Tag: labour law

Employment Contracts: What are they exactly?

Labor law seems to be all about “all or nothing”. On the basis of this principle, a contract either is or is not subject to the provisions and protection of Labor Law. In the first case, the employee enjoys the protection of Labor Law- in its entirety. In the second, Labor Law simply does not apply. It is therefore very important to know if a contract is subject to the provisions of Labor Law. And, of course, under what conditions. But things are neither simple nor clear. Rightly so, we would wonder (regarding Employment Contracts): What are they?

A small breach of the aforementioned “all or nothing” principle, the case of Managers and their own, limited, protection. But what about the rest?

The above topic seems completely theoretical but it is not at all. The (correct) assessment of a contract as an employment contract (or not) reduces the risks of the business. It creates legal certainty.

How important is it, for example, to be able to safely distinguish this form of contract from other contracts like it (indicatively: services and works contracts)? How important is it to be able to choose the right form of contract each time we enter into or re-approach a partnership? How many dangers could we avoid?

This issue does not concern, exclusively, those studying (labor) legal theory. Neither just us lawyers…

Prerequisite for the application of the provisions of the labor legislation

A condition for the application of the specific provisions is the provision of dependent work.

The concept of dependency is crucial. However, the legislator did not choose to define it: Definition of dependence and / or dependent work does not exist.

Various theories have attempted to fill this gap. Each of them seeks to be the criterion for the classification (or not) of a contract as an employment contract

Theories on what constitutes dependence

Many and most experts have written about theories on what is dependence. We will not attempt to record or look into them in detail. But it would not be possible, precisely because of their fundamental importance, not to mention them. Even briefly. Indicatively:

(a) The theory of financial dependence

Necessary but also the only criterion for dependence, according to the specific approach, is when the employee’s sole (or main) source of income comes from a specific job. Under this approach, the employee is required to devote all of his or her working time to the performance of his or her specific job.

In a broader sense, financial dependence is found when the one offering work is not in a place (financially or other) to utilize their own work or the work of others to their benefit. Therefore, they do not take the risk (business or financial) from carrying out the specific activity.

The theory of financial dependence is not a safe criterion for determining dependent work. It is considered by the jurisprudence as only an ancillary criterion for identifying dependence.

(b) The theory of functional or organic dependence

A decisive criterion, according to this theory, is the integration of the employee in the employer’s business. This integration is what makes the employee a functionally integrated element of the company.

This theory has also not prevailed in our country.

(c) The theory of legal dependence

This is a theory of French origin. This theory considers as a critical criterion of identifying dependency the provision of work under the direction, authority and supervision of another person, the employer. The latter has the right to monitor the implementation of their instructions.

This theory presents important similarities with that of personal dependence, which has been adopted as the prevailing theory by Greek jurisprudence. In fact, sometimes these two theories are identical.

(d) The theory of personal dependence & the managerial right of the employer

This particular theory is of German origin and the prevailing one in our country. According to this theory, the work provided under the direction and instructions of the employer is considered dependent. An important element of this theory is the managerial right.

The managerial right is defined as the power of the employer to determine, unilaterally, the terms of employment. Specifically, the place, the time and the way of providing the work.

The scope of the managerial right is determined and limited by hierarchically higher laws. In other words, the employer is entitled to set the terms of employment only when they are not already set by hierarchically superior rules of law.

In particular, it is settled case-law that “… a contract of employment exists when the parties intend to provide the agreed work and wages, regardless of the method of payment, and the employee is subject to legal and personal dependence on the employer. This dependence is manifested in the right of the latter to give binding instructions and directions to the employee, as to the manner, place and time of provision of the work and to exercise supervision and monitor to verify the employee’s compliance with them. ” (indicatively: Supreme Court 602/2017, 171/2016, 608/2014, Plenary Session of the Supreme Court 28/2005).

The inadequacy of dependency theories as a means of identifying employment contracts

The aforementioned theories on dependency have failed to clearly define the meaning of dependent work. In fact, the prevailing theory of personal dependence in our country is currently receiving strong criticism.

