According to the Labor Law (Article 14), the employment contract can be concluded for a definite period of time (the duration of which is predetermined) and for an indefinite period of time (the duration of which is not predetermined).
Article 46 of the Labor Law regulates more specifically the issues related to the employment contract concluded for a definite period of time.
This article is in the part of the Law that contains provisions related to other so-called special, flexible atypical contracts which include: seasonal employment contract, part-time employment contract, part-time employment contract with one or more employers, home-based employment contract and domestic employment contract assistants.
According to Article 46 paragraph 1 of the Labor Law, the employment contract for definite period of time can be concluded for a certain period of time to perform the same activities, with or without interruption for up to 5 (five) years.
This period includes one or more contracts that can be concluded for a definite period of time with the same employer, to perform the same work, in order to prevent the exploitation of the employee through the final use of fixed-term employment contracts. If the employer has repeatedly concluded an employment contract with a specific employee for the same things, regardless of whether those contracts are with termination or without termination, those agreements can not exceed the legal deadline of 5 (five) years.
After the expiration of this period, the employment based on a employment contract for definite period of time, except for the employment contract for seasonal work, is transformed into an employment relationship for an indefinite period, provided that the employee continues to work after the expiration of the term (5 years ), under conditions and in a manner determined by law. The purpose of the institute “transformation” is to prevent the employer from circumventing the law by concluding employment contracts for definite period of time that are of a longer-term nature, so that such actions abuse the rights of the employee.
Regarding the procedure and the manner of transforming the employment, there is a difference between the transformation of the employment in the private sector and the transformation of the employment in the public sector.
In the private sector, fixed-term employment is transformed indefinitely after the expiration of a period of five years, if the employee continues to work for the employer.
Unlike the private sector, in the public sector where the financing is from the Budget, the law prescribes other special conditions regarding the transformation of the employment relationship. In addition to fulfilling the condition regarding the legal deadline after which the employment can be transformed, before the transformation is performed, the need for a specific employee is required to be determined, systematized as permanent (indefinitely) and previously provided financial means for salary and contributions from the Budget for work indefinitely. In this case, it is not about fulfilling a formal legal requirement, but it is about fulfilling an essential requirement because without funds provided from the Budget, the employee would not accept to continue working.
The legislator classifies as a specific fixed-term employment contract the fixed-term employment contract for replacement of an absent employee. This contract for temporary employment can be concluded only until the return of the temporarily absent employee, so for this reason there is no specific deadline for the duration of the contract, but it is conditioned by the duty of absence from work, but can not to last longer for the temporarily absent worker, due to the specifics, the characteristics of this type of contract which is often present in practice. This is due to the different types of paid and unpaid leave provided for in the Law which can not always be foreseen in order to determine in advance the time for which the contract is concluded (for example, maternity leave, parental leave, sick leave etc). However, there are cases when the temporarily absent employee does not want or will not return to work, in which case the employee who replaced him can not be transformed into employment, but the employer will be able to conclude a new employment contract on definite period of time or indefinite period of time.
Article 46 paragraph 4 of the Labor Law provides for the exception that the employment based on a fixed-term employment contract can be transformed into employment for an indefinite period of time before the expiration of the 5-year period, if the employee has been working for more than 2 years which is released on the basis of retirement or other grounds and for which financial resources are provided, if the employer determines that there is a permanent need of the employee, under conditions and in a manner determined by law. In practice, this exception is more applicable in the public sector, because in the private sector the employer can at any time during the temporary employment to transform the employment to indefinite depending on the need and will of the employer, without fulfilling other legal conditions and restrictions.