Blog

Private School Teachers (Regarding the “sacred cows” and the lost privileges)
The recent law on private education, which we approached in our previous article, came to change the status quo. To abolish privileges (of a small) portion of employees. Privileges that do not seem to have a place in a country like Greece, where the right to property is constitutionally recognized. Where entrepreneurship is also constitutionally recognized, it exists and it develops. Where the development of the national economy presupposes (regardless of the parliamentary majority) the strengthening of healthy entrepreneurship. Privileges that do not seem to have a place, in general, in the year 2020. Among the privileges that have been abolished, one seems to have created the strongest reactions. The abolition of the (de facto) permanence (or perhaps longevity?) Of private school teachers.

The employment status and employment relationships of private school teachers have, over time, been enjoying impressive privileges. In fact, regardless of the quality of the educational work provided by them. Regardless of the satisfaction of their supervisors, their students and parents. The termination of their employment contracts could not be described as an easy (at a legal level) case. The opposite. This regardless of whether they were excellent, less good, mediocre or bad.

Dismissal or, more precisely, replacement?

But let us list, in quotation marks, some related questions.

Is the termination of a teacher’s employment contract (under any conditions) equivalent to a common termination? The dismissal, in other words, of (any other) employee? In case of termination of the employment contract of a private school teacher, are we talking about the loss of another job in the direction of saving resources from an (analgesic) employer? To burden other employees with the work of the dismissed?

The answer is no, and that is a given!

Educators “fit”, as we all know, in some departments (eg teachers). However, they may also fit into more specific departments (eg philologists, mathematicians). However, all, without exception, cover specific, maximum, teaching hours in specific departments / classes. This means that in each school, without exception, a specific (proportional) number of teachers should serve. If we terminate a teacher’s employment contract, we will have to hire another in their place.

The owner of a private school, therefore, does not have the opportunity to fire a teacher “to save money”. They are obliged (secondarily by law) to cover teaching hours. To meet, above all, the needs of the school and their students. They are consequently obliged to replace the teacher whose contract they intend to terminate.

Therefore, the jobs of private school teachers in a private school always remain stable. Under the self-evident condition, of course, of maintaining the same number of students. Termination of the contract of a private school teacher presupposes their replacement by another.

And seeing the same issue from another point of view: Is it not, for the benefit of the school, its owner (but mainly the students and their parents) to replace the “problematic cases” (which are always found in employees & professionals) with excellent teachers? With teachers who will have excellent educational work to demonstrate and provide?

The attitude of the State, over time, towards private education

The establishment of private schools and the legal regime that governs their operation, has bothered our country for about two centuries.

The Constitution of Greece of 1827 was the one that established (article 20) the principle of freedom of private education. It foresaw the possibility for Greeks to establish schools and to choose educators. («Greeks have the right to establish any educational facility … and to choose the teachers that will be their educators.»).

In the subsequent Constitutions, however, there was a corresponding guarantee. At the same time, the obligation to license the establishment of private schools by the state was provided.

The current Constitution (article 16 §8) recognizes the possibility of establishing and operating “schools that do not belong to the state”. It grants to the law the determination of the conditions and terms of “granting permission for their establishment and operation”, the matters related to the supervision exercised over them… “.

Laws, over time, regulated these issues. Among them is Law 682/1977 “On private schools of general education and boarding schools”. Some provisions of which are still in force. Others have undergone a number of modifications.

The State, therefore, systematically and constitutionally recognizes (for two centuries now) private education. One would expect from the (among other, benefitted) private educators an effort to improve the private education provided. For one simple reason, before others: securing their jobs.

The (fair?) Struggle of the employees for the abolition of the companies for which they work

“The main purpose of the Federation of Employees’ Associations in super markets is the abolition of these super markets.”

“The main purpose of the Federation of Associations of Doctors and Nurses in private clinics is the abolition of said clinics.”

Can one imagine that an employee would fight for the abolition of their profession? How could a collective / trade union body have as its statute the abolition of the companies in which its employees are employed?

Looks like a (double) joke.

It could be…

However, this does not regard the (particularly likeable) employees in the supermarkets. Nor the doctors and nurses working in private clinics. Not even their Federations.

But it really concerns a category of employees. Those to whom we must trust (?) the education of our children. More precisely: the Federation of Private Educational Officials of Greece (: FPEOG)

The statutory purposes of FPEOG

The statute previously in force

In paragraph 7 of article 2 “regarding the Objectives” of the previously in force (legally approved and duly submitted) statute of FPEOG we read:

“… In this context, the main purpose of F.P.E.O.G. is the abolition of private education ”

This provision became a tool to reveal the (true) intentions of FPEOG. It recieved, as long as it lasted, great reactions. It therefore had to be replaced with a more sleek one. More precisely: it was artfully “camouflaged”.

The current statute

In paragraph 7 of Article 2 “regarding the Objectives” of the (currently in force-posted on the relevant website) statute of FPEOG, we read:

“… In this context, the main purposes of F.P.E.O.G. are: a) The strengthening of the public, social and non-profit nature of education of all forms, types and levels, b) for Education to operate under the responsibility of teachers… If the existing protective legislative framework of the above constitutional purposes is abolished, the operation private education will now be in conflict with Article 16 of the Constitution and will have no reason to exist”.

Despite the “artful” cover-up attempt, no doubt remains about the (timeless) true intentions of FPEOG. Intentions summarized in the following sections: Abolition of private education. Abolition of private schools. Abolition of the profession of private school teachers.

The reasons for the (statutory) effort of FPEOG to abolish private education

The (reasonable) questions and the logical answers

Reasonable questions are raised by the timeless (from its statute arising-undisputed and official) effort of FPEOG for the abolition of private education.

In our attempt to approach its true motives, let us attempt a “dive” through time. Let us refer to the pre-existing forms of the basic legislation of Law 682/1977.

The conclusion to be drawn is that private school teachers did not really want to improve the private school education provided. They wanted, over time, to become civil servants. Alternatively: to enjoy the privileges of civil servants. Often in an improved version.

Initial wording of Law 682/1977

The specific law, in its original form (Article 30) provided:

«8. Private educators who are employed on a permanent or indefinite basis and are dismissed due to the closing of the school in which they serve are not entitled to compensation.
1. Those mentioned in the previous paragraph, as well as those belonging to table A` who are dismissed in the case f` of par. 4 of article 33 of the present, are employed upon their request, with the rank they have, in respective schools of public general education under private law for an indefinite period of time, to meet existing needs, with the conclusion of a relevant contract between them and the Minister of National Education and Religions.
Those are placed, by decisions of the Minister of National Education and Religions, in public schools, operating outside the prefectures of Attica and Thessaloniki for at least three years… »

The subsequent amendments of law 682/1977 (of 1980 & 1981)

The formulation of this provision with subsequent additions from Laws 1035/1980 and 1143/1981 (which were valid until 30.9.1985-when they were abolished by article 95 par. 13 of Law 1566/1985), help us to extract critical conclusions. Specifically:

«8. Private educators who are employed on a permanent or indefinite basis and are dismissed due to the closing of the school in which they serve are not entitled to compensation.
1. Those mentioned in the previous paragraph, as well as those belonging to table A` who are dismissed in the case f` of par. 4 of article 33 of the present, are employed upon their request, with the rank they have, in respective schools of public general education under private law for an indefinite period of time, to meet existing needs, with the conclusion of a relevant contract between them and the Minister of National Education and Religions.
(addition with par. 3 of article 11 of L.1035 / 1980 (Government Gazette A 60):

“For those employed by decisions of the Minister of National Education and Religions in Public Schools, the current provisions on Public Education Officers apply regarding their placement and transfer.”

(added by article 30 of Law 1143/1981):

“For the completion of the time of service required by the provisions for the transfer of private school teachers, outside the prefectures of Attica and Thessaloniki, their previous service in public education is taken into account. “Teachers serving in public education in employment under private law do not occupy an organic position in the schools but are placed within the same city to meet existing service needs.”

Useful conclusions

(a) Any private school teacher dismissed after 1977 was employed in a public school. Initially outside Athens and Thessaloniki. However, from the year 1980 until the year 1985, they could be hired in the specific urban centers as well.

(b) The dream of every citizen of modern Greece (: recruitment in the public sector) could therefore, very easily, become reality for a private educator. As long as they were hired (and then fired) by a private school. They would be hired, based on explicit legislation, in the public sector. And not in any capacity: (Obviously) as a teacher-civil servant in a public school.

(c) Employees of the private sector have never enjoyed tenure in their work. But the basic characteristic of civil servants is that of permanence (not to say, in reality, that they are guaranteed employment for life). From the year 1977 onwards (referring to the interim legislative-pre-existing regulations) we find wall (impressive in height and size) for the protection of private school teachers. In order for a private school to replace a (insufficient) teacher, it had to go through hell and back. Their replacement proved, in reality, impossible. The tenure of private school teachers had been achieved in another way. The employment contracts of other common mortals (:employees of the private sector) could be terminated, subject to the law. Labor law, in any case, extended a protective net to (common) employment contracts. The courts have always exercised strict control over the abusive and illegal dismissals of employees of the private sector. For teachers, however, this was never enough.

The abolition of private education would lead to a reasonable (?) Request to hire private school teachers in the public sector to meet the needs that would arise.

The termination of employment contracts of civil servants (and public school teachers)

Termination of employment contracts of civil servants

It is interesting to see the provisions and conditions for the dismissal of civil servants (: Law 3528/2007) -other than those concerning criminal convictions.

(a)

Under Article 152 (: Grounds for dismissal):

“The employee shall be dismissed only for the following reasons:
1. a) the imposition of a disciplinary penalty of permanent cessation;
2. b) physical or mental incapacity,
3. c) removal of the position in which they serve,
4. d) completion of the age limit and of thirty-five years;
5. e) unsuitability according to article 95 of this Code “.
(b)

Under Article 95 (: Referral of an unpromoted employee):

“An employee who is registered in two consecutive lists of non-promoted to the same degree, is referred within two (2) months from the ratification of the relevant list to the service council, which, with a justified decision, and after the employee has been previously summoned in order to provide the necessary clarifications in writing or orally, may dismiss or demote the employee to some degree. An objection to this decision may be submitted to the Secondary Disciplinary Council “.

The basic conditions for dismissal of a civil servant

Continuing, let’s keep in mind that the public school teacher is dismissed from their position (after the two-year, probationary period) for reasons of: (a)… (b) physical or mental incapacity, (c) abolition of the position in which they serve, (d ) … and (e) unsuitability resulting from their inclusion for two consecutive years in two consecutive tables of non-promoted. Let us also look for the relevant provisions regarding the conditions of the termination of the employment contracts of private school teachers according to the pre-existing law.

The termination of private school teachers’ employment contracts – until recently

The institutional framework that was in force during the last three years – until the implementation of law 4713/20

Based on article 30 of law 4472/2017 (: Employment relationship, duration of contract-termination of employment relationship):

«1. Teachers in private schools are employed on a fixed-term or indefinite-term basis as defined in the following paragraphs.
1. Private school teachers are proposed for recruitment by the owner of the private school and after the approval of the proposal by the Director of the relevant Directorate, they conclude a fixed-term contract, which starts on the day the services are provided by the teacher and ends on August 31st of the second year from their recruitment. At the end of the two years the owner can terminate the contract. After the lapse of 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 for an indefinite duration may be terminated only for the following reasons:
3. a) If the employer invokes and proves a sufficiently justified disturbance of the educational climate in the school due to the inability of the employer-teacher cooperation.
4. b) Shutting down of schools.
5. c) Shutting down of classes and class divisions. In this case, it is permissible to dismiss those who have the least previous experience in education and their working hours are zero. Teachers who also the owners of the schools are excluded from these redundancies.
6. d) Completion of the 70th year of the age of the teachers.
7. e) Private school teachers are fired by the owner of the school they work at, due to:
(aa) physical or mental incapacity ascertained by the local primary health committee concerned and, at the objection of the person concerned, by the secondary public health committee;
1. bb) completion of the service time that establishes the right to receive a full pension from an insurance institution of private school teachers. In this case, the termination of the employment relationship occurs at the end of the academic year,
(cc) the imposition of the disciplinary penalty of dismissal by the relevant disciplinary board;
1. dd) didactic, pedagogical or professional inconsistency based on at least two (2) reports and relating to at least two (2) consecutive teaching years with criteria determined by the Institute of Educational Policy, the first of which is prepared by the school principal and is notified to the competent educational project coordinator who has the scientific responsibility of the relevant branch and the second is prepared by the school unit 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.
(….)
1. A private school teacher is automatically dismissed, if he / she is sentenced by an irrevocable decision to a penalty resulting in dismissal for the civil servants.
(…)
1. The employment contract between the owner of a private school and the teacher is terminated upon death, disqualification, acceptance of resignation and termination of the employment contract and a relevant act is issued by the competent Director of Education.
The legality of the termination of the employment contract for the reasons provided in indent a` and sub-indent dd` of indent e` of paragraph 3 is decided by an independent Committee, which examines whether the employment contract was terminated legally and whether the termination is abusive or not and rules on the matter.

This Committee is established by a decision of the Minister of Education, Research and Religions, which is issued within one month from the publication of this, 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 Court of First Instance pf Athens…
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 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 makes a mandatory decision within ninety (90) calendar days from the termination and submits its proposal to the competent Director of Education, before which it expresses its judgment on the legality of the termination of the employment contract, as stated above. The Director of Education has a binding authority to issue a relevant decision on the dismissal or not of the teacher, in accordance with the content of the Commission proposal within three (3) days from the submission of the proposal to them. This decision shall be notified to those concerned. In case of expiration of the said deadline, the legality and non-abusive nature of the dismissal is presumed. The termination of the teacher’s employment contract does not produce legal effects before the expiry of the deadline for the issuance of the relevant decision of the Commission. Following the issuance of the decision of the Director of Education, the interested parties can appeal to the competent administrative courts. In case of untimely issuance of the decision established by the Commission and until its issuance, the above procedure is not required for the termination of the contract.

