convenient for employers than a traditional professional training contract regulated by the Labour Code.In the loan agreement the parties are free to choose the terms of repayment, the obligation to pay interest in case of a breach of contract. Thus, it gives more flexibility than the means provided by the Labour Code. In order to ensure this mode it is recommended to ask for a request from an employee to provide him the possibility and necessary resources to pursue the professional training…Keeping secrets…Another aspect (different from the issues of training of the employees) that is of a great interest for many employers is how to preserve your secrets in case of an employee leaving for your competitors. I mean the issues that arise in regard to Non-Disclosure Agreements and Non-Compete Clauses. Let’s see if such agreements and clauses are enforceable under Moldovan labour law.Using a simple definition of a Non-Disclosure agreement contained in Wikipedia “it is a contract through which the parties agree not to disclose information covered by the agreement”. In Moldova the issues of trade secrets protection are governed by the Law on Commercial Secret (No. 171 of 06 July, 1994) and by the Labour Code.Art. 53 of the Labour Code stipulates that confidentiality as a contract clause means that the parties agreed within the labour contract validity period and not more than 3 months (not more than 1 year for employee that have occupied chargeable positions) after its termination not to disclose the data and information they knew during the execution of the labour contract in accordance with the rules of internal order, collective or individual labour contract.Para. 2 of art. 53 states that non-observance of confidentiality entails the compesantion of damages caused by the party in fault.The Code does not provide the definition of a chargeable position (functie de raspundere). Therefore, it should be determined in every particular case taking into consideration the employee’s position, his/her responsibilities and obligations and the level of access to confidential information.In order to bring a former or actual employee to responsibility for diclosure of confidential information it is very important to create a clear and effective mechanisms of protecting and accessing confidential information. This may imply the adoption of rules and instructions on evaluating the levels of confidentiality, procedures of ensuring the information protection, its transmission and non-disclure, etc. Without these mechanisms (the elaboration of which should be delegated to competent lawyers, either in-house or outsourced) the non-disclore agreements may be unenforceable…In what regards Non-Compete Clauses, or Covenants not to Compete (that represent a clause ”under which one party (usually an employee) agrees to not pursue a similar profession or trade in competition against another party (usually the employer)”) we face certain legal impediments.The reason to sign such agreements with employees is evident for employers. However, they encounter the same guarantees provided to employees by the labour legislation – the prohibition of limitation of employees rights (even if an employee agrees to such a limitation). The case of Non-Compete Clauses may be and are likely to be viewed by the courts as such a limitation of the right to the freedom of labour. And this circumstance will lead to unforceability of such clauses…PS. Certainly, the issues of employers’ “protection” from their employees are much broader. I touched upon only a couple of them (in order to consider all of them I’ll have to right a book) that I was asked about by the blog readers.If you are interested in other labour law related issues let me know, so that I could come up with new posts on them…

In November 2006 the Chamber of Accounts adopted the Report on financial revision carried out at the Supreme Court of Justice (SCJ) for the period of 2004-2005 (published in Monitorul Oficial on January 12, 2007; read the full text in Russian and Romanian).And I found an interesting paragraph there relating to the remuneration of the SCJ's personnel labour:"During the verified period the remuneration of labour of the Supreme Court of Justice's personnel was regulated by the Parliament's Decision # 453-XIII of May 16, 1995 "On the Remuneration of Labour of Judges, Employees of Courts and Prosecutors' Offices". In spite of the fact that the SCJ established the categories of labour remuneration according to the Annex 1 to the aforementioned Decision of Parliament, the rises in wages and bonuses were set in accordance with the Government's Decision # 139 of February 09, 1998 "On remuneration of labour of public employees and persons that carry out technical maintenance supporting the functioning of public authorities, on the basis of the Uniform Tariff Scale", the latter ones being than the ones stipulated in the aforementioned Decision of the Parliament # 453-XIII.Taking into consideration that according to para. 15 of the Government's Decision its provisions do not apply to public authorities for which the categories and conditions of labour remuneration are stipulated in special decisions, the Supreme Court of Justice ran up unjustified expenses on labour remuneration in 2004-2005 to the sum of 369.1 thousand lei and exceeded the expenses stipulated in the calculation of expenditures for the year 2005 for bonuses payments in the sum of 209.6 thousand lei and the rises in wages - for 26.8 thousand lei..." So, according to the Chamber of Account's data the Supreme Court of Justice overpaid to its staff more than half a million lei during 2004-2005. Quite interesting, isn't it?...

I can't believe it!!! What happened to the Moldovan Parliament? They finally decided to approve the top management officials of the National Agency for Protection of Competition (you can read more on the news in Russian here and here). The Law on Protection of Competition (the main legislative act in the field of competition and anti-monopoly regulation in Moldova) was adopted in June 2000 and entered into force on December 31, 2000. This Law provided the creation of the National Agency for Protection of Competition. But so far the Agency hasn't been created.I adverted to this issue in one of my first posts in this bog in November - "A competition authority: will it become a reality one day?" So, now it seems that the Agency is likely to start its work in the nearest future.But the fact is anyway stunning. We had to wait for more than 6 years, since the law had entered into force, for beginning of its realization.Well, potius sero quam nunquam - Later is better than never...