The evolution of technology is rapid. The possibilities that come with it are without limits. The needs that are formed are unprecedented. It seems only logical that flexible forms of employment are gaining ground, more by the day, over the classic full-time employment contracts. Especially after the recent, ten-year long, economic crisis in our country. And even more: due to the ongoing international and national economic crisis and recession due to the Covid-19 pandemic. This does complicate things even more.

In this, fluid and ever-changing environment in employment relationships, the managerial right of the employer as a means of identifying (or not) an employment contract is more often than ever found to be not enough. This fact, however, does not mean that any flexibility provided to the employee in terms of the place, manner and time of employment, deprives their work of the element of dependence.

There is another aspect worth mentioning

The quick adaptation of employees to the rapid evolution of technology, to which we have already referred, gives them a significant lead in evaluating the optimal way of providing their work. How certain is it that the employer knows better (than the young and tech-savvy employee) the best way to provide non-manual work? And how normal, after all, does it seem to give the employee considerable freedom in how to provide their work? And, in a logical sequence-in addition, in terms of the time and place of the offering of their services?

How important, after all, can the time, place and even the way of providing the work be for the characterization of a contract an employment contract?

Therefore, the limits of this type of contract become fluid. It is difficult to distinguish it from related contracts (services and works contracts, for example).

Additional signs of dependence

The weakness of dependency theories as a criterion for distinguishing employment contracts from related contracts is a given. Consequently, legal theory and/or case law need to take additional evidence into account. A clearer definition of the concept of dependency seems (and is) extremely important.

Among these indications, which advocate the existence of dependence, are, among others (indicatively: Court of Appeal of Athens 15/2008, Court of first Instance of Athens 372/2010, Supreme Court 1133/2012):

(a) The non-existence of an independent business organization of the employee,

(b) The (contingent) payment of operating expenses of the employee by the employer,

(c) The non-use of additional staff by the employee,

(d) The inability of the employee to develop a separate clientele and expand into new markets (formal vs real freedom of action),

(e) The employee does not take responsibility for the financial solvency of the customers,

(f) The assumption of business risk by the employer.

The various signs of dependence do not need to be cumulative. According to case-law, “… what distinguishes dependent work from independent work is not the quantitative element, that is, the accumulation of more evidence of commitment and dependence, but the qualitative element, that is, the particular quality of commitment and dependence which it has for the specific employee that make necessary the special regulation of their relationship with the employer and justify their special protection by the labor law ”(Plenary Session of the Supreme Court 28/2005).

Non-critical signs of dependence

On the other hand, and according to the majority of case law, there are indications that are not critical for the characterization of a contract as an employment contract. These indications may result in the terms of the employment contract deviating from those normally agreed. However, these terms do not appear to be “out of the ordinary” elements of employment contracts.

Among the evidence that are not critical, based on the theory of personal dependence, are:

(a) The duration of the obligation to provide work, (b) The provision of work as a primary or secondary occupation, (c) The amount of remuneration, (d) The manner of remuneration, (e) The type of work provided, (f) The development of an initiative (although its lack advocates the existence of an employment contract), (g) The tax regime and the issued (tax) document, (h) The social security status of the employee (indicatively: Supreme Court 460 / 1986, Court of Appeal of Patra 841/2007, Court of First Instance of Athens 372/2010, Supreme Court 71/2011,).

Executives, to whom we have already referred, are a typical example of employees whose employment provides several of the above indications, which deviate from the usual (even legal) terms of employment contracts. Executives are usually paid very high salaries. At the same time, they are not subject to specific working hours. Rather, they are developing (and should develop) important initiatives. In fact, their characterization as executives determines their clear differentiation from other employees. It places them closer to the employer. In fact, instead of the employer, they operate, exercising their powers both within the company (on the employees, for example) and in the relations and transactions of the company with third parties.

Is the most favorable solution for the employee truly a solution?

Given the difficulties that exist in distinguishing employment contracts and the adverse consequences of not including an employee in the protective provisions of Labor Law, part of case law argues that in cases of doubt the most favorable solution for the employee should be applied.

