Koumentakis

Tag: job

  • Employee suspension or Contract termination?

    Employee suspension or Contract termination?

    Employee suspension (: The other measure that is milder than terminating an employment contract)

    I. Preamble

    “Profit is the brother of loss” mentions a well-known Turkish saying.

    This saying is, unfortunately, proved right in the context of business. This is when the (healthy) attempt to make a profit turns out to be ineffective.

    What is crucial is how the businessman evaluates each case. Is the situation reversible or not? Is the cessation of business temporary or permanent? Does it affect the whole business or only part of it?

    In any case: the effort to reduce a business’s expenses turns out to be particularly significant. Wage cost reduction is the first thought.

    Layoffs? Is that the only solution?

    Are there milder measures? Rotational work or employee suspension?

    We have already referred to rotational work.

    In this article we will examine employee suspension.

     

    II. Suspension-in general

    1. In general

    Termination of an employment contract is a permanent (but also socially burdensome) measure. But what is basically crucial is the support of the business. Rescuing it will mean the (socially desirable) survival of jobs. Employee suspension is, as mentioned, the other milder measure (along with rotational work). Jobs are saved this way, even temporarily. The expectation of a definitive recovery of the business is kept alive. The prospect of a permanent rescue of (endangered) jobs survives.

    2. The legislative framework

    Suspension is regulated by Article 10 of Law 3198/1995, as in force (after its last amendment in 2010). This provision states:

    “Businesses and holdings, if their activity is restricted, may, instead of terminating the employment contract, suspend their employees in written, and the suspension shall not exceed a total of three (3) months per year, unless they have previously consulted the legal representatives of employees in accordance with the provisions of p.d. 240/2006 (Government Gazette 252 A) and Law 1767/1988 (Government Gazette 63 A).

    If there are no employee representatives in the company, all employees are informed and consulted. information may be provided by a one-time notice at a prominent and accessible place in the business. The consultation shall take place at the place and time specified by the employer. During suspension, the employee receives half the average of the last two months’ full-time wage of full-time employment. After the three months have expired, at least three (3) months must pass before the same employee can be suspended again. The employer must inform the relevant services of the Labor Inspection Body, IKA and OAED in any manner regarding the relevant statement of suspension, affecting part or all of their staff. “

    3. Purpose and basic principles

    3.1. Suspension has a dual purpose:

    (a) To contribute in the reorganization of the business with the restricted activity; and

    (b) To support the employees to look for a job during their suspension.

    3.2. The business that is called upon to deal with its restricted activity achieves, through suspension, a reduction in its redundant staff and employment costs.

    Most important: No layoffs.

    Suspension may extend to all of the employees (: complete suspension). But it may also extend to some of them (: partial suspension).

    In no case, however, can suspension be applied as a measure against a specific employee. Suspension is a collective measure (like that of rotational work).

    Thus, the company can suspend the employment relationship for its redundant staff.

    During suspension, the obligation to pay for salaries is limited: The employer pays (to the suspended employees) half (1/2) of the average full-time salary of the last two months.

    3.3. An employee who is suspended does not, of course, have to present themselves to the business and provide their work for the duration of the implementation of the measure.

    During this time, the employee has the opportunity to work for another employer. Alternatively: to engage in any other activity. They shall not in any event be deprived of their right to receive ½ of their salary. These salaries are not offset by what the employee receives from their (potential) employment under another employer to supplement their income.

    Additionally: the time period of suspension is considered as if the employee was actually working. This means that it is taken into account for the determination of the amount of compensation due in case of dismissal, for increasing the salary due to seniority, etc.

     

    III. Conditions for enforcing suspension

    1. It is clear from the wording of the law that the measure of suspension is, in some respects, identical to that of the unilaterally imposed rotational work. The same applies to what is accepted (and we have already analyzed) in the context of rotational work.

