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  • Family businesses …… the challenge of succession and transfer

    Family businesses …… the challenge of succession and transfer

    Family businesses make up the vast majority of businesses, globally, on a European and, of course, on a national level. In our country they constitute 80% of the total number of businesses and 44.3% of the listed companies. As a result, they prove to be extremely important for the economy of our country (and not only). They produce economic and social wealth, create and maintain jobs. They often offer innovation. Despite their multilevel contributions, however, they are not a stabilizing factor for individual economies. Their introversion, low productivity and, in particular, the challenge (and usually impossibility) of succession, make their future uncertain and their environment, therefore, insecure.

     

    The difficult (as proven) task of succession

    The task of succession in family businesses proves to be extremely difficult. Its difficulty is confirmed by the findings of the paper “Study on the Succession and Transfer of MM Commercial Enterprises”, prepared under the auspices of the Ministry of Labor and Social Security and the National Confederation of Greek Commerce. Among those findings: “… according to Ward 14 statistics, 30% of family businesses are estimated to pass successfully into the hands of the second generation, and about 15% have successfully passed to the third generation, while longer-lasting companies end up being only 3 out of 100”.

     

    The management of succession in family businesses

    In order for the succession by the next generations to be successful, considerable effort and preparation is required. It is not enough, of course, to choose the (in the opinion of the founder or major shareholder) best successor. It requires, before anything else, a sincere commitment from the same (: founder or major shareholder). It also requires the parallel involvement of consultants in various capacities and close cooperation with them. Significant, and coordinated, effort is required.

    The traditional approach to succession in family businesses seems very simple. It focuses exclusively on the delivery of the company’s reins to the successor. A tradition that has, basically, two stages (the order is random): One concerns the legal transfer of the ownership from the founder (or main owner) to the successor. The other is the transfer of management and the establishment of the successor in the position of the transferor.

    The modern approach (inter: “The process of succession in family businesses” – A. Kefala, C. Georgiou) treats succession as a long-term process that is analyzed in individual phases. In more detail:

    Phase A’: Diagnosis of the health (and possible pathogens) of the family.

    Phase B’: Diagnosis of the health (and possible pathogens) of the business.

    Phase C’: Adopting the model of the Modern Business and Strategically Aligning it with the Vision of the Founder.

    Phase D: Implementation of the Alignment Strategy.

    However, regardless of the methodology one would choose (also look at the aforementioned study as well as at practices and methods adopted by various counselors), one thing is certain: the process of succession in family businesses is not and should not be treated as a simple process.

     

    The transfer of the family business

    The (potential) legal actions and procedural steps of the succession vary, depending on the corporate type of the family business. Since it is impossible to record in one article what happens in all types of companies, we will limit ourselves in this case to the most important of them: the SA. Also, to the most common, at a legal level, possible options.

     

    “Inter vivos” or “mortis causa“?

    The time, the results and the terms of the transfer of the family business can be chosen (or not) by its owner. In the latter case (: when the owner does not choose) the owner lets “luck”, “old father time”, the provisions of the law and, possibly, the “battle” of any of their descendants choose for them.

    In other words: The transfer of the family business can take place, on the terms that the owner will choose during their lifetime (: transfer “inter vivos”). Otherwise, the transfer will happen when, inevitably, the owner’s lifespan comes to an end (at a when unknown to all of us) (: transfer “mortis causa”). In the latter case, the terms and effects of the transfer will be those provided for by inheritance law in general. Possibly by a will of the owner. Especially in SAs, the relevant provision will also apply (: article 42 of law 4548/2018).

    It is true, however, that the specific provisions of the law do not regulate the smooth succession and transition to the next generation. But neither do they guarantee it; and how could they…

     

    The subcategories of the “inter vivos” transfer option

    In a family SA, the subcategories of the “inter vivos” transfer of the shares of the main (or sole) shareholder in the succession are (basically) three: the sale, the parental benefit and the endowment. The path that will be chosen presupposes the identification of the best, tax-wise, solution. And, therefore, the optimal tax (and of course legal) planning.

    Also: the shares to be transferred in the succession can be transferred in full or only in partial ownership – ie by transferring the bare ownership and withholding the usufruct.

    Let’s look at the individual options in more detail.

     

    The transfer of full ownership of the shares

    In SAs, the principle of free transfer of shares applies (article 41 §1, law 4548/18). The shares can be issued pledged, only as an exception (article 43, law 4548/18). Also: it is possible to issue (or not) physical shares. In the event that physical shares have been issued, in addition to the transfer of ownership of the share, the title itself must also be transferred. That is, the physical delivery of the share titles must take place, in addition to the agreement for the transfer of the ownership of shares from the shareholder to the successor.

    The transfer of the shares must be registered in the shareholders’ book (article 41 par. 2 of law 4548/2018).

    It should be noted that in the light of succession, when full ownership of the shares are transferred, this signals something perhaps even more important. Specifically, the final, complete, and irreversible departure of the transferor from the capital (and not only) of the family business. And finally, their complete replacement by the successor.

    Needless to say, the choice of the right successor has, especially in this case, an even greater value.

     

    The transfer of only the bare ownership of the shares

    The shares of the SA may be subject to usufruct (article 54 par. 1 law 4548/2018). The usufruct can be established by agreement (articles 1143 of the Civil Code) between the transferring shareholder-usufructuary and the owner of the bare ownership-successor. Also: for a definite or indefinite period of time. In any case, and for as long as the aforementioned right lasts, the usufructuary has the power of use and benefit from the shares (1142 Civil Code). This, in practice, means that (although there may be different agreements in place) the usufructuary of the shares has the right to receive the distributed dividends; also to vote at the General Assemblies of the company (article 1177 Civil Code & 54 §2, law 4548/2018).

    More specifically, in the event that the transferor transfers only the bare ownership of their shares, retaining the usufruct for themselves, they:

    (a) Ensure their livelihood for the time after the transfer.

    In more detail:

    It is possible for the transferor to look forward to dividends corresponding to the transferred shares for their livelihood. Or, more broadly, they may look forward to managing said dividends themselves. In some cases, the (sufficient) protection of the transferor becomes more or less imperative. After all, there are many examples of (subsequent) ingratitude on the part of the successor. The retention of usufruct by the transferor is a sufficient compensation for the theoretical (and / or practical, sometimes visible) risks.

    It should be noted, however, that, despite the retention of usufruct by the transferor, it is possible to agree on the transfer of the dividend to a third party, other than the usufructuary (Article 33 §5 of Law 4548/18).

    (b) Ensure the maintenance of their position and power in the supreme body of the SA.

    In more detail:

    It is also possible that the transferor wishes (for some time and to some extent) to maintain their involvement in the management and operation of the SA. Retaining for themselves the usufruct, they retain, at the same time, the right to participate in the General Assembly. Also (and most importantly) the right to vote – in the name and on their behalf. In other words, they do not operate as a proxy of the owner of the bare ownership and successor shareholder (articles 1177 of the Civil Code and 54 § 2, law 4548/2018).

    It is possible, however, to agree between the transferring shareholder-usufructuary and the acquiring shareholder of the bare ownership – successor that the latter will exercise the voting rights deriving from the shares. This agreement, in order to be valid before the company, must be registered in the shareholders’ book. However, this agreement may take place at any time after the usufruct has been established.

    In the event that the shareholder holding the usufruct assigns the right to vote deriving from the transferred shares, they demonstrate the maximum possible trust in their successors. The succession will have, at least in this case, occurred. The successor will be the one who will formally be entitled to make the most important decisions for the management and operation of the family business. On a practical level: The right to elect the Board of Directors and, in general, the management of the family business.

     

    The choice (?) of the transfer “mortis causa”

    The “headaches” of the “inter vivos” transfer can be completely avoided by the main (or sole) shareholder of the SA. In what way? By them avoiding, during their lifetime, to make any choice or preparation. This choice (more precisely: denial of choice) certainly seems convenient. It is a given, however, that they will not ensure in this way, not in the slightest, the succession of their business. Moreover, the major (or sole) shareholder may assess that the issue of succession is not sufficiently important or, at least, a major priority for them.

    However, the options they have, relating to the transfer of the shares of their company “mortis causa” are two. The first is to leave things in the “hands of the law” by adopting the option of unallocated succession: just whatever the law provides for their heirs. The second is to adopt the best solutions for them by drafting the appropriate, according to them, will, in order to transfer their shares and company to specific persons, in the way and in a manner that they will choose.

     

    Successful succession in family businesses is a complex process. It requires the commitment of all persons involved. It requires effort, patience, perseverance and, of course, time.

     

    But the latter (: time) is not always ” kind old father time” nor does it “cure all”.

    Therefore: Careful planning of the succession and its completion during the lifespan of the main or sole owner is desirable.

    Most importantly: the willingness and commitment to devote the necessary time and as much energy as each individual case requires.

    Under the specific conditions: the result is going to reward us.-

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (November 15, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • The Safety Engineer and the protection of the life and health of employees

    The Safety Engineer and the protection of the life and health of employees

    The obligation to protect the life and health of the employee – The Safety Engineer

    In our previous article we referred to the ancillary obligations of the Employer deriving from the employment contract and employment relationship that they develop with their employees. The obligations that are characterized as “ancillary” are not, at all, of minor importance and value. After all, how would one characterize as minor obligations related to the protection of the life and health of the employee? Their fulfilment is required (and rightly so) by the existing institutional framework. The advent of the pandemic, moreover, reminded us very strongly of their value. But life and health are goods that we must protect at all times. Of course, in the work environment as well. The Safety Engineer (should) work in this direction. Respectively, the Occupational Physician who occupied us in our aforementioned article.

    Let us now try to approach the institution of the Safety Engineer.

     

    Η κύρια και οι παρεπόμενες υποχρεώσεις του εργοδότη από τη σύμβαση εργασίας

    The main and ancillary obligations of the employer deriving from the employment contract

    We have already seen in our previous articles that the main obligation of the employer is the payment to the employee of the legal or, as the case may be, the agreed upon salary (648 Civil Code). The employer, however, is also burdened with the “welfare obligation” which can be broken down in several ancillary obligations. Among them are those related to the protection of personal and property goods of employees. The protection, ie, of their life and health, their personality and property.

    The fulfillment of the specific obligations is not left to the good will of the employer. The State has not chosen to remain a passive spectator. It enforces and supervises their implementation based on the existing institutional framework. A possible breach of the above ancillary obligations is linked to a number of civil, criminal and administrative sanctions. It is these data that, among other things, demonstrate the special care of the State regarding their observance.

     

    Ειδικότερα: η υποχρέωση προστασίας της ζωής και της υγείας του εργαζόμενου

    In particular: the obligation to protect the life and health of the employee

    The obligation to protect the life and health of employees is ensured by a series of provisions of civil, public and criminal law.

    The obligation of the employer to protect the life and health of the employee in the context of the employment relationship is established by the Civil Code. The relevant provision (662 of the Civil Code) provides: “The employer must arrange for the work and its premises, as well as for the accommodation, facilities and machinery or tools, in order to protect the life and health of the employee.”

    In addition, there is a set of provisions of public law aimed at the comprehensive protection of employees. These provisions constitute the legislation on health and safety at work.

    These are the provisions that are part of either the general or the specific, relevant, legislation. That means that some provisions concern all employees, while others concern only specific categories of employees (eg Presidential Decree 788/1980 “on security measures during the execution of construction projects”).

    A milestone in the legislation for the health and safety of employees is Law 1568/1995 (: “Health-Safety of employees”). This law has been innovative in the field of obligation of the employer to precautionary protect the life and health of employees. Its scope extends, with few exceptions, to all activities of the private and public sector. After the adoption of this law, various, supplementary, legislations were issued. All of them were codified by Law 3850/2010.

    The innovations of law 1568/1995 concerned the introduction of completely new institutions in the field of safety and health at work in our country. As such are the institutions of the Safety Engineer and the Occupational Physician -already provided for by Law 3850/2010.

     

    The Safety Engineer

    The obligation to employ a Safety Engineer

    The obligation to employ a Safety Engineer concerns all businesses. And this regardless of the number of employees they employ (article 8 §§1 & 2 law 3850/2010).

     

    The role and duties of the Safety Engineer

    The role of the Safety Engineer (who is organizationally directly under the management of the business) is preventive and advisory. It aims to create a safe working environment with the ultimate goal of preventing accidents at work.

    The advisory responsibilities of the Safety Engineer are provided in detail in the provision of article 14 of law 3850/2010.

    The Safety Engineer ” provides suggestions and advice to the employer, in writing or orally, on issues related to the health and safety of employees and the prevention of accidents at work. The written instructions are recorded by the Safety Engineer in a special book of the business, which is paged and certified by the Labor Inspectorate. The employer is obliged to be informed of (and sign as a testimony that they were informed) of the suggestions that are registered in this book “. (Article 14 §1)

    In addition, “advises on the design, planning, construction and maintenance of facilities, the introduction of new production processes, procurement of tools and equipment, selection and control of the effectiveness of personal protective equipment, as well as configuration and arrangement of jobs and work environment and general organization of the production process” (article 14 §2 par. a).