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

Conclusions

Comparing to the reasons for dismissal of public teachers

Private school teachers during the past three years could be fired:

(i) If the employer invoked and proved a sufficiently justified disturbance of the educational climate in the school due to inability of cooperation between the employer-teacher cooperation

(ii) In case of abolition of schools, classes and classrooms

(iii) In case of physical or mental disability

(iv) In case of retirement

(v) In case of imposition of the disciplinary penalty of dismissal by the relevant disciplinary board

(vi) In case of didactic, pedagogical inadequacy or professional inconsistency based on at least two (2) reports and concerning at least two (2) consecutive teaching years.

Does all this remind you of anything?

Let’s look at the reasons for terminating the employment contracts of civil servants…

The legality of terminating the employment contract of a private school teacher.

For ordinary mortals, the legality of the termination of their employment contract was determined a judge (: Single Member Court of First Instance). It seems that it was not enough to determine the legality of the termination of the employment contract of a private school teacher. Under the pre-existing institutional framework, three judges were required. Also, two observers (one of whom was a representative of FPEOG).

Could we claim that private school teachers were not treated favorably? Does this seem right?

The termination of private school teachers’ employment contracts-today

With par. 1 of the provision of article 10 of law 4713/20, article 30 of law 682/1977 is replaced. Their employment relations are henceforth governed by the “current provisions of common labor law” (par. 1).

But the protection of teachers did not fall exactly to the level of other working-class mortals. A privileged treatment is still reserved for them.

Specifically, in the next paragraph (par. 2) we read: “During the judicial review of the legality and possible abuse of the termination of the private school teacher’s employment contract… it is particularly examined whether the complaint constitutes an unfair employer reaction to the legal and contractual conduct of the private school teacher”

The process of replacing private school teachers (and “dismissing” them) is now governed by labor law.

It proves to be extremely interesting (both from a political and a socio-economic point of view) for someone to go through the “achievements” of the private school teachers’ trade union. Over time. From the year 1977 (especially) until quite recently.

One can also witness the evolution of a part of the political history of Greece.

They will not, however, witness a modern development model. Quite the opposite.

They will also not witness a measure of fair treatment of employees.

They will witness a means of dividing employees into “patricians” and “plebeians”. Or, to put it in Greek terms, into “free” and “slaves”.

The injustices (of decades) have been removed.

In the field of private education.

For other employees in the private sector.

It turns out, in the end, that some employees or industries should not be treated as “sacred cows”. Our faith on the Constitution (article 3) does not provide for their existence.

In the end: mourners were those women in black who usually mourned the dead, for a fee. It was, in the recent past, a profession. We met them again, on the occasion of the (recent) “loss” of specific privileges of private school teachers.

As far as I am concerned, however, I boldly declare that no tears were shed on the right cheek for the lost privileges of private school teachers.

And this is because the capable private school teachers (and not only the excellent ones) have no need for them.

On the contrary!

Besides, with their presence they brighten, for a long time now, the field of private education…

And, fortunately, they are the vast majority ..

Stavros Koumentakis
Managing Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (September 6, 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.
September 6, 2020
Teleworking and vulnerable groups: 9 questions and their answers for Legislative Decree / 22.8.20

The second wave of the pandemic is, unfortunately, in progress. The numbers of (spotted) coronavirus vectors are increasing rapidly and on a daily basis. The coordinated management of the whole issue from the part of the Stateis necessary. Business and labor relations are areas in which the State is once again focusing its attention. Providing work with physical presence can only aggravate the already problematic situation. Teleworking was used as a means of stopping the first wave of the Covid-19 Pandemic. It is already used as a means of stopping the second wave. More enhanced though. The Legislative Decree of 22.8.2020 (Government Gazette A ‘161 / 22.8.20) gives us the relevant position, focusing on the protection of vulnerable groups.

Teleworking as a flexible form of employment and a means of management of the pandemic

On the basis of the introductory data, we could only be particularly and extensively looking into teleworking.

Initially as an institution and on the occasion of the 11.3.20 Legislative Decree. In this context, we did look into the individual forms of teleworking, its advantages and disadvantages, the regulatory framework at European and national level. We were also concerned with teleworking and personal data. We were lastly concerned with the past, present and future of teleworking.

Teleworking is one of the most flexible forms of employment. As such it is to be further developed and further consolidated. We will know its further development, in any case, with the arrangement of the working time, to which, inevitably, we will be led. As long as we unhook ourselves from the shortcomings of the past, regarding the already obsolete eight-hour employment.

In our aforementioned article on the past, present and future of telework we referred to the then (until 31.3.20) developments. We specifically mentioned that: “The German Minister of Labor, positively evaluating the results of telework during the pandemic, stated that he is already working towards the institution of a (unilateral) right to employees to provide their services by telework. This, in fact, regardless of any pandemic! “.

This information seemed impressive at the time. We logically expected similar developments in our country. A relevant press release of the Ministry of Labor inclined us towards the drafting and submission of a bill for telework in our country. But developments are marching ahead. The rapid growth of the confirmed carriers of Covid-19 acts as their accelerator.

However, we see elements of the relevant legislation expected in Autumn, infiltrating the aforementioned-recent Legislative Decree of 22.8.2020. Let’s approach the relevant provisions.

Teleworking in the light of the Legislative Decree of 11.3.2020

The provision of article 4 par. 2 a of the Legislative Decree of 11.3.20 [(A’ 55), ratified by article 2 of law 4682/2020 (A’ 76)], provided:

“The employer may by its decision determine that the work provided by the employee at the place of work provided by the individual contract, will be carried out by the system of distance work.”

On the occasion of the commentary of this specific Legislative Decree, we were concerned, among other things, with the following question:

“But what happens when the employee submits (independently-regardless of the position adopted by his employer) a request for distance work”?

Based on the existing, then, institutional framework, our answer to this question could not be different:

“Both the specific request and the supporting document should be freely evaluated (as there is no relevant legal provision) by the employer. It will be accepted as long as the relevant conditions are met. These include: (a) teleworking is possible in the specific case and (b) the request is assessed as “reasonable”. And, ultimately, as long as the employer has no (any) other objections.”

But things are already changing.

Teleworking and vulnerable groups in the light of the Legislative Decree of 22.8.2020

Question 1: Does the employer still have the right to impose telework?

Answer: The employer (still) reserves the right to impose the system of distance work until 30.9.20. The provision, in other words, of the agreed work by telework (instead of the physical presence of the employee at the agreed place of work) (article 4 par. 2.a of the Legislative Decree of 11.3.2020-as already in force after its amendment by the Legislative Decree of 22.8.20).

Question 2: Are employees entitled to claim / enforce teleworking?

Answer: Employees (in general) have the right to ask, but not to impose telework.

However, employees belonging to vulnerable groups have the right to apply to their employer for teleworking. This request can be made “by any appropriate means, such as by telephone, e-mail or text message on a mobile phone” (article 4 par. 2.b of 11.3.2020 Legislative Decree).

Question 3: Are employers obliged to accept the telework that their employees request?

Answer: In order to answer this question, we need to make a differentiation – depending on the category to which each employee belongs:

(a) Employees who do not belong to vulnerable groups

A request for teleworking coming from an employee of the specific category is freely evaluated by their employer – according to what is currently in force. It is accepted, indicatively, if: (a) teleworking is possible in the specific case, (b) the request is assessed as “reasonable” and, finally, (c) if the employer has no (any) other objection.

(b) Employees belonging to vulnerable groups

The employer must, in principle, accept the request for teleworking of an employee belonging to vulnerable groups. Under a specific condition: That it is possible for the work to be provided remotely (article 4 par. 2.c of from 11.3.2020 Legislative Decree).

Question 4: Who will evaluate the possibility (or not) of the work to be provided remotely?

Answer: This assessment cannot be left to the employee. It obviously is the right of the employer.

Question 5: What happens when the applicant employee belongs to vulnerable groups and teleworking is not possible?

Answer: In this case, “the employer takes measures so that the applicant employee who belongs to a vulnerable group does not provide work for the performance of which they come in contact with the public” (article 4 par. 2.d of 11.3.2020 Legislative Decree).

But what are the jobs with which an employee comes into contact with the public? It would be simple, for example, to accept that there is “contact with the public” for a bank cashier. Also, for a saleswoman in a department store. But is it the same with an office worker where a client or associate will be present, at most, on a daily basis?

No rule is established. Each case should be evaluated independently. The evaluation is to be made, here as well-of course-, by the employer.

Question 6: What happens when the applicant employee belongs to a vulnerable group and it is not possible to provide their work by teleworking or by (physical) work without contact with the public?

Answer: When (cumulatively) the conditions of the specific question are met, the employer has the right to suspend, unilaterally, the employment contract of the (belonging to a vulnerable group) employee. This suspension, based on the specific Legislative Decree, can extend up to 30.9.20 (article 4 par. 2.e of the 11.3.2020 Legislative Decree). We will consider it as a logical assumption that, since work will not be provided, no salary will be due (at least based on what this Legislative Decree stipulates).

Question 7: What are the “vulnerable groups” and what medical certificates prove that the applicant employee belongs to them?

Answer: This Legislative Decree does not address this issue. It refers to the Common Ministerial Order to be issued by the Ministers of Labor and Social Affairs and Health (article 4 par. 2.f of the 11.3.2020 Legislative Decree).

Pending…

Question 8: What about the implementation details not tackled by this Legislative Decree?

Answer: We expect, in this case as well, for a relevant CMO to be issued by the Ministers of Labor and Social Affairs and Health. The specific CMO will concern the details of implementation of this Legislative Decree.

Corresponding CMO will be able to extend the time of its application beyond 30.9.20. Depending, of course, on the evolution of the pandemic in our country (article 4 par. 2.f of the 11.3.2020 Legislative Decree).

Question 9: What if, nevertheless, the employer does not comply with their obligations?

Answer: This Legislative Decree imposes very specific obligations on the employer in the event that an employee has notified and proven that they belong to vulnerable groups.

If the employer is indifferent to the (according to the specific Legislative Decree) management of the whole issue, a significant administrative penalty is provided. Specifically: “a fine of five thousand euros (5,000 €) for each violation”. (article 4 par. 2.g of the 11.3.2020 Legislative Decree). It should be noted here that the specific administrative sanction does not exhaust any relevant obligations of the employer acting illegally.

Time flows (rather) torturously in relation to the pandemic.

The number of (reported) coronavirus vectors sets a daily record.

The number of our fellow citizens in the ICU is not decreasing.

Teleworking has proven to be a means of managing the multifaceted (and not just health) crisis.

The State has adopted (with the Legislative Decree of 22.8.20) another series of relevant measures. It is guided by the convenience, health and life of vulnerable groups. And, of course, the operation of business and the economy.

Strict sanctions accompany its implementation.

But let the fear of sanctions not be the reason for the compliance.

Individual, social and business responsibility is really worth prevailing….

Stavros Koumentakis
Managing Partner

P.S. A brief version of this article has been published in NAFTEMPORIKI Newspaper (August 28, 2020), MAKEDONIA Newspaper (August 30, 2020). You may also listen to a radio interview in north98.

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.

August 30, 2020
Shareholder Agreements: safeguarding minority shareholders

The articles of association of a company are the “law” that governs (in addition to the current institutional framework) its operation. The articles of association, however, are not always sufficient to regulate all related relations. Especially those that develop among the shareholders. The need for additional agreements then arises. Agreements that either move on the edge of the law or that would preferably not have the publicity that the law reserves for the statute and its regulations. We are talking, in this case, about extra-corporate agreements. But what is their value? How does law and case law treat such agreements?

This topic seems (and is) huge. Let us try, however, a brief and substantive approach. In the light, in particular, of the SA.

The capital and union nature of SA. Their manipulation.

The societe anonyme belongs to the category of capital companies. As such, the success of its corporate purpose presupposes only the property contribution of the shareholders. Their personal contribution is not legally necessary. It is not even tolerable, unless it is allowed by the articles of association. Let us also take into account the “union-like organization” of the societe anonyme. In the context of this (the union-like organization), the operation of the SA does not depend on the will of each of the shareholders.

The acquisition of the status of shareholder in a SA creates relations between them and it (: shareholder-SA). Not, basically, and among the shareholders.

The shareholders of SA clearly aim at the characteristics and advantages of its capital nature. Possibly in of its “union-like” organization as well.

However, there are many cases where shareholders (may also) have other aspirations. The manipulation, for example, of the purely capital and union nature of the SA. The introduction to the operation and organization of characteristics a partnership would have. The specific aspirations / needs are covered, in particular, through statutory clauses. Sometimes, when this is not possible (or when we do not want it to become, more broadly, known) such aspirations are satisfied through extra-corporate agreements.

We most commonly find these agreements in family SAs. But it is not unheard of to also find such agreements in other types (as well as in multi-shareholder) SAs. for the service (permanent or temporary) of common, among the shareholders, aspirations.

The concept of extra-corporate agreements

Extra-corporate agreements, according to jurisprudence, are “independent, written or oral commitments of an obligatory nature, which oblige the contracted parties (and only them) to a certain behavior beyond the behavior towards the company required by the statutory provisions and the law”. (int .: 25/2012 Multimember Court of First Instance of Samos).

The most common examples of such agreements are those that direct the shareholder’s rights to vote in the General Assembly and the Board of Directors. Under the pre-existing law we encountered, as a matter of fact, contractual restrictions on the transfer of shares. However, sufficient relevant powers are recognized in the context of the statutory regulations under the current law.

The targets. The interests served

Extra-corporate agreements are not entered into to promote the interests of the company. Their main goal is to serve the interests of the contracting shareholders. Mainly of the minority shareholders.