    The conditions laid down by law for the suspension of employees to be valid are, in particular, the following:

    (a) Restriction of the activity of the enterprise;

    (b) Prior information and consultation with employee representatives;

    (c) The written form,

    (d) The maximum length of suspension and

    (e) Notification to the competent departments of the Labor Inspection Body, EFKA. and OAED.

    2. In more detail:

    (a) Restricting the economic activity of the enterprise

    The first essential prerequisite is that the business’s “activity is reduced”. This requirement is also met with the unilateral imposition of rotational work. There we said: “The law does not further specify what “the reduction of business” really means. In any case, there is no need to jeopardize the viability of the business. However, any (minor) reduction of the operation of the enterprise, of the establishment or of a sector of the business and/or if the business is operating at a loss are not sufficiently meeting the relevant legal requirement. Nor is it sufficient for an employer to have financial or liquidity issues that result in their difficulty to pay employees for a certain period. It is required that the “volume of activity” should be such that “there will be a surplus of staff as a result of the reduction in available work” (Circular 35958/666/2017).”

    As suspension is imposed as an extreme measure, but also a measure milder than that of the termination of the employment contract, it is a reasonable premise that the reduction of the activity poses a real threat to jobs. In other words, it must be such a reduction that it could lead to dismissals for economic and technical reasons.

    (b) Prior information and consultation with employee representatives

    i. Prior to the employer’s decision on the suspension measure, the law requires prior information and consultation with employee representatives (in accordance with the provisions of Presidential Decree 240/2006 and Law 1767/1988). This is another (formal) requirement, which we met and analyzed in the case of a rotational system. Fortunately, even in the case of suspension, they do not need to end well.

    ii. The above (under i) obligation applies to all undertakings to which the employer intends to impose the measure. And this, regardless of the number of employees. (Irrespective of whether they employ fewer employees than those provided for their implementation, as set forth in Articles 3 of Presidential Decree 240/2006 and 1 of 1767/1988).

    iii. In addition, according to the abovementioned provision, “information may be provided by a one-time notice at a prominent and accessible place in the business. The consultation shall take place at the place and time specified by the employer.”

    iv. In any case: The information should contain the reasons why the employer needs to enforce the suspension measure. Indicatively: evidence of a significant restriction on the activity, its likely duration, and the proposed extent of suspension (eg, application to certain parts of the business or to the whole business).

    It is noted that in businesses with a small number of employees, this information may also be provided by an oral communication to employees.

    v. The invitation of the employer to consult the employees’ representatives, or in the absence of them, all employees, should, in addition, include the place and time of the consultation. The interval between the communication and the consultation should be sufficient for the employees to prepare. The (sufficient) time is a real issue and is judged on a case by case basis. This is because it depends on several factors. Indicatively: number of employees, number and complexity of issues to be consulted on etc.

    vi. Consultation under Article 4 of Law 3846/2010 is fairly broad. Of course, it is the exchange of views between the employer and employee representatives (or employees). It will focus on the measures and decisions that need to be taken to tackle the difficulties of the business with the significantly reduced activity. Specifically, the creation of a system of distributing the remaining work to all the staff of the enterprise (or to a specific part of it) in order to save jobs.

    vii. What is encouraging, however, is that, as stated above, the positive outcome of the consultation is not a requirement for the implementation of the suspension measure. There is no need for the employer and employees to reach an agreement.

    However, the imposition of the measure of suspension by the employer, without prior notice and consultation, is invalid.