    At the same time, the Safety Engineer “checks the safety of the facilities and technical means, before their operation, as well as the production processes and working methods before their application and supervises the implementation of the health and safety measures of the employees and the prevention of accidents, and give the relevant information to the competent heads of departments or to the management of the business (article 14 §2 par. b).

    At the same time, the Safety Engineer has supervisory responsibilities, which are provided for in detail in the provision of article 15 §1 of law 3850/2010. Specifically, they must:

    “(a) regularly inspect the occupational health and safety of employees, report to the employer any omissions of health and safety measures, propose measures to deal with them and supervise their implementation;

    (b) supervise the proper use of personal protective equipment;

    (c) investigate the causes of accidents at work, analyze and evaluate the results of their investigations and propose measures to prevent similar accidents;

    1. d) supervise the execution of fire safety and alarm drills to determine the readiness to deal with accidents”.

     

    Finally, in order to improve working conditions, they are obliged (article 15 §2 law 3850/2010):

    “(a) to ensure that employees in the undertaking comply with the rules of health and safety of employees and inform and guide them to prevent occupational hazards posed by their work;

    (b) to participate in the development and implementation of employee health and safety training programs.”

     

    Who can act as a Safety Engineer?

    The employer has several options for hiring a Safety Engineer. They can choose as a Safety Engineer someone already employed by their business or a third person. They can also choose to receive these services from a company that provides External Protection and Prevention Services. In some cases, the employer themselves are entitled to perform the duties of a Safety Engineer. The employer can also adopt a combination of the above options (article 9 §1 law 3850/2010).

    However, the selection of the Safety Engineer by the employer is not without conditions. It is, on the contrary, a associated with the category to which the business belongs and the number of employees it employs.

    Businesses are classified into three categories (A, B and C) depending on the sector of their economic activity (Article 10 of Law 3850/2010). This categorization proves to be particularly important, as it determines: (a) the working hours of the Safety Engineer (article 21 of law 3850/2010) and (b) the qualifications that they must have (article 11 of law 3850/2010).

     

    Η υποχρέωση γνωστοποίησης στην Επιθεώρηση Εργασίας

    The obligation to notify the Labor Inspectorate

    The employer is obliged to notify in writing to the Labor Inspectorate the information of the one who assumes the duties of the Safety Engineer. When the latter is a third party, the employer is obliged to share a copy of their employment contract In the case of hiring company that provides External Protection and Prevention Services, the employer must also share the relevant contract, which in fact must bear the content defined by law (article 9 §7 of law 3859/2010). Finally, when an employee of the business is appointed as a Safety Engineer, the employer must share with the Labor Inspectorate a copy of the written assignment of duties and, in addition, of the corresponding declaration of acceptance.

     

    Η Εκτίμηση του Επαγγελματικού Κινδύνου

    Occupational Risk Assessment

    Occupational Risk Assessment is the written assessment of the risks created at work. Risks related to the safety and health of employees. It concerns the existing risks and, in addition, those that are likely to occur. It includes, of course, the groups of employees who are exposed to particular risks.

    The Occupational Risk Assessment is, unfortunately, a rather degraded obligation in the minds of most of us. It is, however, particularly important. And, most importantly, legally mandatory for all businesses, without exception. It is subject to the special obligations of the employer (article 43 of law 3850/2010).

    The drafting of the Occupational Risk Assessment can be carried out by: (a) the Safety Engineer, (b) the Occupational Physician, (c) the company that provides External Protection and Prevention Services.

     

    Its purpose is:

    “a) to identify the sources of occupational risk, ie what could pose a risk to the safety and health of employees;

    1. b) to determine whether and by what measures the sources of risk can be eliminated or avoided, and if this is not possible;
    2. c) to record the precautionary measures already in place and propose what should be taken in addition to controlling risks and protecting employees. “

     

    Ensuring the life and health of their employees is one of the most important obligations of the Employer. There is an adequate legal framework that defines and sufficiently specifies its obligations. As we mentioned in the introduction, the Safety Engineer, the Occupational Physician and the Occupational Risk Assessment hold important positions among them.

    The Safety Engineer and their services should not be approached as another “burden” of the business. We see their value, as a rule, only when something bad happens. We then (we, the Safety Engineer and the Labor Inspectorate) refer to the Safety Engineer’s suggestions in the relevant book – as well as to the Occupational Risk Assessment.

    Afterwards.

    Unfortunately.

    Let’s try to see things “differently”.

     

    The selection and utilization of the services of the appropriate Safety Engineer ensures the life and health of the business’s employees. It is a stabilizing factor in business-employee relations. It increases the degree of satisfaction of the latter. It reduces potential problems (of civil, criminal, administrative nature – and more) of the business. It increases its prestige. Reduces its costs. It helps the entrepreneur and senior management to focus on business development and ultimately prosperity.

    And when the (always undesirable) accident at work takes place, one thing is for sure: its consequences will be more mitigated in relation to the (possible) non-implementation of the measures indicated by the Safety Engineer.

    Let us therefore support and further strengthen the institution and the work of the Safety Engineer.

    Only benefits for employees and, of course, for the business can be obtained!

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (November 8, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Occupational Physician & Occupational Risk Assessment

    Occupational Physician & Occupational Risk Assessment

    Occupational Physician & Occupational Risk Assessment

    The obligation to protect the life and health of employees

    The sudden arrival of the pandemic was an extremely drastic and multi-layered important reminder to all of us. Among other things, it reminded us the value and importance of life and health. In general. In every aspect of -of all of our lives. Clearly in the work environment as well. As for the latter, we must remember that it is the responsibility of the employer to protect the life and health of their employees. And, although it is not the main obligation of the employer, it does not mean that it is a minor one. That it comes second. The state has, moreover, enacted a set of provisions delimiting this obligation. In this context, the Safety Engineer and the Occupational Physician have a significant role. And, of course, so does the Occupational Risk Assessment.

    Let us try to approach the latter.

     

    The main and ancillary obligations of the employer deriving from the employment contract

    The employment contract between the employer and employee can be concluded in writing or (even) orally. However, regardless of the way it is concluded, it generates a number of rights and obligations for both the business (employer) and the employee.

    The main obligation of the employer is the payment to the employee of the legal or, as the case may be, the agreed upon salary (648 Civil Code). However, the employer also undertakes a series of ancillary obligations. These are the ones that make up the “obligation of care” of the employer.

    Among the ancillary obligations are those related to the protection of personal and property goods of employees. The protection, ie, of their life and health, of their personality and of their property.

    A possible violation of said obligations is associated with a series of civil, criminal and administrative sanctions. It is this fact that, among other things, demonstrates the special care of the State regarding its observance.

     

    In particular: the obligation to protect the life and health of the employee

    The obligation to protect the life and health of employees is ensured by a series of provisions of civil, public and criminal law.

    The obligation of the employer to protect the life and health of employees in the context of the employment relationship is established by the Civil Code. The relevant provision (662 of the Civil Code) provides: “The employer must arrange for the work and its premises, as well as for the accommodation, facilities and machinery or tools, in order to protect the life and health of the employee.”

    In addition, there is a set of provisions of public law aimed at the comprehensive protection of employees. These provisions constitute the legislation on health and safety at work.

    These are the provisions that are part of either the general or the specific, relevant, legislation. That means that some provisions concern all employees, while others concern only specific categories of employees (eg Presidential Decree 788/1980 “on security measures during the execution of construction projects”).

    A milestone in the legislation for the health and safety of employees is Law 1568/1995 (: “Health-Safety of employees”). This law has been innovative in the field of obligation of the employer to precautionary protect the life and health of employees. Its scope extends, with few exceptions, to all activities of the private and public sector. After the adoption of this law, various, supplementary, legislations were issued. All of them were codified by Law 3850/2010.

    The innovations of law 1568/1995 concerned the introduction of completely new institutions in the field of safety and health at work in our country. As such are the institutions of the Safety Engineer and the Occupational Physician -already provided for by Law 3850/2010.

     

    The Occupational Physician

    The obligation to employ an Occupational Physician

    Those businesses that employ more than fifty (50) employees are obliged to employ (not only a safety engineer but also) an occupational physician (article 8 par. 2 law 3850/2010). To calculate the number of employees, the employees of all Subsidiary Offices, Branches, separate facilities, and independent holdings of the main business are taken into account.

     

    The role and duties of the Occupational Physician

    The Occupational Physician has medical and consulting responsibilities. Their role is basically preventive. Organizationally, they report directly to the company’s management.

    The Occupational Physician “provides suggestions and advice to the employer, the employees and their representatives, in writing or orally, on the measures to be taken for the physical and mental health of the employees…”.

    The written instructions are recorded by the occupational physician in a special book, which is recorded by the Safety Engineer. The employer becomes aware of said suggestions in written and signed form, as they are registered in the specific book (article 17 par. 1 law 3850/2010).

    The Occupational Physician, according to article 17 par. 2 of law 3850/2010, advices on issues regarding the:

    “(a) design, planning, modification of the production process, construction and maintenance of facilities, in accordance with the rules of health and safety of employees;

    1. b) taking protection measures during the import and use of materials and equipment supply;
    2. c) physiology and psychology, ergonomics and hygiene at work, arrangement and shaping of jobs and work environment and organization of the production process;
    3. d) organization of a first aid services;

    (e) initial placement and change of job for health reasons, temporarily or permanently, as well as inclusion or reintegration of disadvantaged persons in the production process, even with a suggestion of job reform. “.

    It should be noted, however, that the occupational physician is not allowed to be used to verify whether or not an employee is absent due to illness.

    An important obligation of the occupational physician is the obligation to supervise the health of the employees, as it is, in detail, provided in article 18 of law 3850/2010.

    Specifically, the Occupational Physician conducts: “… a medical examination of the employees related to their job position, after their hiring or change of job position, as well as a periodic medical examination at the discretion of the labor inspector… Arranges for medical examinations and measurements of factors of the working environment in application of the provisions that apply each time. Evaluates the suitability of employees for the specific job… “.

    In addition, among other things “… oversees the implementation of measures to protect employees’ health and prevent accidents. For that reason, the Occupational Physician:

    (a) regularly inspect jobs and report any omissions, propose measures to address the omissions and monitor their implementation;

    (b) explain the need for the proper use of individual protection measures;

    1. c) investigates the causes of occupational diseases, analyzes and evaluates the results of research and proposes measures to prevent such diseases;

    (d) monitors the employees compliance with employees’ health and safety rules, informs employees of the risks arising from their work, and of ways to prevent them;

    (e) provides emergency treatment in the event of an accident or a sudden illness “.

     

     Who can act as an Occupational Physician?

    The duties of an Occupational Physician are exercised by doctors. The Legislative Decree of 20.3.20 replaced article 16 of the code of laws for the health and safety of employees (KNYAE) which was ratified with the first article of law 3850/2010 (A’ 84). Pursuant to the relevant provision (Article 16-1), the duties of an occupational physician may be exercised by:

    “a) Physicians who hold the specialty of occupational medicine,

    1. b) Physicians who hold a degree in any specialty other than occupational medicine and who have performed the duties of occupational physician in businesses before the 15th of May 2009;
    2. c) Doctors without specialization who have performed the duties of occupational physician in businesses continuously for at least seven (7) years until May 15, 2009.

    It is noteworthy, however, the (added by the said Legislative Decree) §2 of the same article, on the basis of which:

    «2. The doctors of par. 1 can exercise the duties of an occupational physician in all the regions of medical associations of the country, without the permission of these associations “.

    This addition proved to be particularly critical (as we mentioned in our previous article – question 8) “as (legislative) entanglements of the very recent past (associated with bad trade union practices) created serious problems in choosing an Occupational Physician. For the selection of an occupational physician (who did not have the specific specialty-although they were included in the relevant Special Catalogs), until then, a certificate from the relevant Medical Association was required regarding the non-existence of an available Specialist in the same region (!!!) »

    For the employment of the Occupational Physician, the employer has the option to choose in the assignment of the duties of the occupational physician: (a) to employees of the business, (b) to persons that are not employed by the business, (c) to a company that provides External Protection and Prevention Services and, finally, (d) a combination of the above (article 9 §1 law 3850/2010).

     

    The obligation to notify the Labor Inspectorate

    The employer is obliged to notify in writing to the Labor Inspectorate the information of the one who assumes the duties of the Occupational Physician. When the latter is a third party, the employer is obliged to share a copy of their employment contract. In the case of hiring company that provides External Protection and Prevention Services, the employer must also share the relevant contract, which in fact must bear the content defined by law (article 9 §7 of law 3859/2010).

     

    Occupational Risk Assessment

    Occupational Risk Assessment is the written assessment of the risks created at work. Risks related to the safety and health of employees. It concerns the existing risks and, in addition, those that are likely to occur. It includes, of course, the groups of employees who are exposed to particular risks.

    The Occupational Risk Assessment is, unfortunately, a rather degraded obligation in the minds of most of us. It is, however, particularly important. And, most importantly, legally mandatory for all businesses, without exception. It is subject to the special obligations of the employer (article 43 of law 3850/2010). In fact, the recent pandemic made it necessary to update it as we were called to manage new, unprecedented, risks (as we pointed out in an earlier, as early as 15.3.20, article of ours- 7th question)

    The drafting of the Occupational Risk Assessment can be carried out by: (a) the Safety Engineer, (b) the Occupational Physician, (c) the company that provides External Protection and Prevention Services.