The minority shareholders are therefore the ones who, as a rule, will require the conclusion of such agreements. As a prerequisite for their entry into the company and securing their investment. As a guarantee of the company’s operation based on specific, pre-agreed upon, rules. As a means of engaging the majority in a particular direction. As a tool for creating strong minorities – with rights extended to those recognized by law and the statute to minority shareholders. As a “statute charter” of the partners in order to create strong minorities or majorities and enjoy the related rights.

The legal status of extra-corporate agreements

Extra-corporate agreements are not covered by special legislation.

They are not provided for and are not guaranteed by a special provision of law.

However, the conclusion and regulation of such agreements is, in principle, permissible. It is left to the freedom of contracts (361 Civil Code). So, basically, their content can be formulated freely. The individual regulations that impose sanctions in case of their violation are also freely chosen.

Individual distinctions and characteristics of extra-corporate agreements

The content and individual characteristics of the shareholder agreements are determined by the will and the needs of the respective shareholders.

Individual characteristics that give a different content to these agreements each time may be:

(a) The time of their conclusion: The extra-corporate agreements can be concluded during the establishment of the company. Possibly, however, also at a later time – during the company’s operation.

(b) Duration: shareholder agreements can be concluded for a definite or indefinite period.

(c) Their incorporation (or not) in the articles of association: Such an agreement may be incorporated in the articles of association of the company. Then, of course, it loses the nature of the extra-corporate agreement. We are talking, in this case, about a statutory agreement. Such an (internal) agreement may specify a provision of the law governing SAs (Law 4548/2018).

However, the content of the shareholder agreement may not be tolerated either by law or by statute. In this case, (by conversion-182 Civil Code) its validity as a binding agreement of the parties is possible.

(d) Regarding the creation of obligations for only one or all of the contracted parties: The extra-corporate shareholder agreements are divided into unilateral and multilateral.

Unilateral agreements are those that give rise to obligations to the detriment of one or more parties. In the case, for example, of an agreement for the exercise of voting rights in a specific direction. Unilateral extra-corporate agreements can take on different legal characterizations. Especially that of the order (713 Civil Code).

Multilateral agreements are those, through which all parties undertake obligations to each other. Their usual legal form is that of a civil company (741 Civil Code).

(e) In terms of their content: Extra-corporate agreements, depending on their content, are divided into contracts that generate rights and obligations for the parties and guarantee contracts. In the latter, their content is the guarantee of the demonstration of certain behavior.

Ensuring compliance with the extra-corporate agreements

Violation of an extra-corporate agreement creates a claim for damages against the offender.

It is not uncommon to conclude, in addition – in order to ensure its application-, a penalty clause, which activates in case a party violates its obligations. The court, however, is ultimately the one that will decide whether or not such a clause is activated. Also, its possible reduction to the “appropriate measure” (article 409 of the Civil Code).

Compliance with an extra-corporate agreement can be sought through other, additional, measures. By delivery to a third party, for example, of the shares whose voting rights are blocked or, through their contribution to another company.

The validity and binding nature of extra-corporate agreements

Extra-corporate agreements are obligatory in nature. They are therefore governed by civil law.

Regarding the relationship between them and the statutory provisions, two distinct views have been expressed in theory.

The theory of separation

The prevailing theory is the separation between the articles of association and the respective extra-corporate agreement. According to this theory, extra-corporate agreements, due to their different legal nature, go hand in hand with the statutory regulations.

The statutory regulations, according to the same theory, are those that prevail over the extra-corporate agreements. The former are governed solely by corporate law, the latter by civil law.

The theory of unity

However, the theory of unity of the articles of association and the extra-corporate agreement entered by all shareholders, has also been supported.

It is argued, on this basis, that the extra-corporate agreement takes on an interpretative role of the provisions of the articles of association – in terms of the organization, operation and management of the company. Therefore, its validity extends, in addition to the contracted parties, to the legal entity of the company. Extra-corporate agreements, in this case, take on the nature of a statutory contract.

The consequences (& claims) of the breach of an extra-corporate agreement

The obligatory nature of the non-corporate agreements, as mentioned above, is important. The respective extra-corporate agreement of the shareholders, “… is valid between the parties to the contract, has no consequences of company law nature and is not binding…” for those who have not entered into it (Supreme Court 1121/2006).

The claims, therefore, raised in cases of their violation concern the payment of compensation. Such compensation covers the positive loss and, in addition, any lost profits. And the forfeiture, of course, of a penalty clause – if such has been agreed. Which, not infrequently, is chosen as a solution, as it is always extremely difficult to determine the due and payable compensation.

In cases where the protection of the rights of the minority is sought through the extra-corporate agreements, the minority shareholder does not have the right, in case of violation, to seek their execution. This is because: “… there is no possibility for the minority shareholder to claim from their counterparty in an extra-company agreement a majority shareholder the fulfillment by the latter of what was agreed between them and in particular to claim their conviction in a declaration of will in accordance with the content of the agreement “(569/2007 Multimember Court of First Instance of Athens). This is exactly where the risk of a bona fide party to a non-corporate agreement runs. That is, the risk of the agreement to be deliberately violated in bad faith, without it being possible to enforce it through a court decision.

However, it is accepted that, despite the prevalence of the theory of separation, a decision of the GA of shareholders taken in violation of an extra-corporate agreement may be found invalid. Specifically, the invalidity of a decision of the General Assembly due to (an abusive) breach of an extra-corporate agreement (Supreme Court 1121/2006) has been ruled by jurisprudence.

The validity (and invalidity) of extra-corporate agreements

Extra-corporate agreements, as mentioned above, are (in principle) permissible. They are legally based on the freedom of contracts (361 of the Civil Code). Their content is left to the will of the parties.

Of course, extra-corporate agreements are checked for their validity, just like any contract. In other words, the grounds for cancellation due to fraud, error and threat also apply. Of course, so do the common reasons for invalidity. It does not acceptable, for example, for them to oppose accepted principles of morality.

At the same time, however, the extra-corporate agreements are valid, as long as they do not violate provisions of the articles of association, company law or other public policy.

It has been ruled by case law, for example, that “… the replacement of the board of directors by an extra-corporate agreement is not legal” (1631/2006 Supreme Court).

Especially: the issue of unanimity

One of the issues that, not infrequently, concerns minority shareholders is the (possibility or not) to claim unanimity. It has been ruled that “… the obligation arising from the above agreement unanimously in making decisions on issues of competence and operation of both the General Assembly as well as the Board, contradicts with the concept of the accepted principles of morality as formulated in articles 178 and 179 of the Civil Code, for the reason that an obligation to take all decisions unanimously by the shareholders, even included in a long-term contract, the validity of which extends to perpetual, covering the life of the company, without the possibility of termination and under the threat of an extremely high penalty clause in case of its violation, excessively restricts the free exercise of corporate rights by the shareholders ”. (25/2012 Multimember Court of First Instance of Samos).

The law and the statute of an SA are not always possible to cover the complex relationships that develop between its shareholders. To ensure the always desired balances between them. To successfully manage problems that may arise in the future. To ease (present or future) concerns.

Extra-corporate agreements are those that seek to provide solutions. But their bindingness seems (and is) legally limited. The effort to strengthen them may, in the end, be to the detriment of the one whose rights it seeks to secure.

Their provisions are always proving to be crucial.

Their wording as well.

Stavros Koumentakis
Managing Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (August 23, 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.

August 23, 2020
Criminal record and employees: The employer’s right to information

It is important for any business to know its employees. For some, it is not only important but also valuable. Could we trust the management of money to irrevocably convicted for financial offenses employees? The care of children or the transfer of students to their school to employees involved in cases of child pornography? Involvement (or not) in criminal offenses is certified with the criminal record certificate. Does the employer (or prospective employer) have the right to require such a certificate to be handed to them? Could one argue that not only a right but also a relative obligation sometimes exists?

Employment contract and personal data

The parties undertake, in each contract, specific obligations. Main or secondary. The same happens in employment contracts. The obligation of the employer to protect the personality of their employees is included among them. In protecting the employees’ personalities, they must also protect their personal data.

We have repeatedly been concerned with the possibility of collecting and (further) processing personal data of employees. The focus of our interest was, each time, the individual categories of personal data. We were concerned, for example, with the issue of monitoring and visually recording in the workplace. With the right (or not) of the employer to monitor the e-mails of their employees. We were also concerned, throughout the pandemic, with whether the employer is (or not) allowed to process sensitive personal data. More specifically, the health data of their employees.

In this article we will try to investigate the employer’s right to request from an employee (or prospective employee) a certificate for their criminal record.

The criminal record – Distinctions

The Code of Criminal Procedure distinguishes between two types of copies of criminal records. That for general and that for judicial use (271 par. 1 CCP).

The copy for judicial use

The contents of all criminal records, except those that have ceased to be valid, shall be recorded in the copy intended for judicial use. Despite its detailed content, it is administered to a limited, explicitly listed number of persons. Mainly intended for public services and public officials.

Among the cases explicitly mentioned in the Code of Criminal Procedure is the appointment of judicial officers, teachers of all levels, officers of Law Enforcement and candidates for admission to the academies of the Armed Forces and the Law Enforcement (57 CCP).

The copy for general use

The copy for general use shall contain the contents of all criminal records, with the exception of those:

(a) showing a fine or community service or imprisonment for up to six months after the expiration of three years;

(b) stating a sentence of imprisonment of more than six months or a sentence of confinement in a psychiatric ward after the lapse of eight years;

(c) which indicate imprisonment, after the lapse of twenty years (571 par. 3 CCP).

The respective employer can (theoretically) be given a copy for general use only. After all, “… where the law provides for the issuance and providing of a copy of any type or extract of a criminal record, a copy for general use shall be provided.” (570 CCP).

The conflict of interests of both sides

The employer seeks to develop a relationship of trust with their employees. For this reason, they may want / treat as necessary the receipt of the employee criminal record. Even as a condition for their hiring.

The relevant claim of the employer seems reasonable and, above all, legal. Sometimes, as mentioned above, imperative.

An unhindered requirement of criminal records of employees would affect two protected legal goods. Protected, in fact, by the Constitution itself.

The first is the presumption of innocence. However, since in the general criminal record (to which, in theory, the employer is entitled to have access) the irrevocable, only convictions are recorded, the specific good does not look, in the end, affected.

The second is the protection of human value. It covers, of course, the irrevocably convicted, imposing care for their social reintegration. A strict and comprehensive requirement for the absence of (any) criminal conviction would minimize the possibility of social reintegration. Even on the basis of the professional activity of the convicted person as a self-employed person.

But there is also the dimension of personal data protection. An indiscriminate requirement of criminal records of employees would run counter to the principle of proportionality. It would be an overstepping of the processing purpose. In this case, exceeding the protection of the legal interests of the employer. At the same time, it would conflict with the right to oblivion. But when would personal data protection law justify such processing?

They pre-existing law

The legislative framework

Based on the pre-existing law (Law 2472/1997) the criminal record was explicitly included in the category of sensitive personal data. According to article 2 b’ of Law 2471/1997, sensitive data were defined as the “… data concerning racial or ethnic origin, political views, religious or philosophical beliefs, participation in trade unions, health, social welfare and love life, criminal prosecution or conviction, as well as participation in associations of persons related to the above “.

The collection and further processing of the criminal record as sensitive personal data was, consequently, prohibited (Article 7 §1). It was allowed, exceptionally, under the conditions explicitly provided by law (Article 7 §2).

The position of the Personal Data Protection Authority

This issue has always been important. The Authority had to comment several times on the possibility of processing sensitive personal data. Among them, the criminal record.

The subject of some of its opinions was, precisely, the possibility of collecting and further processing the criminal records of the employees by the employer. Its position was gueded by the legal framework in force at any given time. Also, the effort to harmonize the conflicting interests of both sides.

The Authority, in a series of its opinions (including: nos. 101/2016, 4/2013, 115/2001), came to the following conclusions:

The collection and processing of personal data related to the absence of criminal convictions of the candidate for a job was possible when (explicitly and specifically) provided by law. In other words: The law may provide for the mandatory submission by the employee of a criminal record certificate, which will result in the absence of a conviction for specific crimes. Indicative: for the recruitment and occupation of positions in the banking sector, in the companies providing security services (security companies), in the stock broking companies, in the debtor information companies for outstanding debts, and so on.

Would it be possible for this collection and processing to take place without a specific legal provision that would make it permissible?

Such a legislative provision would be, according to the Authority, the provision of article 7 §2 g’ of Law 2472/1997. Provided, however, that the fundamental principle of proportionality is respected in view of the alleged purpose of processing. The protection, for example, of the conceptual interests of the employer.

In particular, the Authority required that the following conditions be met:

(a) The collection of information on the absence of a criminal conviction directly and only from the employee or candidate concerned.

(b) The exclusion of the collection and further processing of copies of criminal records of general use, as they exceeded the alleged purpose of processing. And this, in particular, because such processing could reveal the existence of criminal convictions, which had nothing to do with the main economic and productive activity of the employer company – as the controller.

(c) The qualification of the collection and processing of Official Declarations for the absence of irrevocable conviction (instead of a criminal record) by the candidates for a position. In fact, the absence of a conviction referred to in the Official Declaration should, according to the Authority, relate to acts recorded in the general criminal record.

(d) The collection and further processing of the above Official Declarations not for all categories of staff but for those, only, related to the main economic and productive activity of the employer, as a controller. This relationship arose from the duties of the employees of these categories based on their employment contracts and the document announcing the terms of their work (p.d. 156/1994).

(e) The observance of the above data for a specific time. That is, for a period of 5 years from the termination of the contract for those employed. Whereas, for the candidates who, in the end, were not recruited, for a period of 6 months from the completion of the recruitment process (announcement of recruits).

The applicable law

The legislative framework

Law 2472/1997, which was taken into account by the Authority for its above Opinions, has been repealed.

As of May 25, 2018, the General Data Protection Regulation (EU) 2016/679 (“GDPR”) has entered into force.