     (c) The written form

    i. The written form (that is, the written statement of the employer’s decision to impose the measure of suspension) is required by the law itself. It is therefore an integral part of the validity of suspension, without which suspension is not possible. Consequence of this omission? The employee is entitled to full remuneration and not half of it, which they should be getting, if they had been lawfully suspended.

    ii. The requirement for the written form is not replaced by any general disclosure that is posted on display in the workplace. According to case law, the employer must send an individual written statement to each employee they are about to suspend (SC 499/1990). It is advised to keep two copies of this statement, one of which will be delivered to the employee. In his statement, the employer is not required to state in detail the incidents which have led them to take the above measure. However, it must be concluded that the application of this measure is a consequence of the restriction of the economic activity of his business. As already mentioned (under III.2.a.), it is only under this condition that the suspension of employees is allowed.

    iii. In the individual written statement, however, the employer must specify the commencement and duration of the measure. Notification of the employee’s forthcoming suspension must take place within a reasonable time prior to its commencement. Such an obligation is not required by law. It is, however, accepted by the courts as a manifestation of good faith (464/2013 First Instance Court of Xanthi). The purpose of timely notification is to allow the employee to seek other employment while suspended, so that they can supplement their income.

    (d) The maximum duration of suspension

    i. The law explicitly specifies the maximum length of time that the suspension measure can be implemented. In particular, its duration may not exceed three months in the same calendar year. The above quarter includes both business days, Sundays and holidays, with the term “year” being the period from 1 January to 31 December.

    ii. This maximum duration of suspension may be imposed either at once or in fractions. It is therefore possible for employees to be suspended once or more times during the year. Under no circumstances, however, can multiple suspensions turn into rotational work. Suspension requires continuous and total abstinence from work. Otherwise, the dual purpose of the imposed measure (the relief of the business and the employee’s opportunity to seek work elsewhere) is circumvented.

    iii. But there is one more time limit. It is about the time it takes to (re)suspend the employee. Therefore, if the abovementioned quarter is exhausted, three months of work are required in order for and employee to be suspended.

    (e) Notification to the competent departments of the Labor Inspection Body, EFKA and OAED.

    The last condition (of legality) of the suspension is that the employer notifies the relevant decision “by any means” to the relevant authorities of the Labor Inspection Body, EFKA (former IKA) and OAED.

     

    IV. In conclusion

    Alternation between profit and loss is not a theoretical possibility in a business. No matter how well organized it is.

    In the event of damages, it is the rescue of the business that must be dealt with first.

    It is up to the employer to choose the appropriate measures, where appropriate.

    The utilization by the employer of milder measures (compared to the termination of employment contracts) is, of course, preferable.

    Making use of the institution of suspension can be a step to the right direction…

    stavros-koumentakis

    Stavros Koumentakis
    Senior Partner

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (January 26th, 2020).

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  • Accident at work (the, already unlimited, employer liability…)

    Accident at work (the, already unlimited, employer liability…)

    I. Preamble

    Most ancient Greek philosophers were concerned with destiny (and the inability of men to define it). This is why there are so many quotes referencing destiny. The most known of them, “destiny is impossible to escape” («το πεπρωμένον φυγείν αδύνατον») is attributed to Pindar. The relevant Socratic phrase is more or less the same: “no one can avoid destiny” («Την ειμαρμένην ουδ’ αν εκφύγοι»).

    Regardless of one’s position on destiny and fate, the law does not consider destiny at all.

    Even when we talk about accidents. Especially accidents at work.

    And then responsibilities are sought.

    And persons to be held responsible.

     

    II. Protection of workers

    Protecting the health and physical integrity of workers when they are working must be (and largely is) the responsibility of the State and the legislator. To a significant extent of the business as well. The humanitarian dimension is critical (as well as self-evident). But the financial aspect of accidents at work is also important: accidents at work and occupational diseases come at a cost. And not a negligible one: a cost burdening the victims, businesses, insurance companies, insurance organizations. Of course the community as well.

     

    III. Accident at work

    1. Legal definitions

    Article 1 of Law 551/1915 provides: “Accidental incident, deriving from a violent event, involving a worker or employee doing one of the works referred to in Article 2, while they are performing or on account of the work, the owner of the business shall provide a compensation to the persons entitled, in accordance with the provisions hereof, in the event that the absence from work caused by the accident is more than four days, except in the case where the worker or employee had intentionally caused the accident.