    Its purpose is:

    “a) to identify the sources of occupational risk, ie what could pose a risk to the safety and health of employees;

    1. b) to determine whether and by what measures the sources of risk can be eliminated or avoided, and if this is not possible;
    2. c) to record the precautionary measures already in place and propose what should be taken in addition to controlling risks and protecting employees. “

     

    Ensuring the life and health of their employees is one of the most important obligations of the Employer. There is an adequate legal framework that defines and sufficiently specifies its obligations. As we mentioned in the introduction, the Safety Engineer, the Occupational Physician and the Occupational Risk Assessment hold important positions among them.

    The obligation to employ an Occupational Physician was, until the beginning of the pandemic, another “burden” with no return for the vast majority of the liable businesses. The entanglements of the existing institutional framework until March 2020 (which succumbed to specific trade union logics) contributed to the feeling of the obligation being a” burden”.

    But things have changed. The institutional framework for occupational physicians was relieved of union burdens.

    The pandemic changed the lives of us all. It highlighted, even more, the value of occupational physicians.

    We already enjoy their services.

    It is worth further utilizing them.

    Especially in the present circumstances.

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (November 1, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Family business, divorce and claim for award of the share in assets acquired during the marriage

    Family business, divorce and claim for award of the share in assets acquired during the marriage

    Family businesses in our country are (as we have already seen in our previous article) the vast majority of all businesses. It is estimated that family owned businesses constitute 80% of all businesses (data from 2016) and 44.3% of all listed companies (data from 2020). These include companies with partners / shareholders that are spouses. Also, some others where the main (or sole) shareholder is one of the spouses. Things fact makes things a little complicated when there is a deviation from the evangelical: “Those who God has joined together, man should not separate” (Matthew 19: 6 & Mark 10: 9). From a theological, social, sociological (and not only) point of view. Of course also from the legal point of view. What is the luck of the assets acquired during a marriage that is now dissolved? And what, in particular, happens with participations in equity?

     

    The claim for award of a share in the assets acquired during the marriage

    In general

    The claim for award of a share in the assets acquired during the marriage (: 1400 Civil Code) was introduced in 1983 in our legal system. The relevant law (: Law 1329/1983) aimed at “the application of the constitutional principle of equality of men and women in the Civil Code…”. And also: “… the partial modernization of the provisions of the Civil Code concerning Family Law”.

    The claim for award of a share in the assets acquired during the marriage presupposes the application of the system of separate ownership of the spouses (1397 Civil Code). It does not apply when assets are jointly owned by them (articles 1403 et seq. of the Civil Code).

     

    The claim for award of a share in the assets acquired during the marriage: the legislation.

    It is not uncommon for the property of a single spouse to increase during a marriage. And this happens despite the other spouse’s contributions to this increase. This contribution often translates into the satisfaction of secondary (?) family needs. Indicative: housework, meeting the needs of the children of the family, etc. But sometimes it translates into a substantial contribution to the business activity of the other spouse (eg providing work in their business without pay, providing ideas for business development (1298 / 2016 Multimember Court of First Instance of Thessaloniki).

    The legislator “took action” to redress this injustice. The provision of article 1400 par. 1 of the Civil Code stipulates that: “If the marriage is dissolved or annulled and the property of one spouse has, after the marriage has taken place, increased, the other spouse, if they have contributed in any way to this increase, has the right to demand the return of the part of the increase which comes from their contribution. It is presumed that this contribution amounts to one third of the increase, unless it turns out to be greater or lesser or to be no contribution at all.”

    Simply put: After the dissolution (or annulment) of the marriage the (non-benefitted) spouse is entitled to claim from the other, whose assets increased during the marriage, their share (based on their own contribution) in augmentation. This contribution, however, must (in order to be compensated) go beyond the “expected”. That is, the (given) obligation between the spouses for contribution to the family needs according to their strengths (: 1389 Civil Code). Only then is the contribution taken into account in determining the amount of the claim on the assets acquired.

     

    The system of separate ownership (or separation of assets)

    The aforementioned claim for award of a share in the assets acquired during the marriage presupposes the application (otherwise not deviation from the system) of separate ownership (or separation of assets) of the spouses. This system is provided in the provision of article 1397 of the Civil Code. The specific provision states that: “… marriage does not change the separate ownership of assets by the spouses”. The assets of the two spouses are distinct.

    Whether, therefore, it is movable or immovable property; whether it was acquired before or after the marriage, the property of each spouse constitutes their individual (separate from the other spouse’s) property. As a result, each spouse has the right to manage his or her personal property as he or she deems fit. And, of course, to manage it freely.

    Acquisition of joint assets by both spouses (together) is common. Their relationship with respect to specific, common, assets is not affected from whether or not they are married. The specific relationship is governed, in this case as well, by the provisions of co-ownership and joint proprietorship (articles 785 et seq. And 1113 et seq. of the Civil Code).

     

    The impossibility of claiming award of a share in the assets acquired during the marriage: The system of joint ownership

    It is possible for the spouses to addopt (in deviation from the system of the aforementioned separate ownership of the spouses) the system of joint ownership (article 1403 et seq. of the Civil Code). The specific system refers to the case where the spouses choose, conventionally, the establishment of “… co-ownership in equal parts of their assets, without the right of each of them to dispose of their share”.

    The application of a co-ownership system can take place either before or during the marriage. However, when it is selected, a claim for award of a share in the assets acquired during the marriage cannot be made a posteriori. The purpose for which this claim is to be made is covered by joint ownership.

     

    The conditions of the generation of the claim for award of a share in the assets acquired during the marriage

    We have already addressed the negative condition that must be met in order for the claim for award of a share in the assets acquired during the marriage to be born. Specifically: to not have applied the system of joint ownership.

    However, in order for the relevant claim to be raised, three more, cumulative, conditions must be met. Specifically:

    (a) The marriage must have been dissolved or annulled (or, by analogy, the seperation of the spouses for at least three years must have been completed – article 1400 par. 2 of the Civil Code).

    The dissolution of the marriage occurs either with the death of one of the spouses or with the issuance of a divorce. In the latter case (: issuance of divorce) as well as the annulment of the marriage, the claim for award of a share in the assets acquired during the marriage is born after the irrevocability of the relevant court decision (1438 par. 2, 1381 CC). Possible fault of one or the other spouse is indifferent.

    (b) The property of one (or of both) of the spouses has been increased during the marriage.

    The increase of the property must have taken place during the marriage. The increase is calculated by comparing the property of each spouse at the beginning and end of the marriage.

    As property at the beginning of the marriage the net property of each spouse is taken into account. The sum, in other words, that arise after deducting liabilities from assets.

    The property at the end of the marriage is the net property at the time. The time point of calculation of the “final” property in case of termination of the marriage with a divorce or with an annulment, as well as in case of a three-year separation is a controversial issue. Various opinions have been expressed.

    A first opinion accepts, as the time of calculation of the “final” property, the time of the irrevocability of the separation of divorce or annulment of the marriage or of the completion of the three-year separation.

    A second opinion (more correct, more efficient and fairer in the view of the signatory) wants the time of calculation of the “final” property to be at the time of filing for divorce or for an annulment of marriage, or of the commencement of the three-year separation. In this way, the possibility of the liable spouse trying to “reduce their wealth” is avoided.

    A third, interim, opinion is that after the time of filing for divorce or annulment of the marriage or the commencement of the three-year separation, the presumption of contribution by 1/3 ceases to be valid in favor of the beneficiary spouse. The beneficiary spouse, therefore, is then required to prove any percentage of their contribution.

    (c) The other spouse has contributed to the aforementioned property increase.

    The contribution of one spouse to the increase of the other’s property is taken into account regardless of the way in which it takes place. That is to say, as contribution is considered any activity of the beneficiary spouse, which is in relation of cause and effect with the property increase of the property of the liable spouse.

     

    The legal nature of the claim for award of a share in the assets acquired during the marriage

    The claim for award of a share in the assets acquired during the marriage constitutes a liability property claim. The fact that it stems from the bond of marriage makes it personal. That is, only the beneficiary spouse has that right, which is extinguished upon said spouse’s death, as it cannot constitute a claim of an heir. Additionally: it cannot be assigned to a third party by the beneficiary spouse. Exception to the above exists if the claim has been contractually recognized or the beneficiary spouse has filed a relevant lawsuit.

    On the basis of its obligatory and property character, the controversial issue of its fulfillment with monetary (compulsory) or actual return of the assets acquired is raised.

    One view is that the claim for award of a share in the assets acquired during the marriage is necessarily monetary. In this context, exercising their claim, the beneficiary spouse may not receive the same assets that belong to the other spouse and are part of the increase of their property. On the contrary, the increase of their property is calculated only in accounting and is returned to the beneficiary spouse in cash.

    Another, more correct, view is that the provision of the increase, in its actual form, is possible. Many times, in fact, it is what is desired by the parties. According to this view, the beneficiary spouse is entitled to claim and the liable to request to pay the corresponding part of the assets acquired as such. In such cases the court may order, on the basis of similar requests, the return of either a percentage of co-ownership of the assets acquired or of a certain or certain things of equal value with the percentage of the beneficiary’s participation in the increase of the other’s property (Plenary session of the Supreme Court 28/1996).

     

    The assets included in the assets acquired and the claim on shares

    The concept of assets acquired during the marriage does not include all, without exception, the assets acquired by the liable spouse, after the beginning of the marriage. What was acquired through donation, inheritance or bequest or by disposing of the assets acquired during the marriage are excluded.

    The assets acquired during the marriage may include rights in rem, as well as prefecture and possession rights in movable or immovable property, money and cash deposits, credit securities, copyrights, bonds and future receivables (eg rents, dividends). Also any shares of an SA. Likewise the shares in LTDs, Private Companies or partnerships and cooperatives.

    However, the assets of the legal entity must be distinguished from the assets of the shareholder / partner-spouse. The latter owns shares, stocks or other types of corporate holdings. The property of the company belongs to the legal entity (in which the spouse participates). Even in the case of a single-member company, owned by the liable spouse.

     

    Securing the claim for award of a share in the assets acquired during the marriage – The case of claiming shares

    The recognition of the claim for award of a share in the assets acquired during the marriage aims at the restoration of justice between the spouses. Restoration which, however, may be rendered impossible. The cause of the rendering of restoration impossible is the awareness by the spouses of the impending dissolution of the marriage.

    Reasonably, once the relationship between the spouses is disrupted, the spouse whose fortune has increased may seek to reduce his or her wealth. Fictitious dispositions of their assets, fictitious commitments and liquidations, transactions without receiving a consideration (gifts) and unjustified spending, are common ways of minimizing the property of the liable spouse. During this period, the beneficiary spouse simply has an expectation of a right. They do not, legally, have the possibility to file the lawsuit of the article 1400 of the Civil Code (Supreme Court 87/1998).

    Thus, effective temporary protection of the claim until its final satisfaction is sometimes highlighted as vital. This is because, according to what has already been mentioned, the initiation of proceedings for the final satisfaction of this claim should follow the dissolution or annulment of the marriage by an irrevocable court decision. Alternatively, the completion of a three-year separation.

     

    The provision of a legal mortgage title

    The legislator chose to include the beneficiary spouse of article 1400 of the Civil Code in the persons to whom a mortgage registration title can be granted by law (1262 no. 4 of the Civil Code). This proves that the legislator treats the latter as a creditor to whom they provide special protection.

    It is noteworthy that the provision of a legal mortgage registration title (1262 no. 4 of the Civil Code) does not presuppose the filing of a divorce or a lawsuit for a claim for a share in the assets acquired during the marriage. The mortgage can be registered at any time during the marriage – even before its dissolution or cancellation or the completion of a three-year separation.

     

    The temporary protection of article 1402 of the Civil Code

    An explicit and independent claim for the provision of security to the beneficiary spouse is also provided under article 1402 of the Civil Code which, in particular, states that: “Without prejudice to the provision of article 1262 no. 4, each of the spouses has the right, in the event that a divorce or marriage annulment action has been brought or that they have brought a claim under Article 1400, to request insurances from the other spouse or their heirs, if it can be deducted by their behavior that there is a reasonable fear that the beneficiary’s claim is in jeopardy.”

    The conditions for the provision of such insurances, which must be met cumulatively, are: (a) on the one hand the previous exercise (by either spouse) of a divorce or marriage annulment action or of an action for participation in the assets acquired during the marriage (especially by the spouse seeking insurances), (b) on the other hand the existence of a reasonable fear that the request provided under article 1400 of the Civil Code is in jeopardy, due to the behavior of the other spouse or of their heirs.

     

    The possibility of applying for interim measures

    The possibility of applying for interim measures, in parallel with the aforementioned measures of articles 1262 no. 4 and 1402 of the Civil Code were explicitly challenged by and have divided legal theory. Until recently.

    After the amendment of the provision of article 682 of the Code of Civil Procedure (with law 4335/2015), the claim for award of a share in the assets acquired during the marriage may, before it is even born, become the subject of temporary judicial protection in the form of interim measures. That is, even before the irrevocable dissolution or annulment of the marriage and / or the completion of three (3) years from the separation of the spouses. And this is because it constitutes a future requirement, which is subject to article 682 of the Code of Civil Procedure (1298/2016 Multimember Court of First Instance of Thessaloniki).