GDPR does not place the criminal record in the special category of sensitive personal data (Article 9). However, it reserves a more specific regulation.

To be precise, article 10 of GDPR mentions that “Processing of personal data relating to criminal convictions and offences or related security measures based on Article 6(1) shall be carried out only under the control of official authority or when the processing is authorised by Union or Member State law providing for appropriate safeguards for the rights and freedoms of data subjects. 2Any comprehensive register of criminal convictions shall be kept only under the control of official authority.”

It is therefore doubtful whether the Authority ‘s Opinions now have any legislative basis.

Based on the Authority’s Opinions, the collection and processing of the employee’s criminal record by the employer, as well as any information of personal data relating to the absence of criminal convictions (eg Official Declarations), was, in principle, prohibited. It could, exceptionally, be carried out under the conditions set out by the relevant law.

However, under the current legal framework, the processing of personal data relating to criminal convictions and offenses or related security measures is carried out exclusively “under the control of an official authority”.

In order for such processing to take place by an informal authority (in this case by the employer) there is an important condition. It must be provided for and allowed by Union law or the law of a Member State which provides for adequate guarantees of the rights and freedoms of data subjects.

However, the Greek law implementing the GDPR, ie Law 4624/2019, does not provide for a corresponding regulation.

The position of the Personal Data Protection Authority

The Authority, in its Opinion No 1/2020, makes the following assumptions:

“While the provision of Article 10 of the GDPR shows that the national legislature is empowered (the ‘opening-specialization clause’) to take the necessary measures to provide adequate guarantees for the processing of personal data relating to criminal convictions and offenses, nevertheless No relevant measures are taken by law, nor does the explanatory memorandum indicate the reason for this omission.

In any case, even if the national legislature intended to take measures to implement Article 10 of the GDPR into specific sectoral legislation, contrary to its choice in relation to Article 9 of the GDPR, such measures have not yet been taken, thus making it largely impossible to apply the provision of Article 10 of the GDPR. ”

Therefore, based on the assumptions of the Authority, the receipt of an employee’s criminal record by the employer can still take place under those cases that are explicitly provided by a specific provision of law. However, unless there is an explicit provision in an applicable law, obtaining such a criminal record is not allowed.

As a result, in cases where there is no explicit legal provision, the collection and processing of personal data concerning criminal convictions and offenses of the employee by the employer, cannot be carried out.

In some cases, the employer’s knowledge of the criminal record of their employees (or prospective employees) proves to be important. Sometimes we would even say that the relevant claim is crucial. Shouldn’t an employer know if their (candidate) treasurer has been involved in financial crimes? A caring son if the lady he hired to take care of his elderly father has been involved in crimes against life? A father for the girl who takes care of his daughter or a mother for the teacher who tutors her son in the lessons if they have been involved in crimes against sexual dignity?

The issue turns out to be even more serious and complicated when third parties are (among) the ones who make strong (albeit tacit – as self-evident) relevant claims. Would we criticize the claim of a parent to know that the driver and the attendant of the school bus with which his children travel, have not been involved in crimes of child pornography?

What should we say to all of them? “You know the legislator has not made any relevant provision, so we are not entitled to request a criminal record for these employees.” How logical, moral and fair, after all, does it seem?

Let us not have reservations that the failure of the legislator to include in the (implementing of the GDPR-Law 4624/2019) provisions “for the processing of personal data concerning criminal convictions and offenses” proves to be problematic.

It is a given (obviously and self-evident) that the relevant omission must be remedied quickly.

Until then: I personally would have a hard time fault (more precisely: I could not fault) the caring son who demands a criminal record from the lady who he wants to hire to take care of his elderly father, the mother from the teacher who tutors her son, the father from the girl who babysits his daughter and the headmaster from the drivers and attendant of the school buses …

Stavros Koumentakis
Managing Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (August 16, 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.

August 16, 2020
New law on private education: back to the likable, for some, Middle Ages?
We are facing the new law on private education (: Law 4713/20, Government Gazette 147 / A / 29.7.20). Opponents and supporters of the law alike will certainly agree on one thing: this is, indeed, an important piece of legislation. A piece of legislation that came to overturn data and acquis. To disturb, according to others, stagnant waters.

Its value and importance

The institutional framework, which this law replaces, intails a “favorite”, for many, subject of discussion. For decades. It concerned, after all, teachers, employees and owners of private schools. It concerned, of course, the students who attend them. Of course, their parents too. A respectable, that is, part of the population of the country. Not to mention those who are indirectly affected.

With this law, drastic interventions take place in the (basic) legislation that would celebrate, in a little while, half a century of life (: exceeding by a lot, indeed, the life expectancy of a law). In fact, the interventions are of such an extent that we can talk about a “NEW law” that governs private education. The reactions, from the very stage of the consultation, have been intense. In fact, the arguments both for and against it were maybe too intense. Even from people who do not seem to have bothered to read it.

But what is really true?

Let us try to approach the new law with sobriety. Through the most important of its provisions. Ten (probably) “provocative” questions will help us approach it more clearly.

However, it is worthwhile to precede a brief introduction about the State and permanence (in general) but also about the intentions of the legislator (in particular).

Regarding the (always attractive) State jobs and guaranteed job security …

Most of us seniors were nurtured (at least for the most part) by the idea of a “public office”. A public sector that provided the “lucky ones” with the security and stability of the “Salary”. And, above all, permanence / guaranteed job security. The extremely high interest in getting one was not, therefore, “too crazy”.

Confirmation of the attractiveness of State jobs: the “clientelistic state”, the reasons for its creation and the (dramatic) consequences of its existence.

And the same confirmation from another point of view: minimum grade required to get accepted in a university. Philosophical School e.g. had, in those years, a minimum grade requirement higher than Law School. Notice their difference? The first provided a guaranteed job for the State. Recruitments were not based on abilities but on time spent waiting to get hired. But with time, things changed. Additional procedures and exams were introduced for being hired for a State job. ASEP has been mediating for more than 25 years. However, in some periods the “restoration” was direct and independent of ASEP (eg the pedagogical schools during the first decade of 2000). Job security, however, is always present in the State. It is, moreover, known that the fulfillment of the necessary criteria at the time of occupying a position, remains a factor sufficient and capable of securing it, for life.

For those not so familiar with the concept, the maintenance of public privileges in a specific sector of the economy makes an impression. In that of private education.

… but also regarding the legislator’s intentions on the “wrong doings”.

Based on the explanatory memorandum of the law, regulations are introduced, which focus on three main pillars:

“A) Enhancing the ability and flexibility of private schools to provide additional educational services, to formulate and organize more freely their extended timetable …” but with a parallel obligation to follow at least the respective timetable of the Ministry Of Education and Religions “.
1. b) Enhance the ability of private schools to better manage their human resources, including the selection and appointment of principals and the evaluation of educational work and teachers, in compliance with current labor law.
2. c) Strengthening the freedom of private schools, regarding the use of their facilities and infrastructure, so that their more efficient use is possible “
But are the legislator’s intentions pure?

It seems that not everyone agrees!

Strong reactions came with the new law, starting from the moment it was submitted to the parliament. The reactions come mainly from teachers’ unions. Also from a portion of the opposition. As they claim, the new regulations signal a “return to the Middle Ages”. The modernization proclaimed by the new law is, according to its opponents, an “empty promise”.

But let us proceed to the analysis of the (most critical) provisions of the new law through ten, rather interesting, questions.

Question 1: Is the evaluation of teachers and the educational work done, finally, with “unwritten” rules? And, in fact, at the free will of the “boss”?

The data:

The provision of article 2 stipulates that for the evaluation of the educational structures, the teachers but also the educational work of the private schools, the corresponding criteria that are used in the public schools are used in a similar way.

However, it is possible to use additional criteria.

For the application of these -any- additional criteria, their prior provision is required in the Internal Rules of Operation of each private school. It is pointed out that we are not talking about differentiated but about additional criteria. The goal behind providing the freedom to introduce additional criteria? The freedom to deepen the evaluation procedures by private schools, depending on the individual physiognomy of each one.

Therefore:

The evaluation of the structures, the teachers and the educational work done is carried out, in an objective way, based on the criteria set by the State. Any additional criteria must be provided in the Internal Regulations of the Operation approved by the relevant Director of Education.

Question 2: Will there be a curriculum in private schools? Or, finally, will each private school follow its own curriculum and provide whatever services and activities it chooses?

The data:

(a) Regarding the Timetable:

Private schools are required to follow the timetable and syllabus of the Ministry of Education and Religions – as will be the case each time. The same, that is, with public schools. In this way, the overall state supervision of the educational process for both public and private education is achieved (par. 1).

(b) Regarding additional educational services

In addition to the compulsory timetable, private schools are entitled to provide additional educational services. These services are provided during extended hours.

However, they presuppose (par. 2) that:

(i) The extended timetable may not exceed 40 hours for each grade level.

(ii) The additional educational services, which concern all students, are notified (included in the extended schedule), to the Directorate of Education and

(iii) The working hours of teachers under the extended schedule for the provision of additional educational services are subject (if assigned) to the hours of regular weekly teaching.

(c) Regarding the afternoon and extracurricular activities

These activities are optional. They are not part of the schedule (neither the mandatory nor the extended). They are performed after the end of the program schedule. As they do not constitute a regular weekly teaching, the regulation of the time limits of employment and the remuneration of the teachers is regulated by labor law (par. 5).

(d) Co-location of private schools with language centers, tutoring centers and other educational institutions

The new law restores the possibility of private schools being under the same roof with language centers and tutoring centers (par. 6). At the same time, it allows the co-location with other private schools, foreign schools, lifelong learning centers and other bodies, (as they are provided in sub-par. I3 of par. I of article one of law 4093/2012).

Therefore:

According to the provision of article 3, the operation of private schools is placed within extended, but clear, limits. Clear provisions are made for: (a) the timetable, (b) additional educational services, (c) afternoon and extracurricular activities, (d) co-location of private schools with language centers, tuition centers and other educational institutions. These limits are defined as absolutely binding for private schools.

Question 3: Is the role of the Director of Education becoming decorative?

The data:

The role of the Director of Education (as the latter is selected under Article 30 of the new law) becomes crucial. The Director of Education is the one who, based on article 4 of the new law, judges the contradiction or not of the Regulation of Operation of the private school with the current provisions and proceeds (or does not proceed) to its approval.

In addition, the important role of the Director of Education is demonstrated by the fact that they make decisions on the appointment and replacement of Principals and Deputy Principals of private schools (as discussed below in question 7).

Therefore:

The role of the Director of Education is proving to be anything but decorative. Among their essential and important responsibilities is the approval of the Regulations for the Operation of Private Schools that they supervise. Also, the appointment and replacement of their Directors and Deputy Directors.

Question 4: Was the manipulation of the teachers finally achieved through the recognition of the owner’s right to participate in the meetings of the Teachers’ Association?

The data:

There has been a lot of talk about the provision of Article 5 of the new law. And, obviously, without any reason whatsoever. The participation of the owner, if they are a teacher, in the meetings of the Teachers’ Association is not new. It was also provided for in the pre-existing law (article 9 par. 3 of law 682/1977). The new provision simply extends the same possibility and under the same conditions to the members, partners and shareholders of the owner-legal entity, in those cases where the owner is not a natural person. The reason? The different, now, organization of many private schools and the non-existence of only one owner-natural person.

Therefore:

The owner of a private school had also in the past the right to participate (anyway – as long as they were a teacher), in the meetings of the Teachers’ Association. The exercise of this right has simply expanded. Owners of the legal entity to which the private school belongs are now entitled to exercise it. Under the same, self-evident condition: that they are teachers.

Question 5: Is it necessary to promote the competition between private schools? And, in addition, should it be borne, again, by the “usual suspects” -teachers?

The data:

Article 6 of the new law adds to the current regime of law 682/1977 (article 12 par. 4) the possibility of further utilization of the facilities of private schools. Their field of their activity is expanding. The (healthy) competition between them is strengthened. Therefore, so does their effort to provide more and quality upgraded services. The only beneficiaries will be, of course, the students.

Expanded educational services obviously require the employment of adequate human resources. New jobs are expected to be created. Especially in the teaching industry – a sector with high unemployment.

The further (additional) employment of teachers is protected by the provisions of labor law. Both in terms of pay and working time limits. This, additional, employment is introduced as optional. It requires, of course, the consent of the teacher. Therefore, any reaction to the misappropriation of teachers in the provision of additional services by private schools is, in fact, against the effectiveness of the labor law itself. The arguments of the opponents of this regulation, perhaps, should look for different bases.

Therefore:

The actions and educational services provided by private schools are expanded, within a predetermined framework. This will benefit not only the competition between them but also, of course, the students. Teachers’ involvement in specific actions and services is not defined as mandatory. In any case: teachers are protected by labor laws and working time limits. The increase of jobs is also logically expected.

Question 6: Will the operation of the private schools be governed by clear rules or is it logically left to the good mood and business freedom of the owner?

The data:

The provision of Article 7 of the new law makes clear provisions regarding the enrollment, transfer and studies of students in private schools.

It clarifies that the rules that apply to students in private schools apply for specific issues. Regarding, in particular: the beginning and the end of the school and teaching year, the registrations, transfers, absences and tests, the grade, the disciplinary penalties, the repetition of the students, the promotion and the dismissal of the students.

It also provides for the direct transfer of a student from a private to a public school, from a public to a private or from a private to another private school, of the same or another owner, throughout the school year. Also: the registration of students in the order of acceptance by the school of their registration application.

It clarifies that the non-re-enrollment or removal of a student from the private school during the school year is not allowed for reasons of poor performance. It allows it for specific reasons. However, in any case, by decision of the Teachers’ Association: (i) for disciplinary misconduct of the student, (ii) for violation of the internal regulations of the school.

Finally, it makes the re-enrollment of a student non-mandatory in case of non-full payment of tuition fees of two (2) school years. The latter regulation aims to discourage strategic defaulters at the expense of the school and, ultimately, other parents.