Indicatively: “In case of doubt, the court must give the most favorable solution for the employee, as required by the principles of Labor Law and with the corresponding application of article 2 of Law 1846/51, according to which it is difficult to distinguish dependent or non-dependent work of a person, this is considered to be covered by turning to the most secure solution, ie that they provide dependent work. ” (indicatively: Court of Appeal of Patra 841/2007).

Let us move away from theories: in reality…

As mentioned in the introduction, understanding that a contract is an employment contract is always valuable. The need to reduce business risk is significant. The need for the company not to take legal risks is even more important.

But what does all this (unfortunately) “fine print” mean for the business?

As for the same subject-seen from another angle:

What should be the choices of the business and what of its legal representative?

Given the current (legislative, jurisprudential and theoretical) data, we must, with excessive care, each time evaluate the legal framework whithin which we (choose to) enter into a contract.

Particular care should be taken to capture in the contractual text the critical elements that conceptually differentiate any type of contract (eg services or works contract) from an employment contract -provided of course we choose to do so.

Dependency theories for characterizing an employment contract as such have already proved inadequate. Developments in labor relations attempt, in vain, to follow the rapid, on a continuous basis, developments in technology. The speed of both intensifies, more and more, the inadequacy of dependency theories.

The recent pandemic has given a further boost to flexible forms of employment. It put “informal” forms of work on the lead. Teleworking is probably the most typical example. It is a given, already, that it is not possible to talk about the future, when, exhausted, we try to catch up with the present.

The managerial right, shaped around the Ford production model (: production line, homogeneous workforce, simple and repetitive movements that serve mass production), already seems obsolete.

It is therefore necessary to expand the conceptual elements of the managerial right.

Even clearer is the need for a clearer demarcation of employment contracts, taking into account the present and the (foreseeable) future.

Until then;

It is necessary to (very carefully) manage the relationships that are specific to employment contracts.

Both on a substantive level and on a level of the relevant contractual texts.

But especially in the relevant contracts.-

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.

June 28, 2020
Executives (and their “bras de fer” match with the business)

I. Preamble

Bras de fer (:”iron arm”) is the well-known game of muscle power (arm wrestling). Two opponents rest their elbows on a horizontal surface (eg a table) and hold each other’s palms. The winner is the one who manages to bend their opponent’s arm outwards.

It is a game of power. The strongest wins. The one who has an arm (: bras) of iron (: de fer). External help is out of the question.

What if we, hypothetically, considered that an employer and employee played this game?

II. The inequality (?) in employment relationships and labor law

The employment relationship is (said to be) an unequal relationship. This is because, as a rule, it is the employer who (seemingly) has the power. They are, after all, empowered to give orders to their employees. Particularly with regard to the place, manner and time that work will be provided.

This unequal relationship is offset by labor law. Its provisions are highly protective of employees. They also provide for serious barriers to the freedom of contract. Their main concern is to protect employees and prevent their financial exploitation.

The protection of employees is dictated by the (essentially) inability of the employee to operate on an equal footing with their employer and to adequately defend their rights.

Therefore, in a possible “bras de fer” employer-employee match, labor law acts as “outside help” for the latter. This is despite the fact that the employer carries, undiminished, the business risk. And of course, the relevant (potentially) adverse consequences that go with it.

III. Executives and labor legislation

But what is the role of labor law for that category of employees who are not in a position comparable to others? For those whose duties are similar to those of their employers? For those who are heavily involved in the formulation of business strategy and policy? For those whose position is not so disadvantaged compared to their employers?

It is reasonable to assume that these employees have a good bargaining power. How can they, on top of that, satisfactorily safeguard their rights?

This is the category of employees designated as “executives”. For the executives, labor law reserves only limited protection.

But it is precisely the restriction (by law) of the protection of this category of employees that renders the careful characterization of an employee as an executive necessary.