    Correspondingly, the provision of Article 8 law 1846/1951 (: “IKA (Social Security of employees) Institutional Law”) defines an accident as: “The violent incident or occupational disease occurring at work or because of work”.

    1. Therefore: The concept of an accident at work

    The concept of an accident at work covers any violent event that causes damage to the health of an employee. Requirement: it must have occurred while the employee was performing their job or because of their job. The concept of an accident at work also includes occupational diseases which are (directly or indirectly) related to the work of the victim. More precisely: if it is in a causal (direct or indirect) link with their work. Sometimes case law seems to, unfortunately, end up adopting extreme positions on what constitutes an occupational disease.

    1. Employer liability in the event of an accident at work

    The employer is obliged to compensate the victim (Article 2 of Law 551/1915). This is because (in accordance with Article 662 of the Civil Code): “the employer is responsible for the work and the place it is performed, as well as the residence, facilities and machinery or tools in order to protect the life and health of the employee.”

    Consequently, taking appropriate measures to prevent an accident at work is one of the basic obligations of the employer. It is noteworthy that in the event of an accident at work, the employer is burdened with the strict liability to provide the victims with compensation. In addition: to compensate their relatives (in case of death). It is also noteworthy that the liability of the employer is independent of the fault of the employer or of their agents.

    IKA (today EFKA) contributes (d. 1846/1951) to the compensation of the worker who suffered an accident at work. The employer’s liability for compensation of the employee extends, at least at first, beyond the contribution of EFKA.

    1. The coverage and contribution of EFKA

    When an accident causes the (insured) employee to be unable to work, they are entitled to receive (or, in the event of their death, the persons entitled) the insurance benefits provided by law (Act 1846/1951). Examples: medical care, sickness benefit, disability pension during his or her incapacity. In this case the employer is relieved of their responsibilities (from the Decree of the 24th of July 1920 “on the Codification of the Laws on the Liability of Compensation for Workers or Employees Involved in an Accident at Work”: liability for compensation, hospitalization and funeral). However, the employer (according to law) is not relieved from their duty to pay compensation for moral damage or for the psychological distress of their family (in the event of their death).

    When an employee, insured under EFKA, has an accident, they are entitled to the benefits provided, and the employer is exempted from any liability [under Law 551/1915 or under common law (Article 60 § 3, a). 1846/1951].

    The consequences of an accident at work are particularly (and on many levels) significant. It always activates provisions providing the affected employee with benefits. But it also activates the employer’s and business’s possible administrative, civil and legal responsibilities.

    It is important to note that the deadline for reporting the accident is extremely short (five days). It must be emphasizes, although unnecessarily, that the description of the accident should not be a ‘typical’ procedure. It should always take place with special care.

     

    IV. The responsibility (and waiver of responsibility) of EFKA

    1. The existing institutional framework

    1.1. The conditions for EFKA to claim from the employer everything it has paid.

    (a) The provision of Article 34 § 2 a. 1846/1951 states:

    «2. If, by judicial decision, it is ascertained that when the accident occurring in the performance or on account of the work is due to the misconduct of the employer or the person added thereto, the employer shall be liable to pay: (a) to IKA, every expense it made, for the benefits it provided due to the accident, (b) to the victim, or, in the event of their death, to the persons referred to in Article 28, the difference between the amount of the compensation due under the Civil Code and the total amount of the compensation benefits granted according to this  law… “.

    (b) Simply put: If a court ruling deems the employer or their agents fraudulent, the employer is obliged to pay to EFKA what the latter (EFKA) has paid to the employee (or, in the event of their death, to their relatives).

    1.2. The (previous) controversies regarding the employer’s misconduct

    The above provision (under 1.1.a) is particularly important. This is because, in the event a court finds a misconduct on the part of the employer, they are the one who bear the sole burden of compensating the employee (or, where appropriate, his or her relatives) in the event of an accident at work. In such a case, EFKA would be completely exempt.