Therefore:

The rules governing the operation of private schools are not left to the owner. They are set, in a clear and strict way, by the State. The State is the one that, basically, governs the operation of public schools as well. The special arrangements are basically in line with the specific nature of private schools.

Question 7: Principals and Deputy Principals: Whoever the headmaster choose?

The data:

According to article 8 par. 1 of the new law, the Principal of the private school and the optionally appointed Deputy Principals are appointed and replaced by a decision of the Director of Education. The owner of the school simply nominates the (according to them) suitable person for the position of Principal. Their powers were not mentioned.

Furthermore, according to par. 2 of article 8, for the appointment of Principals and Deputy Principals, the assistance of the formal conditions that apply in public schools is claimed. In this case too, however, the assistance (or not) of the required conditions will be judged by the relevant Director of Education.

Therefore:

The selection, placement and replacement of Principals and (possibly) Deputy Principals of private schools is governed by specific criteria and rules. But it is not the privilege of the owner. It is at the discretion of the Director of Education.

Question 8: Was a legal excuse found to reduce teachers’ salaries?

The data:

Article 9 par. 1 of the new law defines the framework within which it is possible to reduce the working hours of teachers. However, their relevant willingness and request is required.

This regulation recognizes a (self-evident) right of teachers.

However, there is another possibility: the non-completion of the working hours of teachers appointed to them when they were hired. Of course, in this case, the teacher’s salary will be correspondingly reduced.

Paragraph 2 of Article 9 regulates issues of strengthening the employment and income of teachers. The possibility of providing their services to schools, foreign language tuition centers and other bodies of the same or different owners is provided. It is therefore possible to boost their income from more sources. The relevant obstacles of appointment are removed.

Therefore:

Teachers’ employment and remuneration are streamlined. However, the possibility of additional employment and income is provided. For the most capable ones. For those who, in the end, will choose it.

Question 9: Are teacher redundancies finally becoming free and not subject to any controls?

The data:

With Article 10 of the new law, private teachers’ employment contracts are placed on a new, completely new basis. They become, in particular, of indefinite duration. Consequently, the recruitment, employment and termination of the contractual relationship are now governed by the provisions of common labor law. (With the explicit reservation of the special provisions for private teachers-especially of article 36 of law 682/1977).

This regulation does not equate to free redundancies, as is (rather in bad faith) supported.

In addition, we must take into account that in other, important, sectors of the economy (which we would characterize as of public interest – eg the health sector) employment contracts are also governed by labor law. (Further: Do we not adequately take into account the ills of job security in the public sector?)

We are talking about the constitutional requirement of the protection of private education (as well). But should we not also take into account the constitutionally protected economic and business freedom?

The owners of private schools bear the entire business risk of the school activity. Is it not really understandable why the removal of a teacher who is not fulfilling their responsibilities should be prevented? Who else is harmed, in this case, besides our students – our children? And yet: why should a teacher enjoy higher protection than other employees in critical areas? From a doctor e.g. and in exactly the same context: For what reason, then, should a teacher (good or bad) enjoy a tenure corresponding to that of a civil servant while a doctor does not?

And regardless of all this: The allegation of free and uncontrolled dismissals of teachers seems completely groundless. Labor law prohibits termination of employment contracts for unlawful reasons. This regulation specifies, in addition, and further extends this prohibition.

Therefore:

The inability to terminate teachers’ employment contracts seemed neither a logical nor a legally appropriate choice. The logic was simply restored by including teachers’ contracts in the protection of labor law. And this protection is, and remains, absolutely strong.

Question 10: Are we in danger from the operation of foreign schools?

The data:

The provisions of articles 12 and 13 of the new law facilitate and strengthen the operation of foreign schools. They now have the opportunity to operate schools of other levels of education, from those for which they were originally established. They also now have the opportunity to bring to Greece and employ foreign teachers. For the latter: For what reason, is the corresponding possibility not provided in Greek private schools?

Therefore:

We are not in danger from the operation of foreign schools. Strengthening and facilitating their operation contributes to healthy competition. And this can only be for the benefit of the students. It is desirable, in this context, to provide the possibility for Greek private schools to recruit foreign teachers.

Some people like to talk about “sacred cows”.

Some, in fact, want to believe that they do exist.

Personally: I DO NOT.

And even more: I do not intend to co-protest in Klafthmonos Square (or anywhere else) for the abolition of privileges harmful to fair play, healthy competition, education and, ultimately, the country and its development.

After all: the drastic intervention of the state in the field of entrepreneurship has historically proved to be an obsolete model. It was time for the necessary corrective actions to take place in the field of private education as well.

The (new) law frees private education from a completely anachronistic and outdated regulatory framework. It is undoubtedly moving in the right direction.

For its positive effect we can all, safely, take a stand.-

Stavros Koumentakis
Managing Partner

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.
August 9, 2020
Apprenticeship Agreement

Acquiring professional experience is a common problem of pupils and students all over the world. Without professional experience, the coveted recruitment seems extremely difficult. Even access to some postgraduate studies is difficult. The solution to this problem? In Greece, the apprenticeship agreement. In the global level, internships. Two sides of the same coin. What is the regime that governs them? The issue seems to concern (less apprentices and) mostly businesses. The fear, for example, of the Labor Inspectorate and the possible litigation claims and administrative sanctions. But let us try to better understand the whole issue. After all, more such contracts and relationships are in place during the summer.

The apprenticeship contract -over time

The apprenticeship contract is not an unprecedented or “imported” institution. We also find it in ancient texts. The issue of regulation and the limits of this relationship has been the concern of those involved ever since.

The Greek philosopher Aristippus (435-355 BC), is said to have received a “salary” from his students. But he made it clear that it was not to make a living but to teach them to spend for the good, the right, things. (:”Aristippus receives a fixed salary from his students, not as a means of living, but for them to learn to spend money at what is good”).

In the older, especially, Greek films we find the “paragio”. That is (the child, teenager or young person) who strives to “learn an art” next to the carpenter, the craftsman, the professional. But it wasn’t just in the movies. So it was in life. But then no one talked of the rights of the apprentice and the obligations of the company…

The internship

As already mentioned, internships are already very widespread in developed countries. Given how established they are, their implementation is very organized. We meet internships in many forms. Indicative: unpaid or paid (in full or partially), with physical presence in the company or from a distance, for a specific project or in the context of the general activity of the company and so on).

What are the restrictions of the apprenticeship agreement in our country?

The scope, seriousness and value of the apprenticeship agreement, emerges as self-evident. Risks (not theoretical) for businesses, are a given. There is, however, no relevant legislative restrictions on it. The case law took the floor, as it should. An apprenticeship contract is therefore, according to the jurisprudence, “… the contract in which one of the parties undertakes to transmit to the other the necessary empirical knowledge, for the exercise by the last of a defined profession or certain art” (Int. : 918/2017 Supreme Court 1592/2009 Supreme Court).

Can this contract be concluded for both fixed and indefinite duration? Does it fall within the limits and scope of labor law? Would it be possible for Aristippus, if he were alive today, to continue to demand a salary from his students? Or, even, should he? Or neither of the two? And what would happen to social security?

The way the legal order, and especially case law, approaches the apprenticeship agreement will help us answer the questions arising. But let’s start with the forms it can take.

The Forms of the Apprenticeship Agreement

In order for any contract to be subject to the provisions of a contract already provided for by regulation, the purpose for which the involved parties aim at its conclusion is sought. This is a common place for us lawyers.

And so do we in the case of contracts. Although there is no legislation, it is distinguished in its most specific forms, based on the purpose that prevails each time. These are the more specific forms: (a) the genuine apprenticeship contract and (b) the apprentice employment contract.

Particularly:

(a) The Genuine Apprenticeship Contract

In a genuine apprenticeship contract, the primary purpose is to provide training to the apprentice. This does not mean, of course, that the apprentice should refrain from providing any work. Such an assumption would deprive the apprenticeship contract of its practical and empirical dimension. Therefore, and as the case law consistently accepts, during the execution of the specific form of the apprenticeship contract “the provision of work by the apprentice is not done for the purpose of performing a productive project, but for the needs of their education and acquaintance with the object of their profession or art.” (ind.: 1373/2018 Supreme Court, 1791/2017 Court of Appeal of Thessaloniki, 1592/2009 Supreme Court).

The lack of relevant, specific, legislative regulation has already been mentioned. On the basis of this fact, what is required is the grid of provisions that govern the genuine apprenticeship contract. What is agreed between the parties is valid (361 CC-principle of freedom of contract). In addition, and, of course, proportionally, the provisions for the employment contract of the Civil Code may apply. A necessary condition is that the provisions of the Civil Code are in line with the nature and purpose of the genuine apprenticeship contract.

It is commonly accepted, however, by case law that some provisions of labor law do not apply to the genuine apprenticeship contract. Indicative: those that refer to the time limits of work, the legal remuneration, the termination of the employment contract, the severance pay and so on. The justification base is the fact that the above-mentioned provisions presuppose the provision of dependent work, a condition that is not a prominent element in the genuine apprenticeship contract (Int .: 1373/2018 Supreme Court, 1791/2017 Court of Appeal of Thessaloniki, 1592/2009 Supreme Court).

In this context, the apprentice’s salary is a product of an agreement with the employer. This agreement is not subject to the limitations of labor law. It can therefore be agreed that the employer will pay the apprentice salary (less than the salary of the trained employee) for the benefit derived from the latter’s work. And even more: it is possible to agree that the apprentice will either not receive any salary or that they will pay a certain amount to the employer for the apprenticeship. (So it seems that if Aristippus was alive today, he would not risk either lawsuits or fines from the Labor Inspectorate).

(b) As for The Apprentice Employment Contract

In the apprentice employment contract (as opposed to the genuine apprenticeship contract) the primary purpose is to provide employment in a business or holding. The parallel pursuit of education of the employee, in this case, does not constitute a special obligation of the employer. The issue, from another point of view: any parallel acquisition of knowledge or skills in a certain specialty or profession and the learning of the employee’s art, occur as an automatic consequence of the implementation of the contract and within the framework of its normal operation (int .: 1373 / 2018 Supreme Court, 1791/2017 Court of Appeal of Thessaloniki, 1592/2009 Supreme Court).

Moreover, it is firmly accepted by the case law that in this particular form of contract both the general and the special provisions of labor law (918/2017 Supreme Court, 2052/1990 Supreme Court) apply, “…as long as the purpose of the above contract is the provision of work by the apprentice, for a fee and an ancillary purpose is the learning of an art or profession by the apprentice, according to the instructions and directions of the employer”.

The Need for a Written Document

The boundaries between the apprenticeship contract and the dependent employment contract prove to be fluid and indistinguishable. This becomes even more understandable as we have already concluded (see our previous article) since the finding of employment contracts is, by itself, at times, a “problem for ambitious solvers”.

Both businesses and employees are at risk. The latter by the drafting of by appearance only apprenticeship contracts. The first (: businesses) by the difficulty of proving the existence of an apprenticeship contract. The solution to both of these problems is common: the written form of the apprenticeship agreement.

The content of the (written) apprenticeship agreement must include its individual terms. The type, in particular, of the education sought. In this way, the purpose of education will emerge more clearly. The purpose that distinguishes it from the contract of employment.

Terms such as the duration of the contract, any salary paid and working hours must be clearly stated in the contractual text. The corresponding gaps in the agreement, moreover, cannot be filled by corresponding provisions of labor law.

The Correct Legal Characterization

The designation by the parties of a contract as an apprenticeship contract is not binding.

As we have already pointed out in our previous article, the judge is the one who sovereignly evaluates any case of questioning the characterization of a contract, which is brought before them. As, the exact (correct) characterization of a contract is pre-eminently the work of the judicial autiority (Int .: Supreme Court 602/2017, Supreme Court 608/2014, Plenary Session of the Supreme Court 7 & 8/2011, Plenary Session of the Supreme Court 6/2001).

Special Apprenticeship Contracts

The Special Apprenticeship Agreement

This is a kind of contract that is, exceptionally, regulated by law. It is concluded between the employer and persons who have completed the 15th year and up to the 18th year of their age (article 74 par. 9 law 3863/2010 and article 1 par. 1 Act of the Ministerial Council 6/2012). Its maximum duration can not exceed one year. The terms of remuneration, insurance and working hours of the above apprentices are also regulated by the same provision. The provisions of labor law do not apply in this case. However, those concerning the health and safety of workers exceptionally apply.

Apprenticeship Contracts Through Educational Structures

All of the above apply to the apprenticeship agreements concluded between the employer and the apprentice. Without the intervention of a third party, without the intervention of an educational institution.

In Greece, however, since 1952, the organized apprenticeship system of the Vocational Schools (EPAS) of OAED has been operating. Now, in addition to EPAS, the apprenticeship is promoted, respectively, by Vocational High Schools and public Vocational Training Institutes.

At the European level, actions have been taken to strengthen the institution of apprenticeship. Indicative examples are on the one hand the Erasmus+ program and on the other hand actions that are part of the NSRF 2007-2013 and the NSRF 2014-2020. Some of them have been adopted by our country. It is therefore not uncommon to encounter programs and apprenticeships that are implemented with the intervention of, for example, university institutions or other educational structures which the apprentices attend.

The implementation of the specific programs is sometimes governed by special regulations (inter: the JMD No. 26385/2017 “Apprenticeship Quality Framework”). These regulations manage issues such as the compensation of apprentices, the announcement of their contracts at ERGANI, the financing of businesses, their employment conditions and so on.

The apprenticeship contract obviously is (and should be treated as) an opportunity.

First and foremost for the apprentices, as, through it, they are given the opportunity to gain valuable professional tools and experience -necessary for their next professional steps.

And then for businesses: They get the opportunity to look for future employees from the (potentially) huge pool of apprentices. In addition: the performance of simple tasks without cost (or at a small cost). To highlight their status by contributing to the vocational education of young people who are going to join the county’s workforce. Also, those who are in the process of reskilling.