IV. The designation of an employee as an executive

1. The legislative “introduction” of the concept of executive

The restriction of the protection of executives is not recent. And it does not apply just in Greece. The 1919 Washington International Labor Convention “On the Restriction of Working Hours in Industries and Enterprises” introduced the restrictions. This Convention was ratified by Law 2269/1920. It takes precedence over any other provision of law (Article 28 (1) of the Constitution).

The Washington International Labor Convention regulates the work time limits (Article 1). However, it excludes from its scope persons who hold “… a supervisory or managerial position, or a position of trust” (Article 2.a’).

This wording is extremely broad. In addition, the structure that businesses now have (turnover expansion, business groups, etc.) is creating more and more supervisory, managerial positions and positions of trust, which are filled by employees. A literal (and most likely fair) interpretation would lead to a large number of employees being exempt from the protective provisions of labor law. The relevant limits for its application are, however, interpreted by case-law.

2. The jurisprudential definition / restriction of the concept of executives

The jurisprudence of the Greek courts has already defined (and also restricted) the concept of executives. It could be said that it is now widely accepted that “…persons having a supervisory or managerial position or a position of trust are those who, because they are highly qualified or trusted by the employer, are entrusted with the duties of a general manager of the business or of a sector of the business, as well as staff supervision, so that they not only have a decisive influence on the direction and development of the company, but are also clearly distinguished from other employees because they exercise employer rights to a large extent, including the recruitment or dismissal of employees, the undertaking of criminal liability relating to possible non-compliance within the business with laws that protect the employees and making important decisions that affect the pursuing of the goals of the employer, and who are usually remunerated by salaries far exceeding the minimum wage or the remuneration paid to other employees.” (indicatively: SC 249/2019, SC 1467/2012, SC 74/2011, Court of Appeal of Piraeus 480/2015).

Thus, according to the assumptions of the Greek courts, the prerequisites for one qualifying as a manager (and inherent to the concept) are:

(a) The exercise of managerial duties that are essential to the very existence of the business. Alternatively (or cumulatively) the occupation by the employee of a highly confidential, executive or advisory position in key areas due to their “…high qualifications and special skills of high education and specialization” (Court of Appeal of Piraeus 480/2015).

(b) To possess significant initiative when exercising their duties and to freely exercise strategic decision-making, to be capable of influencing the future and evolution of the business.

3. Particular indications for the designation of an employee as an executive

Courts, (including the Supreme Court), take into account other (in addition to the above-mentioned, under 2) indications, in order to accept that an employee is an executive. These indications can be summarized as follows:

(a) The amount of remuneration

The remuneration of executives must be particularly high. There are no absolute approaches (and there, of course, could not be any). The comparison measure (must) be twofold: (i) the minimum legal salary of the post in question and (ii) the remuneration of other employees in the company concerned. Particularly high salaries do not always lead, in an inevitable consequence, to an employee being classified as an executive. Especially when those high salaries are associated with the employee’s long experience and several years of prior professional experience (SC 1148/2017, SC 747/2007).

From another point of view, however: It is not possible to be an executive and not receive a high salary. This element cannot be missing when designating an employee as an executive. It is assumed that the substantially increased earnings balance out the highly increased obligations of the employee. And of course, the limited protection under labor legislation.

(b) The exercise of employer powers over other employees.

Executives shall be entitled to exercise employer powers. The executive shall exercise them in a manner an employer would. A typical example of such power (but not always of crucial importance) is the ability of the employee to freely decide on the recruitment and dismissal of other employees (SC 1148/2017).

(c) No control over the time frames during which the job is provided

An indication that an employee is an executive is their independence in terms of the time they provide their job. Also, that they do not have specific working hours (SC 1467/2012).

(d) Granting the employer’s power of attorney in dealing with third parties

This indication, though worth mentioning, is of limited relevance to the assessment in case-law.

(e) The undertaking of criminal or civil liability on behalf of the employer in connection with violations of labor law

In this case, however, the Court has to check whether these responsibilities are inherent in the position of the employee or whether they are merely a transfer of the employer’s responsibility (SC 74/2011).

