From the prime minister’s lips – but also those of the then Minister of National Economy – we had heard, before the elections, that the past four years worked in favor of businesses and the next four years (: the current ones will work) in favor of employees. Regardless of the evaluation, each of us, of the specific statements and choices, we already meet a first sample of writing with the passing of the recent labor law (: law 5053/2023). The occasion was, indeed, opportune: During the long economic crisis we encountered significant pressures (but also reductions) in wages and salaries through (also) legislative interventions. The latter concerned, on the one hand, the determination of their amount and, on the other hand, their increments. Indicative through the suspension of the increases resulting from the passage of a certain working time (e.g. a three-year allowance). The recent labor law (law 5053/2023) abolished, among other things, the above suspension. This is article is about that.
Suspension of Increases With the Passage of Working Time
Already, from 14.2.2012, the validity of provisions of laws, regulatory acts, collective agreements or arbitration decisions, which provide for increases in wages or daily wages, was suspended (: Act of the Ministerial Council no. 6/2012-art. 4). In the same context, the application of the increases related to seniority was also suspended, with the only condition that a specific working time has passed. These were: the working time allowance, the multi-year allowance, the five-year allowance and the three-year allowance. Based on the specific legislative provision, the aforementioned suspension would last until the unemployment rate is below 10%. For the implementation of the relevant regulation, it was defined that the average of the national unemployment rate of the last four quarters, as reflected in the Labor Force Survey of the Hellenic Statistical Authority, will be taken into account.
…Especially Towards the Three Years
With the Approval of the 2013-2016 Medium-Term Fiscal Strategy Framework (law. 4093/2012), in the midst of the economic crisis, the minimum (and sub-minimum) salary was determined (€586.08 for employees over 25 years old and €510.95 for workers under 25). Issues of the three years were also regulated. Regarding the latter and:
(a) with regard to workers over 25 years of age it was provided that:
the minimum salary of employees is increased by 10% for each three years of service and up to a maximum of three years (increase, i.e., up to 30% for nine years of service or more);
the minimum daily wage of artisans is increased by a percentage of 5% for each three years of service and up to a maximum of six three years (increase, i.e., up to 30% for eighteen years or more of service).
(a) with regard to workers under the age of 25 it was provided that:
the minimum salary of employees is increased by 10% for three years of service and for three years of service or more.
the minimum daily wage of artisans is increased by 5% for each three years of service and up to two three years at most (increase, i.e., up to 10% for six years or more of service).
The specific legislation provided, however, that the three-year allowance will be paid to those employees who had completed a corresponding period of service by 14.2.2012. For previous service, on the contrary, which would be completed after 14.2.2012, the increase of the minimum wage and daily wage was suspended.
Abolition of the Suspension of Increases
The recent labor law (law 5053/2023-art. 33) significantly changes the above data. It specifically abolishes (art. 33 §8), from 01.01.2024, the above-mentioned suspension (of no. 4 of PYS 6/2012) of salary and daily wage increases; among them and those mentioned in seniority – with the only condition after a certain working time.
In this context, from 01.01.2024, the validity of provisions of laws, regulatory acts, collective agreements or arbitration decisions, which provide for increases in wages or daily wages, is reinstated. The validity of those relating to seniority is also restored, with the only condition being the passage of a specific working time; among these are working time allowances, multi-year, five-year and three-year allowances (art. 33 §1). It is noteworthy, in fact, that all this takes place before the fulfillment of the heresy for the formation of the national unemployment rate of the last four quarters at a rate below 10% (as this is reflected in the Labor Force Survey of EL.STAT. – see related Explanatory Report n. 5053/2023). Based, in fact, on the currently existing rate of unemployment reduction, it was estimated that the aforementioned lifting of the suspension (and reinstatement of the above regulations) would take place in 2025.
Purpose Of Lifting The Suspension
The above regulation is expected (Explanatory Report n. 5053/2023) to boost the income of employees and partially address the issue of persistent inflationary pressures, which weaken their purchasing power. Moreover, the increase in workers’ income is compatible with the convergence of the wage level with that of the other member states of the European Union. Also, with the increase in the level of the average salary in our country.
How to Apply the Lifting of the Suspension
Completion of employees’ seniority is distinguished in terms of its implementation as follows (art. 33 §2):
(a) For employees who were hired (and started working) before 14.02.2012, their seniority continues to be completed from 01.01.2024.
(b) For employees hired after 14.02.2012, their seniority starts to be completed after 01.01.2024.
The period of time between 02.14.2012 and 01.01.2024 is considered, for the purposes of this regulation, as non-existent.
In order to avoid misunderstandings, the law explicitly clarifies (art. 33 §5), that for the period from 14.02.2012 to 31.12.2023 no claim is made, nor are salary or daily wage increases due – including those related to seniority – with the sole condition that a specific working time has passed. Also, it does not allow the calculation of seniority completed from February the 14th 2012 to December the 31st 2023.
…Especially Regarding the Three Years
As, in particular, it is provided (art. 33 §3), for the increase due to seniority to those employees who are paid the minimum statutory salary or daily wage, the time of seniority is recognized as the time of a dependent contract or employment relationship, which has been spent with any employer and in any specialty before 14.02.2012 and after 01.01.2024. The specific, due to seniority, increase (given also the abolition, already, from 2019, of the minimum wage) is determined as follows:
(a) For employees at a rate of 10% for each three years of service and up to a maximum of three three-year terms (increase, i.e., up to 30% for nine years of service);
(b) For craftsmen at a rate of 5% for each three years of service and up to six three-year terms (increase, i.e., up to 30% for eighteen years or more of service).
Based on the above data as well as the recent increase in the minimum wage, the salary that an employee will receive, from now on, after the above suspension is lifted, is as follows: (i) at €780 – as long as they have not completed three years, (ii) at €858 -if they complete, with the above calculation, three years, (iii) at €936 -if they complete two three-year terms and (iv) €1,014 -if they complete three three-year terms. Further adjustment will occur if, of course, a new increase in the minimum wage takes place.
Set-off with the highest legal wages
The payment of the above salary and daily wage increases, which arise based on the passage of working time, depends on whether the employees receive higher wages than the legal ones.
In the case, i.e., when the paid regular wages of an employee are higher than the legal ones, the relative increases are set off with the difference that arises between the paid and legal ones. By paying the difference in question, the above increases are paid in full or in part (art. 33 §4). Therefore, only the remaining amount is paid.
The Impermanence Of The Lift
The legislation to lift the suspension of increases based on the passage of working time is not permanent. The continuation of the payment of the relevant increases depends, directly, on the formation of the unemployment rates. Specifically, it is foreseen that from 01.01.2027, if the unemployment rate exceeds 10% – and until it reaches a rate below 10% – the relevant increases will be automatically suspended (as described in art. 33 §1 & art. 33 §6). For the implementation of the relevant forecast, the average of the national unemployment rate of the last four quarters, as reflected in the Labor Force Survey of the Hellenic Statistical Authority, will be taken into account.
We are used to hearing the above regulations under the general heading ” three-year unfreeze”. They aim at the (even partial) restoration of workers’ income. In restoring, also, favorable for those arrangements to the pre-crisis levels. The (alleged) defenders of workers’ rights complain, on the one hand, about the lack of regulations and the limited restoration of their incomes. Businesses, on the other hand, treat them with skepticism considering their total costs, the related burdens on their products and services as well as, of course, their competitiveness. The ruling majority chose, however, the middle path.
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (October 8th, 2023).
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.