The benefits of utilizing the institution of apprenticeship are both tangible and multiple. For apprentices, businesses and society. All that remains is to seize them.

The state should play its part. It is necessary to alleviate the legal uncertainty created by the lack of an adequate regulatory framework. It is necessary to take a clear demarcation of the individual forms of apprenticeship contracts. The individual rights and obligations of those involved (: business-employee). It is crucial (if not also necessary) to create incentives (eg tax alleviations) to facilitate the development of the institution.

After all: High level of training, supplemented with professional experience is not only valuable for future employees. It is also valuable for the companies that are going to employ them and, of course, for the national economy.

Stavros Koumentakis
Managing Partner

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.

August 2, 2020
The (new) law on Corporate Governance (and a comparative overview with the preexisting one)

Adulthood is an important milestone in human life. After that (it is considered that) we enter the period of maturity. Is it the same with laws? Definitely not for those who are required to always be up to date. Such is the law on Corporate Governance. It is always necessary to meet modern needs. The pre-existing law gives its place, from 17.7.2021, to the new one (: law 4706/2020, Government Gazette AD 136 / 17.7.20). Getting to know the new law is quite interesting. And even more: evaluating it in a comparative, in fact, overview with what, until recently, was in its place.

The importance and value of Corporate Governance

The positive impact of Corporate Governance on Competitiveness and Development is a given. We had the opportunity to approach this issue in our previous article, in the light of the (still valid) Greek Code of Corporate Governance.

Precisely because of this positive effect, however, the issue of Corporate Governance does not only concern listed companies. It concerns, more or less, all businesses. In addition, enhancing competitiveness requires healthy businesses. Business health also requires, among other things, investment funds and / or access to them. The Roots Program of the Athens Stock Exchange, a step in this direction, concerns Greek small and medium enterprises. Enterprises that estimate that they have an interesting investment proposal and are looking for investors. Among the conditions that must be met in order for an enterprise to qualify is the good practices of Corporate Governance.

Therefore: The new law does NOT concern only listed companies.

We are already concerned, in general, with the issue of the attempted improvements of this legislation and its consequences. And this from the previous, still, stage: ever since it was a bill.

It is worthwhile to understand the basic, at least, positions of the new law.

The new law

The first part (articles 1-24) of law 4706/2020 that was mentioned in the introduction (: “Corporate Governance of SAs…”) concerns, exclusively, the restructuring of the Corporate Governance system.

The bill was approved by a larger majority by the Plenary Session of the Parliament. As a result, Law 3016/2002 is replaced, in its entirety, “when it becomes an adult” – and after another year (Article 92, Law 4706/2020). It was about time!

In its 18 years of life, Law 3016/2002 “achieved” the, rather, formal compliance of companies with its provisions. In fact, in most cases, this compliance was not combined with a corresponding adoption of the Corporate Governance Code. It is true, however, that it “left its mark”. It gave directions. It paved the way for other important, and relevant, regulations (eg in the recent law 4548/18 for SAs).

As a result, the new law introduces a stricter Corporate Governance framework. The rigor of the new framework is due to the fact that it includes mandatory provisions. Several of them, as we pointed out in our aforementioned article, have already received strong criticism.

The new law, however, aims, at the same time, to modernize the Corporate Governance system. And to also intocporate the most recent relevant, EU, legislation.

We came to the above conclusions regarding the aspirations of the new law by (also) comparing the previous and the newly voted law. At the same time, the means provided by the legislator for the implementation of the specific aspirations become apparent.

The comparative overview

1. Scope

This law concerns at a formal level, like the pre-existing one, almost all the companies “with shares or other securities listed on a regulated market in Greece” (article 1).

2. The Suitability Policy of the members of the Board of Directors

In the new regulatory framework of Corporate Governance, an innovative, and absolutely binding, obligation of listed companies is institutionalized. This is the Eligibility Policy of the members of the board of directors (: article 3). There was no corresponding obligation in the previous law.

The Suitability Policy aims to ensure the formation of the Board of Directors by the most appropriate persons (fit and proper).

The relevant regulation basically adopts the guidelines that apply to credit institutions. But it lacks (and rightly so) the intensity and interventionism of those.

The eligibility criteria are recorded, in an indicative manner, in the specific provision. However, two of them are mandatory and are, in fact, interesting:

(a) The minimum quota per sex (namely: at least 25% of its members must be female) and

(b) The non-issuance for a member or candidate member (within one year-before or after their election or the assignment of powers) of a final court decision recognizing their involvement in loss-making transactions of a company (listed or not) with related parties.

The criteria included in the above policy (as well as their specifications), are (basically) determined by each company. They are approved by the General Assembly and must be posted on each company’s website.

3. The responsibilities of the Board of Directors

The new law chooses to make a detailed provision of the responsibilities of the Board of Directors (article 4). Clearly, more detailed than the previous law. Among the specific responsibilities, of particular importance (for the institution of Corporate Governance itself) are:

(a) The monitoring and periodic evaluation, every three years, of the institution of Corporate Governance of the company (but let us point out the obvious ambiguity both in terms of how and in terms of the exact object of the evaluation).

(b) Ensuring the effectiveness of the internal control system implemented by the company itself.

The new law fails (unlike the previous one – and rightly so) to repeat the (pointless) reference to issues that are adequately regulated by the law on SAs. These are the obligations of the members of the Board (articles 96 and 97 of Law 4548/2018) -basically for: (a) the promotion of the interest of the company and (b) the non-pursuit of own interests.

The extension, however, of the responsibilities (and consequently) responsibilities of the members of the Board of Directors was not left without a pushback. According to the Association of Listed Companies, the continuous increase of the responsibilities of a member of the Board of Directors will lead to a “lemon market”. Competent people, who can make a real contribution to the company, will avoid taking positions of responsibility.

It is true that the responsibilities of the members of the Board of Directors arising from the recent law on SAs are not insignificant.

In this context, the specific reservations of the Association of Listed Companies could, according to some, be based on truth. For others they could not.

But one wonders: Are there positions of responsibility without responsibilities? And, further, would it be possible for someone to support, albeit in exaggeration, the non-responsibility of the members of the Board? Corporate Governance relies, to a significant degree, on the Board of Directors and its members. For its success it is not possible to choose indifferent and irresponsible men of straw. Serious and remarkable persons are required, with a sense of their responsibility. With clear responsibilities. Always on alert. This will always be a safe condition for the success of the work of the Board of Directors. Also, for the good Corporate Governance and the increase of the value of the companies that it concern.

4. The Structure of the Board of Directors and the individual duties of each category of members

The new law maintains the pre-existing distinction of board members into executive, non-executive and independent (Article 5). The latter (independently) are still appointed, in principle, by the General Assembly. This is despite the fact that many state that they would appoint the Board of Directors as the competent body.

However, the individual duties of each category of members of the Board of Directors are reformed. One of the very useful provisions of the new law is that providing for a list of the minimum duties of each category of members. It should be noted that the previous law had no corresponding provisions. By recording the duties of the members, it is possible to better understand their individual roles. The executive, that is, the non-executive but also, in particular, the independent non-executive members.

Regarding the executive members (Article 6): Their responsibility for the implementation of the strategy of the Board of Directors is highlighted. And so is their obligation to immediately inform the non-executive members in writing, in situations of crisis or danger. Also, in situations that the conditions require measures to be taken that will significantly affect the company.

With regard to the non-executive as well as the independent non-executive members (Article 7): Their highly supervisory role over the executive members is evident, through the responsibilities they are entrusted with. From the specific category of members, it chooses, first of all, the new law to come from the Chairman of the Board of Directors (article 8). However, it also provides for the possibility of derogating from the simultaneous obligation to appoint one of the non-executive members as vice-chairman.

Regarding, in particular, the independent non-executive members (Article 9): For the specific category of members, the new law introduces a more specific provision, corresponding to that of the previous law. It is obvious that the new law aims to strengthen the role of independent members. Also, their (true) independence. In this context, it institutes more criteria for dependence, which, in no case, is tolerated for members of this category.

5. The Committees of the Board of Directors

Another innovation of the new law is the establishment of two new Committees of the Board of Directors (articles 10-12). It is the Remuneration Committee and the Nomination Committee that frame the (pre-existing-remaining in force) Audit Committee. In more detail:

Control Committee

The Audit Committee is still regulated by article 44 of law 4449/2017. It is “… either an independent committee or a committee of the Board of Directors of the controlled entity. It consists of non-executive members of the board of directors and members elected by the General Assembly of the controlled entity “.

Its responsibilities include, inter alia, the supervision of the company’s internal control systems, the monitoring of the statutory audit of the annual and consolidated financial statements and the audit of the selection process and the independence of the chartered accountants.

Its role is therefore twofold. It works protectively for the company and as a guarantee for third parties (investors).

Remuneration Committee

The Remuneration Committee is established for the first time by the new law (Article 11). Its object is the processing of remuneration issues. More specifically, issues of the Remuneration Policy (: article 110 par. 2 law 4548/2018) which is submitted for approval to the General Assembly (principle: say on pay).

The Remuneration Committee is expected to significantly contribute to the work of the Board of Directors (regarding the effective implementation of articles 109-112 of Law 4548/2018-regarding the issues related to the Remuneration Policy).

Nominations Committee

Similarly, the Nominations Committee is introduced for the first time with the new law (article 12). Taking into account the (above, under 2) Eligibility Policy of the Members of the Board of Directors, the Nominations Committee undertakes to nominate the most suitable persons who will fill the positions of its members.

The critique

The establishment of the above, three, distinct committees aims to achieve greater transparency in the operation of a company. However, their introduction has provoked reactions.

Specifically, according to the Association of Listed Companies, the multiple committees burden the companies with unjustified administrative burden. This is because, always according to the Association of Listed Companies, as they have a similar composition and possibly an overlapping structure, their responsibilities could be exercised by a single committee.

This critique seems only partially accurate. In terms of, ie, the administrative cost and the general burden .. Otherwise, it is not accurate. The introductory provision for the establishment of the above-mentioned committees (Article 10) provides for the possibility of concentrating in one Committee the responsibilities of the Remuneration and Nomination Committees.

6. The Rules of Procedure

The Rules of Procedure of the company (article 14), are prepared by the Board of Directors. It is not a new regulation, as it was provided for in the previous law as well (article 6 of law 3016/2002). The content of the Rules of Procedure, however, is formulated with expanded and more demanding content. Further, a summary of the operating regulations is required to be published on the Company’s website.

It is noteworthy that the competent auditor-accountant (or the auditing company) must confirm in their Audit Report the existence and the updated content of this Regulation (Article 21).

7. The Internal Audit Unit

The new law provides (article 15) for the existence of an Internal Audit Unit. A similar provision existed in the previous law (Article 7), which, however, provided for the appointment of internal auditors.

Those who staff the Internal Audit Unit are not members of the Board. In fact, they are defined as full-time employees of exclusive employment. The head of this Unit is, only, a person appointed by the Board of Directors of the company. Not those who staff it.

Any change of the head of the specific Unit must be notified to the Hellenic Capital Market Commission by submitting the relevant minutes of the meeting of the Board of Directors. The notification deadline is extended, as it is set at 20 days from the change (compared to 10 days in the pre-existing law). The Head of the Internal Audit Unit attends the General Assemblies (article 16).

Remarkable, however, are the changes in the responsibilities of the Internal Audit Unit. In the new law, they are presented more extensively in relation to those of the (previous) Internal Audit Service. Internal control thus becomes more thorough and effective.

8. Code of Corporate Governance

The new law provides as mandatory (Article 17) the adoption and implementation of a Code of Corporate Governance by the companies it concerns. However, it is not obligatory to choose a specific Code. In case of deviations of the one adopted, however, the relevant information should be included in the Corporate Governance Statement, based on article 152 of law 4548/2018.

However, in parallel with the implementation of the new law, the amendment of the, in force today, Greek Code of Corporate Governance is expected.

Details for the implementation of this provision are expected, based on the same provision, from the Hellenic Capital Market Commission.

9. Informing the Investors

The new law introduces, for the first time, a set of provisions (articles 18-20), which aims to investor information.

First, there are obligations of transparency and valid information of the company’s shareholders regarding the candidates to be elected as members of the Board of Directors (article 18). The information takes place by the Board of Directors by posting on the Company’s website. The posting is made twenty (20) days, at the latest, before the General Assembly that will elect them. Content of the information-basically: (a) The justification of the candidate member’s proposal, (b) their detailed CV, (c) the determination of the compliance with the eligibility criteria (according to the eligibility policy of the company), as well as ( d) the satisfaction of the other criteria set by law.

At the same time, a provision is provided for the operation of a Shareholder Service Unit (article 19) and a Corporate Announcements Unit (article 20). The first aims at accurate and equal information of shareholders. Also, in their support, regarding the exercise of their rights. The second aims to provide information to shareholders and the investing public, in accordance with the applicable laws.

10. The Share Capital Increases of the Company and the Differences in the Use of Funds Raised

The obligation to submit a report by the Board of Directors to the General Assembly on the use of the funds that will come from the increase of its share capital is known. We (again) find it in the new law (article 22 par. 1). It is identical to that of Law 3022/2016 (article 9 par. 1). The content of this report concerns issues related to the investment plan and the account of the use of the company’s funds. Those, in particular, that were derived from increases that took place during the previous three years (at least).

Changes are found, however, in terms of the implementation of discrepancies in the use of raised funds. In order to implement such a discrepancy, a special decision of the Board of Directors is required. The specific decision is taken by a majority of three quarters (3/4) of its members. However, in addition, approval from the General Assembly is required. Such a decision of the General Assembly requires an increased quorum and majority.

The new law specifies, with greater clarity, for which deviation the above procedure is required to be followed. Law 3022/2016 was limited to the characterization of the one that is assessed as “significant”. Under the new law, a difference of more than twenty percent (20%) of the total funds raised is significant.