The above indications [under (a) to (e)] need not be cumulative in order for an employee to be an executive. It is important to note, however, that the employer-employee agreement on the latter having the title of an executive is irrelevant. The concept of an executive’s role “… is defined on the basis of objective criteria of good faith and common experience and logic by the nature and type of services that are considered as a whole, as well as by the particular relationship of the one providing the work and the employer, as well as the other employees.” (Indicatively SC 935/2017, SC 74/2011).

V. The consequences of an employee being designated as an executive

1. Legislative and jurisprudential consequences

Special attention is paid, as already mentioned, to the designation of an executive. This attention is drawn because of the legal consequences of this designation. Among them, the non-submission of executives to protective provisions of labor law. The exceptions to these provisions are either expressly provided for in law or have been formulated by case law.We have already seen (under IV.1 above) that the legislature explicitly exempts managing officers from specific legislative provisions. Specifically those relating to working time limits, night work, Sundays or other rest days. Executives, in this context, are not entitled to additional remuneration or compensation for overtime – legal or not (SC 74/2011).

Case law, however, has extended the above exceptions. In particular, it includes further provisions of labor law. It further rules out the application to the executives of the provisions of:

(a) the remuneration for extra work (CC 659- SC 1029/1980);

(b) the granting of leave and holiday allowance (SC 1047/2007, Court of Appeal of Dodecanese 79/2008) and

(c) the payment of additional compensation for overnight stay (SC 968/2002).

2. The justified (or not?) exemption from provisions of labor law

It is justified to exclude executives from the provisions on working time limits. To be more precise: it is mandatory. The executive cannot be subject to time restriction controls as they do not have specific working hours. And how could that be implemented otherwise? Their increased responsibilities often require longer working hours than other employees. As a result, the provisions on time limits become incompatible with the position of an executive. Compensation for long-term work, however, is significantly higher than other employees.

However, case-law does not recognize to the executives the right to leave. The relative (established) position of case-law is criticized by legal theory as being wrong, on the basis that it is contrary to both national and Union law. The relevant arguments are based on three pillars – legislations.

In particular, Law 539/1945 “On the granting of regular paid leave”, although it provides for exceptions to its provisions (Article 1 par.3), does not exclude executives.

In addition, the EU, via the Directive 2003/88 (which replaced Directive 93/104), guarantees the right to paid leave for all employees who provide work, without excluding executives.

Lastly, International Labor Convention No. 52 (which deals with employees’ leave and was ratified by Law 2081/1952) does not include in its exemptions the executives from the right to take leave (Article 1 par.3).

Notwithstanding the foregoing, there does not appear to be a change in case law on the relevant exception.

3. Executive officers and trade unions

There is a question of incompatibility with the position of an executive and the involvement in trade unions.

Law 1264/1982 explicitly prohibits employers from joining employees’ trade unions (Article 14 par.3). The purpose of this prohibition is the independence and free development of employees’ trade unions, without being hindered by the employer. Based on this point of view, part of the theory argues that the legislative ban should also cover executives. The argument in favor of this view is that managers exercise employer powers while at the same time their interests overlap with those of employers. Consequently, they cannot engage with other employees as long as they serve the interests of their employer.

However, in case-law the opposite oppinion prevails. In particular, it has been held that there is no prohibition on the participation of an executive in the company’s employees’ union, “… because the provision of Article 14 par. 3 of Law 1264/1982 prohibits the participation in trade unions only of employers and not of executives.” (CA 561/2007).

4. Continuing to include executives in the category of employees

In any event, the executive shall not cease to be an employee. Despite their increased (employer) powers and / or despite them having a highly confidential position, they still are employed. As a consequence, the attribution to them of the title and duties of an executive does not entirely deprive them of the protection of labor law. This protection is limited, not eliminated.

However, the executive still enjoys considerable safeguarding of their labor rights. In particular, the provisions of the law of relating to the termination, collective redundancies and transfer of business apply to them as well. That is, they are entitled to redundancy compensation and a number of other benefits as well as additional holiday pay (unless otherwise agreed, SC 178/2008).

VI. In conclusion

In the (theoretical) bras de fer between employer and employee the result is rather clear. At a first glance, the relationship seems uneven.