    There is a prerequisite for an emergency or for an imminent danger to exist, in order to qualify for interim measures.

     

    The (possible) interim measures

    The beneficiary spouse may intend to acquire shares of the SA (or of a corporate holding in another type of company) in the development of which they contributed, or they may aim to their financial compensation through it. In this case, they are entitled to request from the competent Court, in order to secure their right, the issuance of interim measures. Specifically: precautionary seizure (707p. Code of Civil Procedure) or escrow (725et seq. Code of Civil Procedure).

    The specific measures seek to impose a legal burden on the shares. Particularly:

    The interim measure of precautionary seizure binds temporary assets of the debtor in order to ensure the satisfaction of the monetary or convertible to monetary claim.

    The interim measure of the court guarantee is ordered to secure non-monetary claims. In particular, in disputes concerning the ownership, the occupancy or the possession of a thing,  or any other dispute concerning the thing (of course also of shares).

    In any case, the Court rules and orders any appropriate and necessary interim measure to protect any future claim for award of a share in the assets acquired during the marriage.

     

    A possible dissolution of a marriage raises a lot of problems. Among them is the splitting of joint assets but also the claim for award of a share in the assets acquired during the marriage by one of the two spouses. In commonly owned by the spouses assets it is not uncommon to come across a company in which the spouses will participate 50/50 (in this case see our previous article).

    Problematic (also) seems the case where the sole (principal or ordinary) shareholder, partner or owner of a legal entity is one of the spouses. The other has, basically, a claim for a share in the shares (or in any other type of corporate equity) of the owner spouse.

    Of course, the settlement of the entire dispute outside the courtrooms is desirable.

    In any other case, the business will certainly not benefit.

    And, to a significant extent, neither will the spouses.-

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (October 25, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Equal Shareholders in an SA. A blessing or a curse?

    Equal Shareholders in an SA. A blessing or a curse?

    Exactly one hundred years ago, the Greek legislator dealt with the SAfor the first time. They had in mind a legal entity where the shareholders would be, in principle, different from those who would run it. The shareholders would exercise their rights through the General Assembly. The members of the Board of Directors and the management of the company would be discrete roles. We find, over time, that the property right over the company (: shareholders) is “confused” or identified with the company’s management. Often the participation in the company’s share capital, for reasons of (projected) equality, (but mainly due to both sides’ insecurity) is set at 50% -50% for the two, unique, shareholders / groups of shareholders. Some would characterize these percentages as a blessing. Some as a curse. For those who know: Two equal / only shareholders prove to be problematic for any legal entity. And maybe it is a bit worse in an SA. But again, maybe not…

     

    Images drawn from life (and not from movie scripts)…

    Every new business starts, as a rule, with the best intentions. When the founder is just one person, things are more simple.

    When they are two, it is less…

    At the beginning of a business cooperation, the two, only, founders & equal partners, usually walk harmoniously. But then, sometimes, things change. One of the two (and / or both) sometimes chooses to exercise power over the other. Others times, possibly, their problematic personal relationships are mirrored in the management of the company. And, of course, in the legal entity itself and its business activity. That is when we have a problem. Sometimes, a very serious one.

    It is possible to reach the same problem when the founders-brothers (or very close friends) and 50% shareholders are replaced, over time, by their successors. Successors (or heirs) who will seek to get the “upper hand” in the, among them, informal bras de fer.

    The same problem may arise when the only founder and shareholder of the SA dies and leaves (by will or without one) as equal heirs and successors their two children. Children who, when it comes to claiming power, may prove to not love each other enough. Let’s also not forget that their spouses’ meddling (often, as we see) gives them a nudge to that direction as well.

    We all know such (and many other similar) stories. And continue to see them. All too often. More often in family businesses (do not forget, after all, that in our country they make up 80% of the total number of businesses). However, we will encounter such phenomena in all sub-categories of businesses. Without exception.

    So what happens next?

    We are all too familiar!

    At the most part, it is not pleasant…

     

    The «50/50» SA

    In other words:

    The main problem, on a practical level, arises when we are faced with only two, equal, voting rights.

    We usually attribute this phenomenon with the term “SA: 50/50”.

    The point when it is created varies. It can be created at the point of the establishment of the company (: when it is founded by two, equal, shareholders). It can also be created during the company’s operation (: subsequent configuration of two, equal, shareholdings).

    “Equal participation” may also be the result of the existence (or creation) of groups of shareholders (whether or not bound by extra-corporate agreements). Each of these groups holds 50% of a company’s voting rights. Shareholders (or groups of shareholders) may, at times, not be just two. Such a case would be encountered, for example, when two shareholders (or groups of shareholders) hold 1/3 of the shares and voting rights each, while the shareholders representing the last 1/3 abstain from making decisions.

    The two, equal, shareholdings are problematic when the holders of the 50% voting rights of the company do not agree in making critical corporate decisions and / or in the election of the Board of Directors.

    As the case law accepts, “in these cases, the lack of communication between the shareholders, leads to the immobilization of the company and its operation is lead to a deadlock, as it is impossible to reach a simple majority in the General Assembly to make decisions, with the main problem being the General Assembly not being able to elect a Board of Directors.” (18191/2014 Multimember Court of First Instance of Thessaloniki).

     

    The provisions of the legislator

    The legislator could not ignore those specific, problematic cases. Those cases where the SA cannot operate. Or worse, those cases where the company reaches a deadlock due to the inability of the General Assembly (and/or of the Board of Directors) to make decisions.

    The dissolution of the company by a court

    The law generally provides the possibility of dissolving the company, “if there is an important reason for this, which, in an obvious and permanent way, makes the continuation of the company impossible” (article 166 §1 law 4548/2018).

    Moreover: “An important reason according to paragraph 1 exists, in particular, if, due to equal participation of shareholders in the company, the election of the board of directors is impossible or the company cannot operate”. (article 166 par. 2).

    The SA is dissolved by virtue of a court decision. Procedural prerequisite: the submission of a relevant application before the Single Member Court of First Instance of the place of the company’s registered office. An application notified to the latter and adjudicated by the non-contentious procedure (article 166 §3).

     

    The acquisition of the shares of the SA

    The company’s dissolution must, reasonably, be the last resort to address the impasses created in a company with equal shareholders. This is because a direct consequence of such is the loss of the shareholder status of all the shareholders, the termination of the company as a legal entity and the ultimate disappearance of the latter from the legal and business world.

    In an effort to avoid the last resort of the dissolution of the SA, the legislator provides for/prefers an alternative. A solution that promotes the continuation of the company. This is the option (and possibility) of acquiring the shares of the company. Specifically:

    …by decision of the Court

    The Court, which will handdle the request for the dissolution of the SA, “… before issuing its decision, provides the company and the shareholders with a reasonable period of time to remove the grounds for dissolution, in particular through redemption of shares between the shareholders, unless it reasonably considers that this measure is pointless. This deadline can be two (2) to four (4) months. If the above deadline is provided, the court may order measures for the temporary settlement of corporate cases.” (article 166 par. 4). Such a deadline (: for the removal of the grounds for termination) cannot be extended (as provided by the previous legislation).

    …or as an initiative of the other shareholders

    However, the shareholders themselves, those who do not want the company’s dissolution, are also given the opportunity to claim the redemption of the shares of the one (or of those) who request the company’s judicial dissolution. This is the power of the (non-applicant) shareholders of 1/3 of the share capital (and not of the 1/5, as the pre-existing law required) to excursive a main intervention in the lawsuit opened regarding the dissolution of the company. Specifically:

    “Shareholders representing at least one third (1/3) of the capital, can intervene in the relevant lawsuit and request the redemption of all the shares of the applicant or applicants. In this case, the court orders the redemption and determines the consideration, which must be fair and correspond to the value of these shares, as well as the terms of its payment. In order to determine the value, the court may order an expert examination carried out in accordance with Article 17. The redemption value may not exceed the amount that the plaintiffs are likely to receive in the event of liquidation of the company, which the court may increase up to twenty percent (20%)” (Article 166 §5).

    It should be noted here that this provision absolutely determines the method of valuation of the redeemed shares. It is well known that there are many such methods that enable those who perform them to get a wide range of results. The legislator here explicitly chooses the value “which the plaintiffs are likely to receive in case of liquidation of the company”. This value can be increased by the court “up to twenty percent (20%)”.

    In the event of a redemption of shares, in accordance with the manner immediately mentioned above, “any provisions of the articles of association for the freezing of such shares … shall not be taken into account, unless the articles of association provide otherwise. “ (article 166 par. 6).

     

    The exception of listed companies

    The SAs whose shares are listed on a regulated market (and consequently the equal shareholding rights in it) are explicitly excluded from the possibility of a judicial dissolution for a “great” reason (article 166 par. 9 law 4548 / 2018).

    We find a corresponding provision in the pre-existing law (article 48a par. 9 of law 2190/1920). A justification for this legislative choice is (also) foundin the explanatory memorandum of Law 3604/2007, which amended the aforementioned provision of article 48a. Specifically, as it is explicitly noted in it, the provisions of article 48a “… apply only to non-listed companies, because in listed companies the shareholder can in principle leave the company by selling their shares.”.

     

    Conditions for exercising the right to a judicial dissolution due to “equal participation in the company”

    The provision of article 166 of law 4548/2018 is mandatory. This means that any statutory arrangements that are contrary (or divergent) in content to this provision are void. The conditions for exercising this right can be summarized as follows:

    The standing to bring an action

    The right to request a judicial dissolution of the company is exercised only by a shareholder. Therefore, members of the Board of Directors, creditors of the company and auditors do not have this right. Even if they justify, in some way, a relevant legal interest.

    The condition of the applicant being a shareholder is supplemented by the requirement of the holding of a specific, minimum, percentage of the share capital. Applicant shareholders (one or more) must raise at least 1/3 of the paid-up share capital. According to the wording of the relevant provision, a simple holding of shares is not sufficient. Their value must also have been paid for in full. However, the type of shares that make up the necessary 1/3 is irrelevant.

     

    The existence of a “great” reason

    The right to request the dissolution of the SA has, as already mentioned, a central goal. To solve impasses that the SA and its shareholders have reached.

    Therefore, “a great reason is required, which, in an obvious and permanent way, makes the continuation of the company impossible” (art. 166 §1).

    Such an important (according to article 166 §2) reason “exists, especially if, due to equal shareholders in the company, the election of the board of directors is impossible or the company cannot function”.

    Therefore: the existence of equal shareholders is not enough to request the dissolution of an SA. A great reason is required, like the one required by law. The inability, e.g., to elect the Board of Directors and of the operation of the company due to the existence of two equal (with equal voting rights) shareholders (or groups of shareholders) who are unable, systematically, to agree on the decisions necessary for the operation of the company.

    In fact, the situation mentioned above must lead to the impossibility of electing a Board of Directors or must obstruct the operation of the company in general. In particular:

    Regarding the impossibility of electing a Board of Directors:

    The impossibility, in this case, concerns the General Assembly. Specifically, the case in which the General Assembly is unable to make a decision regarding the election of the Board of Directors. A prerequisite, in fact, is the “… situation that shows elements of permanence.” (3494/2010 Multimember Court of First Instance of Athens). The alleged inability to make a decision, for example, in a single (extraordinary) general assembly “… primarily lacks the element of permanence required to be present, in order to substantiate the great reason for the decision of the court to dissolve … the SA.” While, at the same time, general statements of the applicant that “… they intend to vote against in any future proposal or issue raised in the General Assembly… and will concern issues of major importance for the operation of the SA, such as the approval of balance sheets, and that this event will make it obviously and permanently impossible to continue the operation of the company, it is not enough to make their claim legally stand …, since no preventive judicial protection is provided… ”(18191/2014 Multimember Court of First Instance of Thessaloniki).

     

    Regarding the inability of the company to operate:

    The inability, in this case, concerns the Board of Directors. This is the case in which a fictitious lack of administration is identified. In other words: there is a Board of Directors, but it is unable to make decisions. This fact obstructs the operation of the societe anonyme. In fact, in a complete and permanent way.

    However, it is completely different when the operation of the SA is not obstructed in a complete and permanent way. In the case that “… the inability to make decisions is at the level of the Board, or because there has been a real lack of administration due to e.g. death or resignation of some or all members of the Board, or because there has been a fictitious lack of management due to e.g. stubbornness or assertiveness of its members…, implicit resignation-abstention from decision-making…, disagreements of members resulting in inability to exercise management…, the problem can be solved even with the removal of the members of the Board and the appointment of new members by the General Assembly, after the appointment of an interim administration that will convene the General Assembly“. (18191/2014 Multimember Court of First Instance of Thessaloniki).

    Therefore, the inability of the Board of Directors to form decisions, which can be addressed by:

    (a) Removal of its members and election of new members by the General Assembly and / or

    (b) appointment of an interim administration under Article 69 of the Civil Code;

    cannot constitute an important reason for a judicial dissolution of the SA. Provided, of course, that the internal involvement is not permanent and, at the same time, it is not found within the General Assembly. It is clear that an SA cannot operate indefinitely with judicially appointed administrations.