In addition, the new law explicitly provides that the above (regarding the deviations in the use of funds raised by cash payment) also applies in cases of issuing a bond loan with a public offer.

11. Disposal of company assets

The new law makes specific reference in the case of a decision of the General Meeting of a company (which is subject to its regulations) for the disposal of assets that exceed certain limits (article 23). These are the disposal of assets: (a) with one or more transactions, (b) which take place within two (2) years, (c) the value of which represents more than fifty one percent (51%) of the total value of the company assets.

In these cases, the decision of the General Assembly must be taken with an increased quorum and majority (article 130 §§3 & 4, law 4548/2018). However, the possible disposal of assets contrary to the provisions of the preceding paragraphs, does not affect the validity of the relevant decisions (Article 24 §3).

12. Sanctions

In case of violation of the obligations arising from this law, serious penalties are under threat (Article 24). The penalties are imposed by the Hellenic Capital Market Commission – without prejudice to the responsibilities of the Bank of Greece.

The sanctions are clearly stricter compared to Law 3016/2002. The fines that are threatened are much higher. The fine that will be imposed can reach up to 3 million Euros. Based on the current ones, it is possible to impose a fine of 1 million Euros – maximum.

In addition, under the new law, the penalties provided may be imposed on the company. In addition, that is, with the legally obliged natural persons.

However, the amount of the fines has provoked reactions. It is argued that the fines provided for could prove devastating. At the same time, the lack of severe monetary sanctions in other EU Member States in cases of breach of Corporate Governance obligations is pointed out.

The new law on Corporate Governance is moving in the right direction. The objections that have been raised are, to some extent, understandable. However, they are not enough for a negative evaluation.

The overall conclusion remains the same: Corporate Governance best practices (and the new law) will inevitably have a positive effect on competitiveness and growth. And, through them, the Greek stock market and the national economy will be benefitted.

There is no doubt.

Further: As mentioned in the introduction, the new law typically covers only listed companies. At a substantive level we will begin to see its regulations affect, more or less, all companies. This effect will also have a positive impact on competitiveness, growth and, of course, the national economy.

And Lastly: Let us not have any doubt about all these positive provisions of the new law on Corporate Governance.

Let’s welcome it!

(α) Η ελάχιστη ποσόστωση ανά φύλο (συγκεκριμένα: 25% των μελών του πρέπει να είναι γυναίκες) και

Τα κριτήρια που περιλαμβάνονται στην ανωτέρω πολιτική (όπως εξάλλου και η εξειδίκευσή τους), ορίζονται (κατά βάση) από την εκάστοτε εταιρεία. Θεσπίζονται από τη Γενική της Συνέλευση και οφείλουν να αναρτώνται στον ιστότοπό της.

Stavros Koumentakis
Managing Partner

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.

July 26, 2020
Voluntary (unpaid) Work: Is it possible?

Voluntary work (work, ie, without pay) looks like an oxymoron. At a first glance, it seems to refer to undeclared work (or “moonlighting”), “exploitation of man by man” and so on. But is that the case?

Work and pay: an (unbreakable?) bond

We have already seen the inextricable link between work and pay in an earlier article. There, we also found the value of the payment (and the consequences of non-payment) of the salary. This all seems perfectly normal. The employee has a (reasonable) claim and the employer has a (justified) obligation to pay it. Moreover, the payment of the salary is the compensation from the employer for the employee’s work.

The vital importance of salaries is evidenced by a wealth of data. Among other things, from the enactment of special legislative provisions, aimed at protecting salaries and ensuring their payment.

Reasonably, then, one wonders if and how there can be voluntary work. The answer, in order to be given, presupposes the (given) separation of voluntary from dependent work.

An important point worth mentioning: Voluntary work is not dependent work. Based on this fact, voluntary work does not fall within the scope of Labor Law. Consequently: voluntary work is not regulated by the provisions of labor law.

Voluntary work: the lack of legislation

The institution of voluntary work is not new. As an “old” institution, it is widely known and widespread. It has many, well known, forms.

Voluntary work will be found in non-profit bodies and organizations. In bodies exercising public power. In political parties. In legal entities of private law of non-profit character. But we will also find them in legal entities of a speculative nature. We will touch on this particular category below.

So, despite the fact that volunteering is widespread, there is no relevant legal provision. It is unfortunately not regulated by law. Its existence, however, is recognized. We find it in both theory and jurisprudence. Its existence is accepted (and this is interesting) in Governmental documents. Worth mentioning are the documents No. 2418/10/93 and 21829 / 04.08.2014 of the Ministry of Labor. Wherever we find a mention to voluntary work, the following assumption is always there: its distinction from dependent work. Discrimination based on the finding that the element of dependence is missing in voluntary work..

The “freely” provided voluntary work

Voluntary work is provided freely. In other words: the employee does not provide their services on the basis of their will or obligation to work under an employment contract, but on the basis of their voluntary disposition (Supreme Court 180/2000).

In case law, but also in the Documents of the Ministry of Labor, as voluntary employment contracts are recognized those in which the provided “work” is based (indicatively) on: (a) family ties (eg: Court of first instance of Thessaloniki 1332/1988), (b) friendship (eg.: Supreme Court 712/2001), (c) engagement or cohabitation (eg: Supreme Court 2007/2019), (d) moral obligation (e.g.: as well as (e) political reasons (eg: Court of first instance of Athens 464/2000), ideological, philanthropic, etc.

The content of the specific, indicatively listed, legal relations (for the legality of voluntary work) has, in general, the legal basis of contractual freedom (361 CC).

The lack of a legislative framework more specific than the principle of the freedom of contracts creates the need for a written record of this contractual relationship. It does not seem logical to sign a contract with the person with whom we may be living or with the person with whom we have a close, brotherly, friendship. It is, however, as necessary if we consider that it will not be paradoxical to require proof before a third party (of the Labor Inspectorate, for example, EFKA or the competent Court).

The agreement on non-payment of salary

The existence (or not) of the dependency element is one of those elements that distinguish the dependent employment contract from related contracts (also see: Employment Contract (Distinction From Related Concepts & The Protection of The Company).

In the case of voluntary work, the lack of the dependency element (advocated by the voluntary provision of services) must be accompanied by an agreement for the non-payment of a salary.

It is important to be clear that he one who voluntarily provides “work” is not one of the “employer’s” employees. And this can only arise from a written, explicit and specific, relevant contract. However, the mere omission of reference in the employment contract to the amount of the employee’s remuneration cannot be equated with the employer’s lack of obligation to pay wages.

[It should be noted here that, in general, when there is no individual agreement on the amount of remuneration and it is not possible to resort to the legal salary, the employer is obliged to pay the usual salary (articles 649 & 653 of the Civil Code). The salary, ie, that would be received by an employee of the same specialty with the same qualifications and qualities, providing similar work, under similar conditions. However, the introduction of the minimum wage has replaced, in most cases, the need to resort to the ordinary wage. A similar need still exists, for example, in standby contracts].

In the case of voluntary work, non-payment of salary or other compensation is de facto agreed. The value of the “work” offered, in this case, cannot be sought even by the provisions of unjust enrichment. Voluntary work is provided, as already mentioned, freely – for no consideration. As a result, the wealth that may be generated for the recipient of the services is based on a legitimate cause. It cannot, therefore, be described as unjustified. It is also not possible (and for the same reason) to be sought (Supreme Court 180/2000).

Criteria for designating a contract as voluntary work

Elements of the voluntary employment contract are: (a) the lack of the element of coercion and (b) the agreement for non-payment of wages. The existence of these elements, however, does not necessarily mean that this is a voluntary employment contract. A contract of employment may be concealed.

Moreover, the designation by contractors of a contract as voluntary work is not binding on the competent authorities. As we pointed out in a previous article: “the characterization of a contract, as the exclusive task of the judicial authority belongs to the court (Ind .: Supreme Court 602/2017, Supreme Court 608/2014, Plenary Session of the Supreme Court 7 & 8/2011, Plenary Session of the Supreme Court 6/2001)”.

Document No. 21829 / 04.08.2014 of the Legal Department of the Labor Inspection Body of the Ministry of Labor lists specific elements, which must be taken into account when investigating the provision or not of dependent work. Specifically: (a) the type and duration of work, (b) the employer’s activity (c) the requirement for the one working voluntarily to have special skills, (d) the fact that the provision of services is the profession of the volunteer and their main means of livelihood, (f) the existence of a kinship or other kind of relationship, (e) the possible conclusion of a contract.

If the above criteria (and the facts in general) support the existence of dependent rather than voluntary work, the administrative sanction is not of minor importance. The competent Labor Inspector will, in this case, impose a fine of € 10,500 for each (undeclared) employee. And this, with captive competence, without prior invitation of the employer to provide explanations (article 65 of law 4635/2019).

The obligation (or not) of the employer to pay insurance contributions

Finally, a question arises regarding the existence (or not) of the employer’s obligation to pay insurance contributions in favor of the one who provides voluntary work. (We refer, of course, to the cases where there is no (hidden) dependent work).

The answer to the above question is given by article 2 §1 f. Of law 1846/1951 (LAW ESTABLISHING THE GREEK SOCIAL SECURITY AGENSY). It is specified, in particular, that the insurance of this law compulsorily and automatically includes “persons who within the borders of the country provide professional work for a fee, as such understood and provided on behalf of Legal Entities of Public Law regardless of legal nature of the relationship (public or private law) “.

As already mentioned, voluntary work presupposes a lack of dependence and, in addition, an agreement for non-payment of wages. Therefore, there is no obligation of the employer to pay insurance contributions in favor of the employee voluntaring.

Elements associated with employment contracts are those of dependence and salary. Of course, it does not seem tolerable, at first sight, to accept unpaid work. Unless it is voluntary “work”.

Although voluntary work is not regulated by law, it is nevertheless a reality. And as such it is accepted by theory and jurisprudence. Even from the Ministry of Labor and its bodies.

But in implementing this form of “work” it is necessary to be very careful. And when we choose it, we have to manage it even more carefully. The existence of the relevant, content-wise, conventional text seems (basically) absolutely necessary.

A possible failure to prove the basis and existence of voluntary work is inevitably linked to (underlying) dependent work. And, at the same time, with severe penalties for the business, organization or body to which it is provided.

The (free) meeting of the needs of the latter is important.

But more important is their (maximum possible) protection.

Stavros Koumentakis
Managing Partner

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.

July 19, 2020
Corporate Governance: The improvements attempted and their consequences

In an earlier article we approached the concept and content of Corporate Governance, in the light (in particular) of the relevant (Greek) Code. Also, the effect of Corporate Governance on competitiveness and growth. The parliamentary procedure for a very important, relevant, legislation is currently underway. It refers to companies listed on a regulated market.

The bill under vote will replace the corresponding, in force today, Law 3016/2002. The total replacement of the latter was deemed necessary. Of course, a series of questions arise. The most important of these: Will this law have positive consequences for the companies it concerns? And, if so, how? Is there a risk that it will prove another (legal) burden on businesses? How does it “affect” all SAs?

Let’s try to approach them.

How will a bill concerning listed SAs ultimately affect them all?

The Greek Code of Corporate Governance was drafted and implemented in a different (business, financial, legal, etc.) environment. Under the force and perspective (in particular) of Law 3016/2002.

The legislation under vote will be (let us have no doubt) the basis for the reform of the aforementioned Code. The latter, despite its non-compulsory nature, concerns all Greek SAs.

We are already well aware that prospective creditors (including banks) are showing increased interest in corporate governance. This interest increases repidly when it comes to investors and prospective investors. The decision to (or not to) finance or invest depending on the existence (or, respectively, non-existence) of satisfactory corporate governance is not farfetched (nor does it impress us). After all, who would feel safe to finance or invest in a company that operates without rules? In a company that would, as usual, be based on the “ruling of one man”?

So there can be no doubt that this legislation concerns, more or less, all companies – especially SAs.

The main goal, the necessity of enactment and the aspirations of the bill on Corporate Governance

The explanatory memorandum of the bill, currently under preparation, gives us valuable information regarding the purpose and aspirations of its authors.

Its main goal seems to be to update the institutional framework of corporate governance of certain SAs. Those, in particular, who have shares (or other securities – eg bonds) listed on a regulated market in Greece.

The reform of the existing institutional framework proved necessary for two reasons:

(a) The first (probably the most important) is related to the need to harmonize the rules regarding corporate governance with current, relevant, trends and practices.

(b) The second reason has to do with changes in the legal and regulatory framework governing the operation of these companies. Changes that have taken place at global, European and national levels. Regarding, in particular, the (national) legislative environment: On the one hand, almost two decades have passed since the implementation of the current law on corporate governance (Law 3016/2002). On the other hand, an important legislation has been in force for the past eighteen months: Law 4548/2108, which governs the operation of SAs. A law that contains (scattered) provisions for corporate governance.

And now let’s come to the goals of this legislation.

The aim of the introduced provisions is the (adapted) strengthening of the corporate governance structures and procedures of SAs. It is also known that the modern capital market has higher relevant requirements.

At the same time, efforts are made to ensure the operational and decisive autonomy of the company. An autonomy under the control, in any case, of corporate law. As well as of the capital market legislation.

Lastly: Over the years a great wealth of issues has been dealt with by legal theory and jurisprudence. The bill under adoption aims to clarify some of them. And to also remove pending relevant concerns (such as, for example, the role of non-executive members of the board).

In brief…

In the above context, a detailed set of provisions governing the operation of the board of directors of listed companies is introduced.

Article 44 of Law 4449/2017 established the Audit Committee – a committee with increased (and particularly important) responsibilities. The legislation under vote preserves its existence and operation. In addition, two new committees of the Board of Directors are established. The Remuneration Committee and the Nomination Committee. The purpose of these committees is to:

(a) Ensure in-depth processing of remuneration issues (by non-executive board members)

(b) The nomination of candidates for the Board of Directors who are then submitted to the Board of Directors for approval; and

(c) The effective and rational compliance of the company with the current legal framework.