    The payment by the employer of the social security contributions of their employees aims, inter alia, at mitigating their (strict) liability from possible accidents at work. When, however, is it considered that the employer should not be assisted by EFKA?

    It is true that there has been a lot of debate in the legal world about the exact content of (required by law) employer misconduct. Could we assume that an employer intends(!) to have an accident happen to an employee?

    In one hand, the employer’s misconduct (and their full liability) only existed if the misconduct also covers the outcome of an accident at work. That is, in cases where the employer wanted or accepted as probable the harm of the employee.

    According to others, the concept of fraud in the aforementioned provision also refers to the case where the accident at work is causally linked to fraudulent breach by the employer of the laws, decrees and regulations providing for the mandatory measures for the protection of safety and health at work.

    In order to clarify the specific legal considerations, the legislator undertook the authoritative interpretation of this provision. And the result was not in favor of the employer.

    1.3. The (rather unlimited) expansion of employer liability

    (a) Article 212 of Law 4512/2018 provides:

    ‘The true meaning of Article 34 (2) of Law 1846/1951 (A’ 179) is that the employer is obliged to pay the expense provided for under:

    (i) paragraph 2 and the difference between the amount, according to the Civil Code, of the compensation and the insurance benefits provided for in point,

    (ii) of paragraph 2, where, by judicial decision, it is found that the accident, in the performance of, or on the occasion of, the work, is due to the act of the employer or the added person from them, or as a result of the accident itself or in non-compliance with the provisions of laws, decrees or regulations which define the safety and health measures at work, if the accident is causally linked to violations of these provisions.”

    (b) Simply put: It is possible (and of course extremely common) for a court to associate an accident at work with a breach of an obligation to take (mandatory as per the existing institutional framework) measures relating to the health and safety of workers. 

    In this case:

    (i) the employer is considered to have acted fraudulently and

    (ii) the employer is also liable for what EFKA was obliged to pay to the employee who suffered the accident or, in the event of their death, to their relatives.

     

    V. Regarding the extent of the liability and risks of the business

    The primary responsible for compensating the victim is, at least at first – according to law 1846/1951- both the business and EFKA.

    In the event accidents at work occur, the liability of the employer and the business is already extremely wide (above under III.1.3.a).

    Failure to comply (or failure to least imperfectly comply) with safety standards in an enterprise constitutes the necessary grounds for the full relieving of the EFKA of its obligations to the affected employee. What EFKA paid for it is then sought by the company. The insurance contributions paid by the employer on behalf of the employee do not appear, in this case, to ‘be worth something’ …

    Experience has also shown that it is extremely easy for any accident, in any business, to be attributed (and is easily attributed) to incomplete compliance with safety standards. This fact establishes the employer’s misconduct (!!!). And, as a consequence, the sole responsibility of the employer and the full exemption of EFKA from any liability before the affected employee.

     

    VI. In conclusion

    It is only natural that the modern legislator does not deal with accidents at work as they were doing so in ancient Greece. Let alone dealing with them by invoking (the inevitable) destiny.

    But the company’s liability regarding accidents at work has already become very broad. Possibly: unjustifiably broad.

    Compliance to safety standards is not sufficient on the part of the business. It is also mandatory to invoke and prove such compliance. A slightly differentiated view of the auditors appointed to the specific accident at work can lead to significant (possibly even disastrous) consequences for the business and the entrepreneur.

    What should be done? It is imperative not only to comply with the safety standards but also to be able to prove (full) compliance.

    Even more:

    Extremely careful management of (in any case, completely undesirable) accidents at work is absolutely crucial. Regardless of whether one believes (or does not believe) in “destiny” and “fate” one thing is certain: The (possibly extremely) adverse consequences of an accident at work can certainly be mitigated.

    The same goes for the consequences affecting the business.

    stavros-koumentakis

    Stavros Koumentakis
    Senior Partner

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (December 22nd, 2019).

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