    The above disagreements of the shareholders or of the members of the Board of Directors should be demonstrated through the minutes of the meetings of the General Meeting or of the Board of Directors. At the same time, the correlations of forces may be proved by other means, such as, for example, from the extra-corporate agreements of the shareholders (18191/2014 Multimember Court of First Instance of Thessaloniki, 3494/2010 Multimember Court of First Instance of Athens).

     

    Equal participation in an SA (especially in the case of 50/50 SAs) creates, quite frequently, insurmountable problems.

    Unanimity is required in the General Assembly that is called, for example, to elect a Board of Directors. If unanimity is not reached, in a continuous and permanent manner, the SA is left without administration. However, the company is also left without administration in case there is a Board of Directors, but one that is unable to make decisions.

    In both cases, the company cannot operate.

    To address the extremely serious problem, the law provides specific, quite effective, tools. The dissolution (or threat of dissolution) of the company is one. One that is so strong that it, in fact, sometimes, shocks. Justifiably. Because sometimes such (shocking and extreme) solutions are required, in order to ensure the survival of the company at the last moment.

    It is obvious that the solutions provided by law should be adopted as a last resort.

    Before these extreme solutions there are, without a doubt, other, milder ones.

    Extra-corporate shareholder agreements, statutory arrangements and provisions, the management of minority rights are some of them.

    And first of all:

    The avoidance, for as long as possible, of the establishment and operation of as SA with its shares and voting rights divided in two.

    The responsibility of the founders, the transferring shareholders and of those who plan their succession proves to be extremely serious. It is, however, perfectly manageable.

    As long as timely management of the whole issue takes place. Before, of course, the cration of the problem.

    Ex-post solutions, although painful, still exist.

    In any case: there are no “canned” solutions.

    Only tailor made.

    Always.-

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (October 18, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Vulnerable Groups and (tele)work in the time of the pandemic …

    Vulnerable Groups and (tele)work in the time of the pandemic …

    The issue of the (current) pandemic concerns everyone. But more so what concerns us is the risks we run – we all, after all, would like to reduce them. Teleworking is a step towards exactly that. This particular topic (of teleworking) has occupied us repeatedly (in our articles as well). Most recently, on the occasion of the Legislative Decree of 22.8.2020 (Government Gazette A ‘161 / 22.8.20) – [ratified by article 2 of law 4722/2020 (A’ 177) and supplemented by article 21], which attempted to manage the issue of  . However, this Legislative Decree was not complete: it neither identified the vulnerable groups, nor was it accompanied by a relevant Ministerial Order. It referred to a future CMO to be issued by the Ministers of Labor & Social Affairs and Health. It took two (2) whole months and two CMOs to clarify, to some extent, the issue.

    The agitation that it, meanwhile, created in businesses and employees was (unnecessarily) great.

     

    Employees vs Businesses

    Had employees have the choice they would all choose, probably without exception, teleworking. But not all businesses would. Businesses that do not adopt it as an option in general, receive heaps of requests from employees for the exceptional(?) approval of teleworking (“for them only”). The reasons put forward are, basically, of a medical nature. Sometimes they concern the employees themselves or their relatives. Sometimes they are a manifestation of the desire of employees to reduce their exposure to the risk of contracting the (sometimes deadly) virus. Moving with public transportation, moreover, raises reasonable concerns. The long coexistence with more (colleagues) does so too. Both the invoked reasons and relevant concerns are respected.

    But what is legally provided for? When is it mandatory for employees to request to telework? And when is it not?

     

    Let us try to decipher the relevant institutional framework.

    Question 1: Which employees belong to vulnerable groups?

    The employees who belong to the category of vulnerable groups are identified in the provision of article 1 of the CMO No. 37095/1436 [of the Ministers of Labor & Social Affairs and Health (Government Gazette B ‘4011 / 18.9.20)]. They are divided into two major categories: High and Intermediate Risk (Article 1.1). Detailed determination of the content of the specific categories as well as the relevant case study also takes place in the specific provision.

    It is noteworthy that “when an individual meets more than one criteria of the intermediate risk category, then they are automatically considered to belong to the High Risk group” (Article 1.2 37095/1436 CMO and Article 1 last paragraph of CMO No. 39363/1537 CMO [ of the Ministers of Labor & Social Affairs and Health (Government Gazette B ‘4262 / 30.9.20)]).

     

    Question 2: Who certifies and how the inclusion of an employee in a category of vulnerable groups?

    It is not enough for the employee to assure their employer that they belong to a specific category of vulnerable groups. Relevant certification is required. This certification takes place with a reasoned opinion of the doctor of a relevant specialty. The consulting physician can be either the therapist or a third “(public or private) Healthcare Facility for cases of special therapies such as chemotherapy, radiotherapy and immunotherapy”.

    However, it is important to note that in this opinion “the employee’s affiliation” to one of the aforementioned categories of high or intermediate risk should be precisely mentioned (article 2, 39363/1537 CMO). It is not enough to simply report the employee’s illness.

     

    Question 3: What right is recognized to employees belonging to vulnerable “High Risk” groups?

    Employees belonging to High Risk groups have the right to (request to) provide their work with the system of distance work (article 2.A.1 of 39363/1537 CMO). However, this is a right, not an obligation of the employee who belongs to the specific group.

    Therefore: an employee belonging to a High Risk group may exercise (or not exercise) his / her specific right. But even if they choose to not exercise it, the employer is not released from any obligation (ref.: 12th Question).

     

    Question 4: How does the employee inform the employer that they belong to a High Risk group and require applies for distance work?

    The employee’s request is forwarded “in a timely manner to the employer, by any appropriate means, such as telephone, e-mail or text message of a mobile phone” (article 2.A.2 of 39363/1537 CMO).

    However, it is not enough to submit the employee’s request to their employer. It is required to provide “within a reasonable time… a relevant medical certificate”. (article 2.A.3 of 39363/1537 CMO). This is, in essence, the opinion of their inclusion in the High Risk category -above 2nd Question).

     

    Question 5: What are the obligations of the employer regarding the employees who belong to a High Risk group?

    The nature of the work of the employee belonging to a High Risk group determines their ability (or not) to work remotely.

    If teleworking is possible, “the employer must accept the employee’s request” (article 2.A.4 of 39363/1537 CMO). In this case, the employee will continue, through teleworking, to provide their services to the employer.

     

    Question 6: What happens when teleworking of an employee belonging to a High Risk group proves impossible?

    Teleworking of an employee belonging to a High Risk group may prove impossible (because, for example, the employee provides manual labor). In this case “the employer must take measures so that the applicant employee belonging to a vulnerable group does not provide work for the execution of which they come in contact with the public”. (however, other employees in the same business are not considered as public).

    The employer is further obliged to “…consider, depending on the needs of the business, the possibility of temporary employment of the applicant employee in another job, in order to ensure the protection of their health”. On the other hand, “the employee must accept the… proposal of the employer, unless are unable to do so for a significant and serious reason.” The specific reason should be “… reported in writing to their employer”. (article 2.A.5 of 39363/1537 CMO).

     

    Question 7: Under what conditions (and for how long) is the employment contract of an employee belonging to a High Risk group suspended?

    Teleworking of an employee belonging to a High Risk group may prove impossible. It is also possible that the business’s efforts to employ them “in another job, in order to ensure the protection of their health” will be fruitless. In this case, the employer informs, in writing, the specific employee “for the reasons of inability to implement them and suspends their employment contract” (article 2.A.6 of 39363/1537 CMO).

    The employer has this right regardless of the NACE Revision 2 classification of their business activity. This suspension may not extend beyond 31.12.20 (article 3 of 39363/1537 CMO).

     

    Question 8: Do employees who belong to a High Risk group receive a salary or compensation and their contracts are suspended?

    These employees (belonging to a High Risk group and whose employment contracts are suspended) are not required to provide their work to the business in which they work. Nor is their employer, logically, obliged to pay them a salary. To the extent that these employees are not bound by a contract of employment with another employer, they are entitled to special purpose remuneration (Article 4§1 of 39363/1537 CMO).

     

    Question 9: What is the amount and what is the treatment of the special purpose remuneration?

    The special purpose remuneration “…is calculated per month in proportion to the days during which the employment contract of the above employees is suspended, based on the calculation of the amount of… 534.00 euros corresponding to thirty (30) calendar days”. The specific employees “…are provided with full insurance coverage on their nominal salary, for the days when the employment contract is suspended” (article 4§2 of 39363/1537 CMO).

    Special purpose remuneration “… is tax-free, non-transferable and cannot be confiscated … it shall not be subject to any withholding tax, fee or levy, including the special solidarity levy…, cannot be siezed and offset by certified debts to the tax administration and the State in general, municipalities, districts, insurance funds or credit institutions” (article 4§3 of 39363/1537 CMO).

     

    Question 10: What is the procedure for receiving special purpose remuneration?

    The payment of the special purpose remuneration presupposes the submission and registration of relevant statements related to the issue to the ERGANI platform by both the employers and the employees (article 5 of 39363/1537 CMO).

     

    Question 11: What is the treatment of employees belonging to Intermediate Risk groups?

    The employer who is notified of the employee’s inclusion in an Intermediate Risk group, is initially obliged to investigate the possibility of teleworking. In case this is not possible, the employee is temporarily employed in a job in which they do not come in contact with the public (article 2.B of 39363/1537 CMO).

    In any case: there is no issue of suspension of the employment contract of an employee who belongs to an Intermediate Risk group.

     

    Question 12: What are the General Protection Measures that the business should take anyway?

    An employee belonging to a vulnerable group (whether High or Intermediate Risk) is entitled to exercise (or not) their right to work remotely or to provide their services away from the public.

    However, the employer is obliged, in any case, “to take increased protection measures, based on the occupational risk assessment, as well as to fully implement the legislation on health and safety at work”. They are also obliged to comply with the more specific provisions “governing issues of implementation of public health measures, such as social distancing and using a mask, in workplaces, by sector and place of economic activity” (Article 2.C of 39363/1537 CMO).

    The (of great significance) additional importance and value of the occupational risk assessment should be stressed at this point. This assessment proves, once again, extremely important. Even more so, the alignment of all businesses with it.

     

    Question 13:  What is the duration of these measures?

    The period of validity of the specific, aforementioned, measures extends until 31.12.20 (article 6 of 39363/1537 CMO).

     

    All the measures taken since the beginning of the pandemic had / have aimed to ensure the protection of life and health.

    The Joint Ministerial Orders that define the meaning of the vulnerable groups but also the treatment of the employees that are part of them, move in the specific direction. They adequately aim to secure the specific goods (: of life and health) of the employees.

    But they are also aiming for something more important: crystalizing the balance between the reasonable needs of employees who belong to vulnerable groups and those of the businesses that employ those employees.

    They achieve it, to a sufficient degree.-

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (October 11, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Small Business and Small Business Act

    Small Business and Small Business Act

    If someone, swept up by the characterization (: Small and Medium Enterprises), considers that their importance in the European economy is “equal”, they are mistaken. The figures of the European Union (March 2020) seem revealing. Small and Medium Enterprises in the European Union are around 25 million. They cover two out of three jobs. They generate 50% of its (total) GDP. And, in addition, 50% of them undertake innovation activities. The European Union since 2008 has demonstrated its interest (through the Small Business Act and related tools).

    The data for our country seem shocking: The Greek Small and Medium Enterprises amount (: 2019) to 821,209 (against the total of 821,540-only 331 are characterized as Large). They represent 63.5% of the total value added. They cover an employment share of 87.9%.

    So they deserve our attention.

    But mainly the attention of the State.

     

    Small and Medium Enterprises may be family businesses. Or maybe not. We mentioned in our previous article the importance of family businesses in the Greek (and not only) economy.

    Let us focus in this article on Small and Medium Enterprises.

     

    Small and Medium Enterprises and the… rest

    The distinction of companies based on their size

    In order to talk about small and medium-sized enterprises, it is necessary to determine which ones we are referring to. A noticeable difference and feature of each category is the size of the business. Size is a very important feature of any business. It also affects its organizational structure and its management.

    The size of a company usually takes into account the number of employees, turnover, invested capital and capacity.

    The (relevant) Recommendation of the European Commission

    Distinction of companies according to their size is provided in the relevant Recommendation of the European Commission 361EC / 06.05.2003. Based on this Recommendation, companies are divided into:

    (a) Very Small Enterprises: These are enterprises with less than 10 employees and a turnover of less than € 2,000,000.

    (b) Small Enterprises: Enterprises that employ less than 50 employees and their turnover does not exceed € 10,000,000.

    (c) Medium Enterprises: Enterprises with less than 250 employees and a turnover of less than € 50,000,000.

    (d) Large Enterprises: Enterprises that employ 250 or more employees and their turnover is over € 50,000,000.

     

    The distinction of enterprises at national level

    We find a similar distinction of enterprises (entities) at national level in law 4308/2014 (article 2), to which the law of SAs also refers (law 4548/2018, article 2 case k). According to Law 4308/2014, entities are divided into:

    (a) Very Small Entities: “Very small entities are entities that at the closing date of their balance sheet do not exceed the limits of at least two of the following three criteria: a) Total assets: 350,000 euros. b) Net turnover: 700,000 euros. c) Average number of employees during the period: 10 people”.