The organizational structures of the company are (at the same time-substantially) upgraded. The authors of this legislation did not intend to introduce horizontal provisions. There was an effort for these provisions to adapt to the size and complexity of the activities of each company. The intention is for the provisions and the related obligations to remain proportionate and effective.

The goal, in any case, is the consolidation by SAs of good and effective governance practices. And to also strengthen the confidence of shareholders (or potential shareholders) in them.

“The law is moving in the right direction”, but the burden?

Quite recently (on 11.6.20) an event of the Hellenic American Chamber took place. Its theme: “Corporate Governance, a new reality during and after the era of the pandemic “.

Among the participants was the CEO of the Hellenic Petroleum Group (ELPE) Andreas Siamisis. The position he took: “the bill is undoubtedly moving in the right direction…”.

It is important that a listed company adopted this position.

But there is, without a doubt, another parameter: that of the charge. It would be worthwhile, in fact, to investigate whether regulations like those introduced through this bill will prove to be appropriate for all listed companies. And, finally, the cost / benefit ratio…

The parameter of the significant burden has already been underlined, ever since the stage of the consultation of the bill, by the Association of Listed Companies.

According to the long-standing position of the Association of Listed Companies, issues regarding corporate governance should be regulated by provisions of non-binding law, in order to allow for the possibility of deviations.

This position, after all, builds on the two basic principles of corporate governance systems worldwide. One could say, on its cornerstones. Namely: (a) the prediction of the possibility of deviations following “comply or explain” explanations and (b) the prediction of flexibility and configuration of the adjustments based on the principle of proportionality.

According to the Association of Listed Companies, therefore, the increase of liabilities without deviations, imposed by the law to be voted, is a significant burden on listed companies. A burden that may lead to their exit from the Greek Stock Exchange, and, in general, to the avoidance of entry into it.

At the same time, the Association of Listed Companies has highlighted further black spots in the bill. As a result, it argues that the new law (with the proposed provisions as they are today) fails in its goal, as: It does not promote the reorganization of the Greek capital market -and certainly not the competitiveness of Greek companies.

“We should not only change the law but also our culture on these issues…”

On the other hand, Ms. Vasiliki Lazarakou-chairwoman of the Hellenic Capital Market Commission, while also participating in the aforementioned event of the Hellenic American Chamber, seemed positively in favor of this bill.

It is important, in fact, to note that she praised, in her specific capacity, its ability to promote development. The relevant argument had three pillars: Corporate Governance (a) is one of the most important tools for the smooth operation of a company, (b) upgrades the organization and management of a company and, most importantly, (c) makes the company more attractive to investors.

Corporate governance and the impact on competitiveness and access to investment capital

It is not surprising that the bill on Corporate Governance has given rise to controversy and provided a platform for a constructive dialogue.

In any case, however, and despite the position anyone took, it is worth focusing on the most important, in our opinion, statement in Ms. Lazarakou’s speech. She pointed out, in particular, that “we should not only change the law but also our culture on these issues.”

Who, then, could disagree with this particular admission-encouragement? Our corporate governance culture does not, in fact, serve the principles and values that are accepted (at an international, European and / or national level). Nor, of course, does it serve the principles, goals and aspirations of the bill under vote. And if some defend the specific principles and values, it does not mean that we have adopted the relevant culture. When we succeed in this, just know: We will have moved in the direction of increasing the competitiveness of our companies and facilitating their access to investment funds.

Besides, good corporate governance (along with organization and transparency) have been recorded as necessary prerequisites by (among others) the CEO of the Athens Stock Exchange, Mr. Socrates Lazaridis, for raising investment funds. A step in this direction is, also, the Roots program, to which a previous article of ours, already mentioned above, refers.

The Roots program exactly confirms the emergence of corporate governance as one of the pillars of growth. In addition, unlisted companies “immersed” in good business practices gain easier access to investment funds.

“So by changing our culture” in the direction of good business practices (among which corporate governance plays a dominant role) we provide “good services” to our companies. We make them more attractive. We assist in their development.

And if we move in this direction, we, without a doubt, assist with the development of national economy.

Stavros Koumentakis
Managing Partner

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.

July 12, 2020
Employment Contract (distinctions from related concepts and the protection of the business)

The concept of employment (contracts) in the context of Labor Law presupposes dependence. The protection offered by Labor Law (something like the Magneto helmet, for “The X-Men fans”) presupposes the provision of dependent employment services. But when one is and one is not dependent? When the work offered is classified as dependent when is it “something else”? Are there clear boundaries between the employment contract and the contract of independent services, the works contract and / or the contract under which commission is payable? And how, after all, is a business protected?

Regarding dependency and dependent work

It is well known that dependency is a fundamental concept in labor law. The legislator chose, however, not to legislate on it. This has resulted in the development of various views and theories about its content. Their common goal? Identifying the (safe) criteria for designating (or not) a contract as an employment contract. The individual issues concerning the contract of employment were addressed in our previous article (: Employment Contracts: What are they exactly?) There we approached the varius views, theories and criteria that each of them adopts. Also: the impossibility of defining, with certainty, the concept of dependence. Finally, we have been given the opportunity to approach the critical (and non-critical) indications adopted by case law for the evaluation of a contract as an employment contract. The inability to clearly define the content and meaning of the employment contract is a given. Its boundaries remain fluid. As a result, it is extremely difficult to distinguish between related concepts and contracts. Among them: the contract for independent services and the works contract. And -sometimes- the contract under which commission is payable.

Related contracts

The distinction from the contract of independent services

This is perhaps the most difficult distinction between related contracts. The reason does not seem strange: independent service and employment contracts have a number of common features. On the other hand, the object of both is the provision of paid work. Their common grounds are many. This is also the reason why the Civil Code itself places them in the regulatory scope of the same set of provisions (articles 648 et seq.). This is despite the fact that some of them refer, exclusively, to the employment contract. The only criterion for distinguishing the two conventional forms is the concept of dependence. The lack of dependence, moreover, is what directly refers to an independent service contract.

According to case law, “…contracts of independent services… exists when the employee provides their services in lieu of wages, without being subject to the control and supervision of the employer and being obliged to comply with the latter’s orders and instructions, in particular as to the how and the time of provision of their services ”(Ind .: Supreme Court 602/2017).
However, as also noted in case law, there is some form of commitment and dependence in the independent service contract as well. As is the case, after all, in any case where (contractual) obligations are undertaken. For this reason, the compliance from the part of the one offering the work with what has been contractually agreed (regarding, inter alia, the place or time frame of their work) does not imply, without a doubt, the “worker’s” dependence on the employer. Based on the above data (but especially the ambiguity of the concept of dependence), the difficulty of distinguishing between the two types of contracts arises as self-evident. In many cases, in fact, the discrimination proves to be extremely difficult.

The distinction from the works contract

At first glance, distinguishing between an employment contract and a works contract seems easy. Moreover, the purpose of the two, specific, contracts is different. Specifically, with the employment contract, the parties aim at the work itself, which will be provided for a definite or indefinite period of time. On the contrary, with the works contract (681 AK), the parties aim to achieve a specific, final, result. The realization of this certain result implies the automatic termination of the contractual relationship of the parties (Ind .: Plenary session of the Supreme Court 19/2007, Supreme Court 223/2011). However, according to case law "… when the provision of labor is intended for a certain result, but which is outside the power of the worker, who undertakes not to produce it, but simply to do what is possible for them to produce it, then there is an employment contract and not a works contract, even if it has been agreed between the parties that the salary will be paid only if the desired result occurs” (Supreme Court 376/2006).
In any case, the works contract (as well as the independent services contract) is characterized by a lack of dependence on the employer. Proof of this assumption is the fact that the contractor has the initiative in the execution of the project. The latter is the one who chooses the time and the way of execution of the project within the contractual deadlines. They are not obliged to comply with the (non-contractual) instructions and orders of the employer. They are not even subject to the control of the latter. The contractor undertakes to execute / deliver the agreed project. The developer-employer reserves the right to receive a properly executed project. The fluid boundaries of the concept of dependency clearly make it difficult to properly characterize an individual contract (: employment or works contract). However, it is extremely difficult to distinguish between the two types of contracts when we have at hand successive projects for the same employer, under the same contractual terms. In such cases, successive contracts are likely to cover the employer’s ongoing and permanent needs.

The distinction from the contract under which commission is payable

The independent services contract and the works contract are the closest contracts to the concept of employment. The employment contract, however, has more common features with the works contract (articles 713 et seq. of the Civil Code). In both contracts, for example, a work supply is agreed upon, while compliance with the instructions of the employer or principal respectively is required.
However, from the works contract regulated in the Civil Code, the element of remuneration is missing. In contrast, in the employment contract, the salary is the employee’s compensation
and the means of subsistence. The salary is therefore one of its essential elements. The existence or non-existence of remuneration is therefore what makes it relatively easy to distinguish between employment and works contracts. (Let us not forget, of course, the special form of the paid order contract concluded with in-house lawyers).

The emerging danger

The incorrect legal characterization of the employment contract is not without legal consequences. Dependence, moreover, is what puts the employee “under the umbrella” and the protection of labor law. There are many cases where the circumvention of labor law is attempted by the use of related contracts, such as the ones mentioned above. Independent services contracts, works contracts and even contracts under which commission is payable conceal, not infrequently, employment contracts. The indistinguishable limits between them are those that are used to exceed the protection of Labor Law. The danger that arises in terms of employees’ rights is undeniable. And given.
On the other hand, however, we should not ignore the existence, regulation and operation of related contracts. Especially the independent services and works contracts. Should we, from the outset, exclude the truth of the intentions of the parties who have chosen an independent services or works contract? In this context, we should avoid an aphoristic generalization about an undercover contract when we are in front of a related contract. Adopting the intention in advance to circumvent labor law by a business which chooses to enter into a contract other than an employment
contract, the freedom of contract is ultimately violated. And, of course, freedom in conducting business. The moment, in fact, when the latter is protected under the Constitution.
Thus, in the context of business freedom, freedom of contract and private autonomy, the desire of the business may indeed be the conclusion of a contract for independent services, works and / or a contract under which commission is payable. Let us not attribute, without a doubt, "bad" intentions to the business. A contract other than an employment contract may indeed reflect the true will of the parties and what has been agreed. And the one that better serves the interests of the parties (and not just the business’ targets).

Restriction of business (and contractual) freedom

However, there are some cases where the aforementioned freedoms of the business are either bent overall or drastically limited. In these cases, the employee’s interest is the one that is exclusively proposed and drastically protected. These are the cases in which the Greek legislator preferred: (a) either to attribute to certain contracts the designation of an employment contract directly, (b) or to establish presumptions in favor of the designation of a contract as an employment contract.

The direct legislative characterization of a contract as employment contract

In specific contracts, the legislator chose to attribute, by themselves, the trait of dependency. These are clearly cases where the boundaries of the employment contract dependent with related contracts become particularly blurred. Typical examples of direct legislative characterization: (a) the contracts concluded by professional athletes with sport SAs for the provision of sports services (article 85 par. 2 and 4 of Law 2725/1999) and (b) the contracts concluded by tour guides (holders of the provided license to practice the profession of tour guides) with tourist – travel agencies, with members of the association of shipowners of passenger ships and with tourist offices abroad for the implementation of tourist programs (article 37 law 1545/1985). However, in the above and in the corresponding legislative interventions, issues and concerns regarding their constitutionality are raised.

The legal presumptions of dependence

In other cases, the legislature limited themselves to introducing (rebuttable) presumptions in favor of the existence of dependent work. In these cases, the assistance of certain facts argues in favor of the existence of an employment contract. However, as the presumption offered by law is defined as rebuttable, the possibility of retaliation is provided. A typical case of introduction of a presumption in favor of dependent work is the provision of article 1 of law 3846/2010. According to this provision: “The agreement between the employer and the employee for the provision of services or work, for a definite or indefinite period, especially in the cases of pay per unit (contract), telework, employment from home, is presumed to conceal an employment contract, if the work is provided in person, exclusively or mainly to the same employer for nine (9) consecutive months”. Despite the existence of the facts which fall within the scope of application of a presumption corresponding to the above, the judge is the one that at the end will determine the existence of dependent work.

The correct legal characterization

In any case, the judge is the one who sovereignly evaluates any case of questioning the characterization of a contract, which is brought before them. It is also known that the characterization (by the parties and / or the legislator) of a relationship as an employment or independent services or works contract or contract under which commission is payable, does not depend on the characterization given to it by the parties or even the legislator.
On the contrary, "this characterization, as a pre-eminent task of the judicial function, as delimited by the provisions of art. 26 § 3 and 87 § 2 of the Constitution, belongs to the court, which, evaluating the facts set out in the lawsuit and those that may possibly subsequently arise during the evidentiary procedure, gives the exact (correct) legal characterization to the contract. “(Ind .: Supreme Court 602/2017, Supreme Court 608/2014, Plenary Session of the Supreme Court 7 & 8/2011, Plenary Session of the Supreme Court 6/2001).

And what is the appropriate attitude of the business?

In the light of all the above, the businessman/woman (and / or their legal representative) could reasonably ask: “So what should I do?” It would be desirable to avoid burdening the business with legal and other, incalculable, risks.
In practice:
(a) Selection of the legally correct contractual type that connects the business with its employee or associate – before the start of their cooperation.
(b) Clear documentation of the legal validity of the contractual type to be selected. Incorporation in the relevant, prescriptive, conventional text of those substantive parameters
that support it.

It is also important to keep this in mind: At some point in the future, any contractual relationship, any contract, any case in which we are involved may be brought before a competent Court for evaluation.

Let’s not be left then to form our own supporting file and arguments.

Because, as is well known, “it is better to prevent than cure”.

Stavros Koumentakis
Managing Partner

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.

July 5, 2020

This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.