    (b) Small Entities. “Small entities are entities that are not very small entities and at the closing date of their balance sheet do not exceed the limits of at least two of the following three criteria: a) Total assets: 4,000,000 euros. B) Net turnover: 8,000 .000 euros. c) Average number of employees during the period: 50 people”.

    (c) Medium entities: “Medium entities are entities that are not very small or small entities and which at the closing date of their balance sheet do not exceed the limits of at least two of the following three criteria: a) Total assets: 20,000,000 euros. b) Net turnover: 40,000,000 euros. c) Average number of employees during the period: 250 people”.

    (d) Large Entities. “Large entities are entities that at the closing date of their balance sheet exceed the limits of at least two of the following three criteria: a) Total assets: 20,000,000 euros. B) Net turnover: 40,000,000 euros. C) Average number of employees during the period: 250 people “.

    Following the above, Law 4548/2018 (for SAs) provides (article 2 par. k): “For newly established companies and until the preparation of the first balance sheet, “very small”, “small” and “medium” companies means those whose capital does not exceed the amounts of 100,000, 500,000 and 1,000,000 euros, respectively, while “large” means those whose capital exceeds the amount of 1,000,000 euros “.

     

    The «Small Business Act» (SBA) for Europe (2008)

    The importance of Small and Medium Enterprises (hereinafter referred to as SMEs) for Europe is, according to what has been said (especially in the introductory part), indisputable. The Commission of the European Communities has recognized in good time the need to take initiatives to better adapt the single market to the needs of SMEs. In the light of the above initiatives, the Commission presented the “Small Business Act” (hereinafter: SBA) for Europe (2008). This is the Communication from the Commission of the European Communities to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 25.06.2008 in Brussels.

    According to this Communication, SMEs are a key factor in the well-being of the European Union, local and regional populations. In this context, the Commission’s goal was to transform the EU into an international environment for SMEs. In an environment capable of contributing to the sustainable development and competitiveness of SMEs.

     

    The goal of the «Small Business Act»

    The goal of the initiative was identified as:

    (a) improving the overall approach to entrepreneurship policy;

    (b) the definitive introduction of the “Think Small First” principle in policy-making, ranging from legislation to public services; and

    (c) promoting the development of SMEs and addressing the problems that continue to hamper this development.

     

    The 10 principles of the «Small Business Act»

    The Commission has adopted ten principles in order to implement the announcements and provisions for SMEs. Principles aimed at planning and implementing policies at EU and Member State level to improve SME development conditions. The Commission’s list is structured as follows:

    1. Creating an environment in which entrepreneurs and family businesses can thrive and in which entrepreneurship is rewarded.
    2. Ensuring that honest businessmen are quickly given a second chance in the event of bankruptcy.
    3. Setting rules in accordance with the “Think Small First” principle.
    4. Greater response of public administrations to the needs of SMEs.
    5. Adapting policy instruments to the needs of SMEs: facilitating the participation of SMEs in public procurement and making better use of the opportunities offered by state aid for SMEs.
    6. Facilitate SMEs’ access to finance and create a legal and business environment conducive to timely payments in commercial transactions.
    7. Support SMEs to take full advantage of the opportunities offered by the single market.
    8. Promoting the upgrading of skills in SMEs as well as all forms of innovation.
    9. Enabling SMEs to turn environmental challenges into opportunities.
    10. Encourage and support SMEs to benefit from market development.

     

    The implementation of the ten principles

    The Commission has submitted measures-recommendations for the implementation of the SME development project. Some of them concern the Commission itself. Others, concern Member States. Many of these are legislative proposals. In particular, tax legislation and law on insolvency. Also, possible bilateral agreements between states, with the aim of opening the EU markets to third markets.

    Of the measures proposed, some focus on citizens and their information. To those citizens who are already (or not) doing business. The aim is to cultivate a business culture, to inform about state aid and public procurement, to strengthen the “green markets”.

     

    Small and Medium Enterprises in Greece (2019)…

    The Member States are committed to implementing the above ten principles developed by the Commission. Their efforts are reflected in annual reports, separate for each Member State.

    Regarding Greece, this report captures the importance of the SMEs for the domestic economy and entrepreneurship. Specifically, according to the “Small Business Act” for Greece (2019), the Greek SMEs:

    (a) amount to 821,209 companies (almost 100% of the total of 821,540 Greek companies);

    (b) represent 63.5% of the total value added, while the corresponding figure in the EU is 56.4%; and

    (c) contribute the most in the field of employment with their (relative) share reaching 87.9%, while the corresponding share in the EU is 66.6%.

     

    …and the performance of our country in the ten principles of the Small Business Act.

    Despite the fact that the SMEs are of this crucial importance for the Greek economy, the performance of our country in terms of the principles of the Small Business Act for 2019, almost overall, is disappointing. (: Comparison with other Member States).

    Specifically, Greece’s performance is below the EU average in 8 out of 10 Small Business Act policy principles. Our country’s effort has a positive sign only in the field of state aid and public procurement. It is compatible with the EU average in terms of the principle of promoting upgrading skills in SMEs as well as all forms of innovation.

    Greece, unfortunately, has one of the lowest scores in the EU in terms of implementing the principles of: (a) second chance, (b) access to finance, (c) turning environmental challenges into opportunities, and (d) internationalization.

    Specifically:

    (a) Entrepreneurs who have declared bankruptcy, unwittingly, and want a second chance at doing business, are almost unable to turn to it. In addition: the fear of (relative) failure in our country is high. Reasons for the above, of course, the law on insolvency in our country, the cost and the time of the bankruptcy process. It is a regulated sector that undoubtedly needs further legislative intervention and reform. Some improvements, however, are expected to take place with the imminent introduction of the law on insolvency.

    (b) Access to financing is one of the most important factors in the development of entrepreneurship and the economy. Our country, however, has an extremely low performance in the possibilities it provides to companies to find financing. The extremely reduced possibilities concern both external lending (banks) and internal (own lending).

    (c) Greece presents extremely low performance in terms of the existence of a business “green” culture. The size of SMEs benefiting from public support measures for their green production is one of the lowest in the EU. At the same time, SMEs still do not receive any assistance in improving their energy efficiency and the use of renewable energy sources.

    (d) Finally, in terms of internationalization, our country has implemented most of the Commission’s recommendations. However, progress in the development of imports and exports is particularly slow. The cause of this problem is located in the (non) information of the SMEs.

     

    The European Union has recognized in time the importance of Small and Medium Enterprises in the European economy. It has set out the principles within which both it and the Member States must act.

    The relevant actions of our country still seem inefficient. They clearly lag behind the other Member States and their progress. The most characteristic are the areas related to: (a) the “second chance” that could be taken advantage of by the “honest” among the bankrupt, (b) access to finance, (c) the promotion of “green culture” and related development and (d) the internationalization of Small and Medium Enterprises.

    It is up to the State to do the right thing.

    To the SMEs to remain vigilant.

    And exert due pressure.

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (September 27, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • The recovery οf the economy. 100,000 new jobs & 21 critical questions

    The recovery οf the economy. 100,000 new jobs & 21 critical questions

    The economic crisis that is (not only) nationally linked to the current pandemic seems unprecedented. Measures were taken at a European (e.g. SURE program) as well as in a national level. As far as our country is concerned, we have seen a number of measures whose central focus was on supporting businesses and securing jobs. Some of them: The (temporary) ban on dismissals, the suspension of employment contracts, the safe operation personnel, the transfer of employees to businesses within the same Group, the COOPERATION program. But all this was more temporary. More drastic measures were needed. The further strengthening of flexible forms of employment (among them: part-time work, rotarional work, teleworking, etc.) but also the addition of the regulation of working time are some of them. But what the circumstances really demanded was the strengthening of the real economy. Already, with the addition of one hundred thousand (100,000) new jobs, the necessary impetus is expected. The CMO no. 39539/996/30.9.2020 (Government Gazette Β΄ 4261/30.9.2020) was issued pursuant to powers granted in article 28 ν. 4726/20- Government Gazette Β’ 181/18.9.20. They both concern the “open program for the addition of 100,000 new subsidized jobs” (hereinafter referred to as the “Program”).

     

    Let’s try to decode it.

    Question 1: What is the purpose of the Program?

    The purpose of the Program is the creation of 100,000 new jobs, with the subsidy of all insurance contributions (made from both employers and employees), for six (6) months, in businesses- employers of the private sector of the country, regardless of their industry and business activity (Article 1 par. 1)

    Question 2: What is the time point from which job growth is monitored?

    The new jobs subsidized by the Program are additional to the number of existing jobs of businesses- employers on 18.9.2020 (article 1 par. 1)

    Question 3: When does the Program start and how long does it last?

    The date of entry into force of the Program is set at 1.10.2020 and is valid until the exhaustion of the subsidized 100,000 jobs (article 1 par. 2).

    Question 4: What is the amount and duration of the subsidy for each job?

    For each new position that is created and included in the specific Program, the total of the employee and employer insurance contributions is subsidized by the state budget, as well as the corresponding insurance contributions in bonuses provided for by law and leave allowance. The specific subsidy takes place for a period of six (6) months and is independent of the amount of the employee’s monthly salary (article 2 par. 1).

    Question 5: What is the amount of the subsidy when the person hired under the Program is long-term unemployed?

    It is possible that a long-term unemployed person is employed (ie a person registered in the OAED unemployment register for a period of at least twelve months until the submission of the application-declaration of the businesses-employers for participation in the Program).

    In this case the new recruitment is subsidized from the state budget (in addition to the subsidy of insurance contributions (Article 2 §1-question 3) with an additional two hundred (200) euros on (exceeding this amount) net monthly salary, before tax and special solidarity contribution (Article 2 §2).

    Question 6: Which businesses are affected by the Program? There are conditions.

    The Program concerns businesses- employers of the private sector of the country, regardless of their sector and business activity (article 1 §1). However, it concerns only those businesses that are up to date with their tax and insurance contributions or have settled any established debts due to the State and the Electronic National Social Security Agency (e-EFKA), at the time of submitting the application-official declaration for the Program (article 3).

    Question 7: Which are the employees affected by the Program and can they participate in it?

    Those employees hired from 1.10.2020 onwards can join the Program (article 4§1).

    The specific employees must not: a) have worked in the applicant company-employer, for at least one (1) month before the date of their employment nor b) have worked in another business, for one (1) month also before date of their recruitment (Article 4§2).

    Question 8: Is it necessary to hire full-time employees?

    Recruitment may take place under a full-time or part-time contract of employment for a period of at least six (6) months (Article 4-1).

    Question 9: What are the obligations of the businesses that participate in the Program?

    The businesses-employers that participate in the Program are obliged to maintain the average number of employees that they had on 18.9.20, increased by the number of new subsidized employees. This obligation is maintained for the period of six months in which each new job is subsidized (Article 5§1).

    Question 10: What jobs should the businesses that use the Program keep?

    The number of jobs that the beneficiary businesses have to maintain concerns all of their employees in a fixed-term or indefinite employment contract, either full-time or part-time ones. This number also includes the jobs of those employees who have been suspended (Article 5§2).

    The positions that the beneficiary businesses are obliged to maintain are those that concern employees:

    (a) whose employment contract is terminated due to retirement or death;

    (b) whose fixed-term employment contract expires;

    (c) who quit.

    Question 11: Is it possible to change the working conditions of the employees included in the Program?

    It is not possible to change the working conditions of the employees included in the Program. Even if there is consent of the beneficiary employees (Article 5§3). However, it is not possible to suspend their employment contracts either (Article 5§7).

    Question 12: Is it permissible to terminate the employment contracts of employees included in the Program?

    It is permissible, provided there is a significant reason (article 5§4). Let us remember, of course, that the significant reason is ultimately evaluated by the competent courts.

    Question 13: What are the sanctions for the business in case of violation of the obligation to maintain the jobs they had on 18.9.20?

    It is not, of course, tolerable for the beneficiary businesses to violate their obligation for six months to maintain the jobs they had on 18.9.20 and the same working conditions (article 7 par. 4 & Question 21). In fact, the observance of their specific obligation is closely monitored on a monthly basis (Article 7§2).

    In case of violation of the specific obligation, these businesses-employers, are no more included in the Program and are obliged to return all the subsidies received under it – (Article 7§4).

    Question 14: What happens in case of termination of an employment contract of a beneficiary employee for a significant reason?

    In case of termination of the employment contract of a beneficiary employee for a significant reason, it is not allowed to replace them with a new subsidized employee for the remaining period until the expiration of the six months. However, the beneficiary businesses are entitled to request the approval of a new subsidized job (Article 5§5).

    Question 15: What happens after the subsidized six-month period lapses?

    After the lapse of the six-month period in which the insurance contributions (and part of their salary, in case a long-term unemployed person was employed, -article 2 par. 2 and Questions 5 & 20) are subsidized, the company can maintain (or not) the employment relationship with the beneficiary employee. In case of maintenance, the total of the charges (salary and insurance contributions) is borne by the employer exclusively (article 5§6).

    Question 16: Can a business partake at the same time both in the Program and in “COOPERATION”?

    Employees who are placed in the new jobs of the specific Program cannot be included in the program “COOPERATION” of article 31 of law 4690/2020 (A’104). Their employment contracts cannot be suspended.

    However, it is possible for a business to partake at the same time both in the Program and in “COOPERATION”. But strictly for different employees.

    Question 17: What is the relationship between the Program and teleworking?

    Employees who are part of the Program can also provide their work by teleworking, if this is allowed by the nature of their work. It should be noted here that the (unilateral) choice of telework by the employee who is part of the Program is not possible (with the exception of those belonging to a vulnerable group – Question 18).

    Question 18: What happens when the beneficiaries are in vulnerable groups?

    As an introduction, we mention that the employees who belong to the vulnerable groups are already identified by the no. 37095/1436 / 17.9.2020 (Government Gazette B’4011) CMO. In addition to the above decision, the details of the application of the protection measures in favor of the vulnerable groups are determined by the CMO with No. 39363/1537 / 30.9.2020 (Government Gazette B’ 4262).

    The protective arrangements that concern them in relation to the current pandemic, prevail over those mentioned in the Program (article 5§9).

    Question 19: What is the procedure to be followed for joining the Program?

    Every business that intends to make recruitments within the framework of the specific Program submits an electronic application to the ERGANI platform for each beneficiary (article 6§1). The details of the application are checked and verified by ERGANI and the businesses receive a response to the application or the rejection of their application. In case of approval, the beneficiary businesses conclude, at the latest on the next day, the relevant employment contract with the specific, beneficiary, employee.

    Question 20: What is the procedure for the payment of the € 200 salary subsidy for the long-term unemployed who are included in the Program?

    The payment of this subsidy takes place by crediting the bank account of the employer businesses (Article 9§2).

    Question 21: What happens in case of false, according to the content, official declarations by the businesses that request their inclusion in the specific Program.

    The sanctions are both of criminal and administrative nature. In any case: Amounts that were unduly paid to businesses are collected based on the Code for the Collection of Public Revenue.

     

    As mentioned in the introduction, strengthening businesses and increasing jobs is a prerequisite for managing the financial crisis.

    The ball is now in the businesses’ court.

    Let’s seize the opportunity!

    Σταύρος Κουμεντάκης

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (October 4, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Family businesses and the Economy

    Family businesses and the Economy

    Family businesses are the first form of business in the history of mankind. They are also the vast majority of companies in Greece, Europe and the world. This assumption is an indisputable fact. The quantitative data document it in an emphatic way. Family businesses are often associated with small and medium-sized businesses. Well-known, global, business giants are family businesses. It is for these reasons that the value of family businesses is considered (and is) absolutely crucial to the global economy. Of course to the domestic economy as well. The (special) issues they are called upon to manage are many and complex. Their problems respectively. They do not, however, receive due attention or special care at the legislative level.

    Are there solutions?

     

    But what is a family business?

    The opinion (2016 / C 013/03) (: Own-initiative Opinion) of the European Economic and Social Committee on “Family businesses in Europe as a source of renewed growth and better jobs “ was published on 15.1.2016 in the Official Journal of the European Union. In it, a recommendation is made for the adoption of a definition of family businesses.

    Therefore, a family business (according to this report) should be defined as one where the majority (direct or indirect) of the decision-making rights belongs to the natural person (or persons) who founded the business or is the owner of its share capital or to their spouse, parents, children or direct heirs of their children and, at the same time, a representative of the family or relatives formally participates in the management or administration of the business.

    What about listed companies?

    Listed companies should be (based on the same report) characterized as family businesses, if the person who established or acquired the company or their family or descendants hold 25% (and more) of the decision-making rights.

    However, it was assessed by the same Opinion that this definition is too broad. It was even added that “it should be limited in a way that emphasizes the family character of the business, and especially the multigenerational purposes of its objectives”. It did not, however, come up with a (limited in scope) definition of it.

    If one studies the global family business literature, they will find that definitions of the nature of “they cannot be limited” have been proposed. It is therefore a given that we have not agreed on a commonly accepted definition.

    Family businesses, however, are a reality.

    An indisputable reality.

    And, in fact, globally.

     

    The Importance of Family Business in the US Economy

    In the US, according to research published in Family Business Magazine:

    (a) 60% of businesses are controlled by families

    (b) family businesses generate 64% of US GDP and employ 62% of the workforce there; and,

    (c) 37% of the top Fortune-500 companies are family controlled.

     

    The importance of family businesses in the European economy

    The importance of family businesses in the European economy also seems shocking. The above-mentioned Opinion refers, inter alia, to the elements of the final report (11/2009) of the Expert Group “Overview of Family – Business – Relevant Issues: research, networks, policy measures and existing studies”. The latter shows that family businesses at European Union level – for all countries where data are available:

    (a) account for more than 60% to 90% of all European companies;

    (b) employ from 40% to 50% of all employees.

    (c) contribute about to 2/3 of the GDP

    The European Union (seems to) pays special attention to family businesses. In the framework of its interest, it founded, in 1997, the European Family Businesses which is one of its organizations. Its aim is to “promote the development and continuity of family businesses in Europe, through a European program based on freedom, common values, the rule of law, prosperity and social justice”. Based on data from this Organization, the most recent data (: 2009) by European country (family businesses as a whole) are as follows:

    The importance of family businesses in the Greek economy

    Three years ago, an extremely interesting report was published, entitled “An Overview of the Environment for Family Businesses in Greece”. Coordinator: the Athens Chamber of Commerce and Industry (ACCI). This report was implemented in the framework of the FABUSS (Family Business Successful Succession) program – (: project in the framework of the ERASMUS program, which sought to help young people connected with family businesses, to become competent and effective “successors”).

    Based on the data of this report, 80% of business owners in Greece describe their business as family run. In other words: 80% of Greek companies are characterized as family businesses by their own owners. The percentage is impressive.

     

    Family businesses and the Greek stock market

    The Athens Stock Exchange is well aware of the value and importance of family businesses. In the context of the relevant understanding and care, it kindly provided us with part of the data it collects from the notifications of significant changes in voting rights, according to Law 3556/2007. Let’s take a look at one of the relevant tables:

    In family businesses, the management is exercised, basically, by the holders of significant percentages of their share capital. This is a safe rule for spotting the family nature of a business. [above mentioned, No. 2016 / C 013/03 Opinion (: Own-initiative Opinion) of the European Economic and Social Committee].

    From this table (and the detailed data that accompany it) extremely interesting conclusions are drawn for the companies listed on the Main Market of the Athens Stock Exchange. One of them, which is a quite safe conclusion to draw in fact, is that among them, family companies exceed the rest listed companies by 44%.

    From the other conclusions we choose to mention the ones that are most interesting in the context of the present. Among them:

    (a) In 44.3% of the listed companies on the ATHEX Main Market, the executives hold more than 20% of their share capital (: most likely members of one or more families). Respectively: in 35.2% of the same companies, the executives hold more than 1/3 of their share capital and

    (b) 13.6% of the market value of those listed on the ATHEX Main Market are from listed companies in which the executives hold more than 20% of their share capital. Also: 8.1% of the market value of the same companies are listed companies, in which the executives hold more than 1/3 of their share capital.

    Based on the data that, by law, the companies listed on the Main Market of the Athens Stock Exchange must provide, we can safely spot the family companies. It turns out that their participation in the stock market, their business and financial development is not negligible at all.

    In other words: Family businesses also have a significant role in the Greek Stock Exchange.

     

    The issues that concern a family business – especially the issue of succession

    We could safely conclude, based on the above, that family businesses are the musculoskeletal system of the Greek economy. They do not, however, enjoy any particular privilege. They do not enjoy (nor have they ever enjoyed) special attention from the executive authority. Most interestingly: Not even from the researchers. Other categories of business (which include, unquestionably, family businesses) seem (?) more interesting…

    Extremely important data emerge from the above-mentioned ACCI report. Among them: the problems faced by family businesses. The most important of these (seems to be): the issue of succession.

    Seven out of ten family business owners plan to pass on the family business to the next generation. But this is not, of course, an automatic or, at least, simple process.

    According to the same report, the most important problems regarding the succession concern the high transfer taxes, the need to adapt the business’s staff to the new ownership and management regime, the insufficiently developed administrative capacities of the successors and their low level of training.

    The most important factor for successful succession (seemingly) is the change of mentality of the founder / director. Such a change concerns a multitude of modules. From seemingly simple issues (moving away from everyday business and making strategic decisions) to more complex ones (assisting the successor in managing and handling the next day).

    The development of a succession management plan is undoubtedly absolutely necessary. And so is the assistance of appropriate counselors.

    Our country is not characterized by a lack of consultants (business, tax, legal).

    We all know a plethora of such.

    The (self)projected as experts on succession issues, infinitely many.

    The really capable, however, are very few.

     

    The advantages of family businesses

    The most important advantages of family businesses (also as per the the above-mentioned Opinion) could, as a rule/indicatively, include the following:

    (a) The long-term perspective of the activities of the family businesses and the specific values ​​that govern them.

    (b) Building inter-business relationships on the basis of trust. [As the family business is characterized by the intention to pass it on to the next generation, it treats (basically) its employees with care and responsibility. They are, after all, the ones who will support the next generation (as well). This element further strengthens the relationship of trust].

    (c) The high quality of the products or services offered. Creating long-term bonds with employees, customers, suppliers and local communities.

    (d) The investment of sufficient capital and (reinvestment) of a significant part of the profits. The effort is focused on building a stable, independent and innovative business. A key concern is to reduce business risks and pass on a healthy business to future generations.

    (d) The development of family businesses in a more balanced way, in order to achieve their long-term (multi-generational) goals.

    (e) The development and operation of family businesses on the basis of a system of values,

    (f) The sense of personal responsibility, devotion and, possibly, self-sacrifice of those family members who either manage it and / or work within it

    (g) The effort to preserve the image of the business.

    (h) The (self-evident) respect for those who set up the business and take over its management.

    (i) The ability to better manage crisis situations as well as periods of recession and stagnation.

    (j) The sense of personal responsibility of those who exercise management and the effort to ensure the longevity of the business.

    Therefore: Family businesses are characterized by a multitude of advantages over the other types of businesses.

    It is worth realizing their value, nurture and further utilize them.

     

    The recommendations of the European Economic and Social Committee

    The European Economic and Social Committee in the above-mentioned Opinion:

    (a) Recognizes the unique value of family businesses (according to the Small Business Act which states that “the EU and Member States should create an environment within which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded”)

    (b) Calls on the European Commission, on the one hand, to adopt an active strategy promoting best practice for family businesses in the Member States and, on the other, to take action to establish a legal framework and regulations for family businesses.

    (c) Calls, inter alia, on the European Commission:

    • To include a family business category in European statistics (Eurostat) to effectively collect family business data from national statistical offices.
    • To improve the legislation on the transfer of family businesses from one generation to the next, especially from a tax point of view, in order to reduce the exposure of these businesses to liquidity problems.
    • To promote the climate of family organization, which is based primarily on long-term employment.
    • To assist in promoting innovation among family businesses.
    • To assist in the development of education and the promotion of research in the field of family entrepreneurship.
    • To support family holdings and the redevelopment of cooperative entrepreneurship, especially the type that attracts family businesses.
    • Introduce tax reliefs for reinvested earnings.

     

    The European Economic and Social Committee is an advisory body. The European Commission consults it, but it is up to the latter to decide whether or not to adopt its proposals. Unfortunately, no further legislative action has been taken on the measures proposed by the EESC.

    The importance of family businesses in the international, European and national economy is undeniable. Commonly accepted (by all).

    The European Union has shown its practical interest in family businesses. It has not, however, taken the next, absolutely necessary, institutional steps (eg issuing Instructions, Regulations, etc.) to assist them.

    Do we have to wait for that (European Union) initiative before we act?

    Obviously not.

    The State must take the necessary measures in order to support 80% of all Greek businesses. Among those measures must be the introduction of tax reliefs (for the transfer of said businesses from one generation to another) and, respectively, for the (reinvestment) of profits.

    Respectively, however: Entrepreneurs who (sooner or later) will be called upon to hand over the reins of their business should not hesitate and take their time, looking for excuses (for themselves). The initiation of the appropriate procedure, with the assistance of the competent persons, should not be delayed at all. Thoughts of the type: “It does not concern me.-“, “I have / we have time…”, “no one will do better!” look only natural. But not justified.

    Therefore: The State must do the right thing.

    Entrepreneurs must do so, respectively.

    Immediately.-

    Σταύρος Κουμεντάκης

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (September 20, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Private School Teachers & Dismissals (: and the absurdity of such argued…)

    Private School Teachers & Dismissals (: and the absurdity of such argued…)

    Recent legislation addresses the conditions for the termination of employment contracts of private school teachers. (Basically: the possibility and conditions of their replacement). Some of the trade unionists (and some of the politicians) are still supporting that such provisions are absurd. They underline, in particular, the need to safeguard the level of private education provided. Also: the, created by this law, “unfair conditions”. The teachers’ union (Federation of Private Educational Officials of Greece) opposes the new law with full force. Mobilizations are already being announced for its abolition.

    Proponents of the newly introduced provisions, on the other hand, have been working to make the actual transcript of this statement available online. Removal of old problems and distortions.

    The conflict remains intense.

    What, in fact, is true?

     

    The challenges in the field of education

    The (late) start of the new school year is just around the corner.

    School as we knew it (teaching students in person) is no longer granted – and the pandemic is the reason why.

    Now more than ever, we are concerned with intertemporal issues (seen, however, from a new perspective). The modernization of Education, the smooth operation of schools, their technological equipment are just some of them.

    We do acknowledge that there are some greater issues: Ensuring, for example, the life and health of students and teachers. As well as stopping the pandemic.

    The field of private education is concerned with another important issue: The change of the core of its operation. This issue has, to some extent, overshadowed the aforementioned-more critical issues. At least that is what the ones affected are seeking to prove.

     

    Changes in private education

    The recent law 4713/20 seeks a substantial modernization of private education. It modified some of the problematic and outdated regulations regarding private education’s operation. It replaced some others.

    Among the privileges abolished is the (“de facto”) permanence enjoyed by private school teachers. A “permanence” due to the impressive, indeed, restrictions (and conditions) of terminating their employment contracts. Even for the ones among them who were completely inadequate.

    Those who (consider to) have lost privileges due to the introduction of this law are, unanimously, attacking it. And so are their (willing) supporters. We have already talked about the lost privileges and their holders in our previous article. And so have we about their motives.

    There are those who, out of conviction, include themselves in the ever-shouting.

    There are also those who, soberly, record their concerns. Are they reasonable? Is there adequate protection against a vindictive termination of their employment?

    Let us try, in this case too, a structured and argumentative approach. On the basis of the only safe criterion: the existing institutional framework.

     

    The termination of contracts (more precisely: the replacement) of private school teachers

    Article 10 of Law 4713/2020

    The relevant provision, which replaces the previous article 30 of Law 682/1977, stipulates that:

    «1. Teachers in private and equivalent schools are recruited and employed under private law contracts of indefinite duration and are subject to the issues of recruitment, employment and termination of their employment in accordance with the applicable provisions of the common labor law provisions, subject to special provisions for private school teachers and in particular, of article 36 of this law “.

    1. During the judicial review of the legality and abuse of the termination of the employment contract of the private school teacher of par. 1, it is examined in particular, whether the termination is an unfair employer reaction to legal and contractual behaviors of the private school teacher. “

     

    The transitional provisions

    Article 36 of Law 682/1977 provides that:

    «1. Every two-year employment contract of a private school teacher, according to par. 2 of article 30 of law 682/1977, which is expires within 2020, is considered to expire on 31.8.2020 and the legal compensation is paid, unless the parties agree on the conversion of said employment contracts to indefinite ones.

    1. From the entry into force of the present, an employment contract of a private school teacher, of a two-year duration, according to par. 2 of article 30 of law 682/1977, which expires within 2021, is automatically converted into an indefinite contract.
    2. From the entry into force of the present, any procedure for checking the legality and the abusiveness or non-termination of the employment contract of a private school teacher, which is pending before the independent Committee of article 30 of law 682/1977, is abolished “.

    In brief

    (a) The employment contracts of private school teachers are now terminated, as are those of other employees – “common mortals” in the private sector.

    (b) Special mention is made and significant sensitivity is shown for the judicial review of the (possible) abuse of the termination of their employment contracts.

    (c) The activation of the new, relevant, provisions is done gradually.

     

    The pathogens that the new regulations were called upon to address

    Article 10 of Law 4713/2020 seeks to deal with the “wrong doings” of the past:

    (a) resulting from the (unjustifiably) privileged treatment of private school teachers over other employees

    (b) which created impressive (gradually, in fact, reinforced) restrictions on the possibility and process of terminating private school teacher’s employment contracts

    (c) which have achieved an equalization of the working status of private school teachers with that of civil servants

    (d) which have (“de facto”) achieved for teachers the permanent tenure applicable to civil servants.

     

    Restrictions on the termination of private school teachers’ employment contracts

    If one refers to the provision of article 30 of law 682/77 and its pre-existing forms (in combination with article 33 – until its abolition), they will be impressed by the ingenuity of its authors to achieve the permanence of private school teachers. It would not be an exaggeration to argue that it could easily have been the subject of a dissertation entitled: “The inculcation of entrepreneurship by the negative achievements of trade union action and its embrace by politicians.”

    Over the years we come across (legally required) fixed-term contracts for teachers. Let’s take a brief look at the restrictions and conditions for terminating their employment contracts:

    (a) Numerical constraints

    The numerical constraints on termination of private school teachers’ employment contracts are quite interesting. Let’s look at two related examples:

    (i) The provision of art. 13 §1 Law 2986/2002 (valid until 2010):

    “(B) At the end of the four-year period (note: of the then valid fixed-term contract of the private school teacher) the owner of the private school may terminate the contract without justification for only 33% of the teachers who complete six years of service. In case two teachers complete six years, the contract of one of them may be terminated. In case only one teacher completes six years and another teacher of the school completes six years within the following two years, it is possible to terminate the contract of one of the two).

    (ii) The provision of art. 47 §16 Law 3848/2010:

    “At the end of each school year it is possible to terminate the employment contract of one teacher per private educational unit and per level of education… Private junior high schools and high schools of the same seat, of the same owner and with the same address are considered to be a single educational unit.”

    (b) Procedural conditions

    Even more provisions that guaranteed the “de facto” permanence were in place in the last three years and until the entry into force of law 4713/2020. Extensive reference to them was made in our previous article. These assurance provisions can be summarized in the two procedural conditions of the valid termination of private school teachers’ employment contracts.

    To recall (very briefly) the provision of article 30 of law 4472/2017:

    «1…

    «1…

    1. Private school teachers …. enter into a fixed-term contract, which… and expires on the 31st of August of the second year following their recruitment. At the end of the two years the owner can terminate the contract. After the lapse of the two years and if the contract is not terminated according to the above, it is automatically converted into a contract of indefinite duration.
    2. The contract of indefinite duration can be terminated only for the following reasons:

    …

    1. e) Private school teachers are dismissed by the owner of the school they serve due to:

    …

    1. dd) didactic, pedagogical or professional deficiencies based on at least two (2) reports and concerning at least two (2) consecutive teaching years with criteria determined by the Institute of Educational Policy, the first of which is compiled by the principal of the school unit and is notified to the competent educational project coordinator who has the scientific responsibility of the relevant branch and the second is drawn up by the school director and notified to the above educational project coordinator, who adds an additional report, if they deem it appropriate and especially if their opinion differs from that of the Director.

    …

    The legality of the termination of the employment contract for the reasons provided under a` and e`.dd` of paragraph 3 is judged by an independent Commission, which examines whether the employment contract was terminated legally and whether the termination is abusive or not and decides on the matter.

    This Committee is established by a decision of the Minister of Education and Religions, which is issued within one month from the publication of the present, and consists of:

    1. a) One (1) Judge of the Court of First Instance, as President, with their deputy, serving in the Labor Disputes Department of the Athens Court of First Instance….
    2. b) Two (2) Judges of the Court of First Instance serving in the Labor Disputes Department of the Athens Court of First Instance with their deputies….

    One (1) representative of the Federation of Private Educators of Greece indicated by a decision of the Federation of Private Educators of Greece and one (1) representative of the most representative employers’ organization nominated by its decision shall be present as observers, without the right to vote, at the meeting of the Committee.

    …

    The above Committee also takes into account the official reports, and meets and decides obligatorily within ninety (90) calendar days from the termination and submits its proposal to the competent Director of Education in which it expresses its judgment on the legality of the termination of the employment contract, as stated above. ….

    Dismissals of private school teachers that take place without following the above procedure are invalid. ”

    In simple words: If, by any chance, a teacher proved (from 2017 onwards) inadequate immediately after being hired, their replacement was possible (at best) after two years and three months.

     

    In conclusion

    The legislator, when trying to tackle the issue of private education, had multiple distortions and pathogens to manage.

    Among them, the (de facto) inability to replace inadequate private school teachers. (Even if one does not rush to wonder if there were / are such). Also: inequality in relation to other employees in the private sector (health professionals, for example, to whom we owe so much). And yet: the multiple problems that arose in the exercise of business activity and the limited, only, assistance in the provision of high quality services in private education.

    The problem seemed complicated…

     

    The explanatory memorandum of law 4713/2020

    The solution to the (apparently only) complex problem was (and indeed has proved to be) disarmingly simple. It was limited to one sentence and just twelve words:

    Inclusion of private school teachers in the protective field of labor legislation.

    But what were the legislator’s thoughts?

    Let us refer to the explanatory memorandum of this particular provision in question. There we will identify the distortions that, in their view, the legislator aims to cure. The medium they use. The purposes of this provision (: of the new, that is, Article 10). So, what is the ratio of this provision?

    As stated in the explanatory memorandum, the inclusion of the private school teachers’ employment relationship in the common labor law is intended to restore the balance among:

    (a) the managerial right of the entrepreneur-employer;

    (b) the parallel safeguarding of labor rights, in accordance with the provisions of labor law and Law 682/1977 of private school teachers, but also

    (c) ensuring state supervision in the relevant business activity.

    It is also noted that the previous legislation in the field of private education affected (insofar as they went beyond the principle of proportionality) the core of the business activity of private schools. And it is not an accidental activity but one that is constitutionally protected (article 16 §8 & 5 §1 of the Constitution). And this by pointing out that the private schools in our country, in contrast to other countries, carry entirely the business risk.

     

    The (sufficient?) Protection of private school teachers from the termination of the employment contract of an indefinite period

    Since the submission of the relevant bill of Law 4713/2020, specific voices have adopted (and continue, even today, to cultivate) the position on the now free dismissals of private school teachers. The position, also, of the insufficient protection of the private school teacher from the possible unjustified termination of their employment contract by the respective headmaster.

    But what is the truth?

    Can the current headmaster, unjustifiably and without restrictions, dismiss / replace their teachers?

    Doesn’t labor law, which now includes private school teachers (like all other employees), provide some protection?

    The headmaster has the right to say to their teachers: “LEAVE !!!” and are they really obliged to leave with their heads bowed?

    The answers to the above questions are obviously negative. Labor law has never been inadequate in protecting employees from illegal dismissals. The law of termination requires the fulfillment of a series of conditions (formal and substantive) in order for the termination of an employment contract to be lawful.

     

    The existing institutional framework

    Conditions of termination of employment-in general

    Let’s take a look at what is provided by the provision to which all the employees of our country are under (article 5 §3 par. A of law 3198/1955):

    «3. The termination of the employment relationship is considered valid, as long as it has been made in writing, the due compensation has been paid and the employment of the dismissed person has been registered in the Greek Social Security Agency payroll or the dismissed person is insured”.

     

    Regarding the (now in place) conditions of dismissal / replacement of a teacher

    The dismissal / replacement of a private school teacher with an employment contract of indefinite duration is subject to formal and substantive conditions. Specifically:

    Formal conditions:

    The common labor laws require the observance of three formal conditions in order for the termination of the employment contract of indefinite duration to be valid. These are:

    (a) The observance of a written document of the termination.

    (b) The observance of a certain notice period (where provided), after the expiration of which the employment contract may be terminated.

    (c) The payment of compensation.

    Substantive condition – Restriction of the abusive exercise of the employer’s right:

    In addition to the three specific, formal conditions, the validity of the termination of an indefinite contract requires the existence of a fourth, negative-substantive condition. This is the lack of abuse, as it is reflected in the general provision of article 281 of the Civil Code but also in the special provision of article 30 par. 2 of law 682/1977-as in force.

    According to the provision of article 281of the Civil Code:

    “The exercise of the right is prohibited if it obviously exceeds the limits imposed by good faith or good morals or the social or economic purpose of the right.”

    Therefore, the right to terminate the employment contract for an indefinite period of time by the employer – school owner must be respected and not exceed the above limits. Otherwise, their practice is considered abusive.

    In line with the above, the current Article 30, paragraph 2, refers to the judicial review of the legality and abuse to which the termination of the private school teacher is subject. As explicitly and specifically it is provided, “During the judicial review of the legality and abuse of the termination of the private school teacher’s employment contract of par. 1, it is examined in particular whether the complaint constitutes an unfair employer reaction to the lawful and common conduct of the private school teacher”.

    In short, the termination of an employment contract of indefinite duration in Greece is valid with no need for a special reason to be presented (with reference to the open debate on Article 24 of the Revised European Social Charter). This does not mean, however, that it is not subject to substantial restrictions. Much more, when that adequate protection is not provided to employees. The jurisprudence has proved this for a long time now.

    Employees of private clinics, doctors and nurses, offer their services in the field of health – for which specific constitutional provisions are provided.

    Journalists working in the field of journalism offer their services in the field of press-for which, also, specific constitutional provisions are provided.

    Employees in private schools offer educational services – for which specific constitutional provisions are provided.

    Private sector employees are generally subject to the protective provisions of labor law. Doctors, nurses, journalists have always been subject to the protective provisions of labor law.

    Private school teachers are now too…

    The removal of pathogens and distortions of almost half a century is a fact!

    The catalysis of unjustified privileges and distortions, of a corresponding duration, is too.

    Let us celebrate the restoration of equality.

    But mainly of logic!

    Σταύρος Κουμεντάκης

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (September 13, 2020).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

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