But it is not the same when an employer and an executive are competing. Accordingly, the protection of the latter by the provisions of labor law is reasonably limited. However, the limits of their protection are essentially laid down by case law. Sometimes even against (or beyond) the law. This, of course, creates legal uncertainty. Both for executives and for businesses.

Adequate legislation regarding the rights of both (executive-business) is therefore desirable.

And if such legislation is desirable, there is another legislative intervention that is necessary. And that is one that would lay down the conditions (with the least possible subjective elements) under which an employee as an executive.Until then, adequate (but also necessary) contractual arrangements between the employer and the executive will be of particular importance. We have already seen the importance of concluding written contracts with the right content for common employees. However, when employing executives, it is essential to conclude appropriate written employment contracts. Both for the executives and, above all, for the businesses that make use of their services.

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (March 15th, 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.

March 15, 2020
Standby Contracts

Standby Contracts: Blessing or a curse?

I. Preamble

Numerous companies are called upon to satisfy drastically changing needs. Sometimes, those needs are emerging as a result of circumstances no one could predict. It is, of course, not possible for a business to employ a significant, at times, number of employees just because “maybe, at some point, some of them may be necessary”. The costs involved would be unbearable. And, consequently, deterrent.

A suitable solution for such businesses (and such cases) are the so called “standby contracts”. The business-employer agrees with specific employees that the latter will be available and ready to offer their work. As long as the relevant need arises. (Of course) For a fee.

Standby contracts are an institution that, unfortunately, is not provided for by law. But how does case-law approach this institution?

II. The concept of employment

“In the beginning was…” (one could argue) the concept of employment, under labor law. And that one would have a strong argument. The existence of employment is a prerequisite for the application of the provisions of labor law.

The importance of the concept of employment is fundamental. We have yet to manage, however, to agree on how employment is determined. Or, to take it a bit further, to include in a legal text a (commonly accepted) definition of it. The distinction of an employment contract from contracts and concepts close to it often proves very difficult.

Theories on what constitutes employment vary and are constantly changing. And what is changing as well is what case-law considers as criteria for identifying employment. The Supreme Court has found that: “for the purposes of the application of the provisions of labor law, employment shall normally mean the provision of the employee’s intellectual or physical activity, which is carried out under the control of the employer and is intended to achieve an economic result”.. This assumption may, however, give rise to the misconception that employment requires the positive action of the employee in order to be understood as such. However, the Supreme Court makes clear, that “… there is an employment relationship even when simply the freedom of the employee is restricted, when the latter undertakes the obligation to be standby and ready to offer their work, when this is required by the employer”. (indicatively SC 814/2014).

It is settled case-law that one’s readiness for work is a form of employment. Standby contracts, however, are not provided for by law. The results of this particular regulatory gap is the difficulties in defining employment and its various forms. Most importantly: the uncertainty and ambiguity around the rules that govern it.

III. The forms of a standby contract

1. In general

Case-law distinguishes two basic forms of a standby contract:

(a) actual standby contract and

(b) non-actual standby contract (mere or on call).

The criterion for this distinction is the degree to which the employee is standby.

Case-law has found in some cases that there are “intermediate standby stages”. These are contracts found between the two aforementioned categories. Contracts that are entered into in the context of the freedom of contract (CC 361) and are characterized by the intensity of the alertness required from the employee (indicatively: SC 110/2014, SC 8114/2014, SC 70/2010).

It is for the competent Court to determine the degree to which an employee is standby at any given point. Also, the degree to which an employee is required to be alert. Depending on the ruling of the court, the standby contract will fall into one of the two basic categories mentioned above.

2. Actual standby contracts

When actually standby, the employee must:

(a) Be for a specific period at a predetermined location (in the business or outside of it) and

(b) Maintain their mental and physical alertness so as to be able to offer their services the moment the employer or circumstances so require.

That is, it is not a simple restriction of the employee’s freedom. The employee, when actually standby, is required to, simultaneously, constantly be alert and available to the employer. And do so for the time predetermined by the employer.

3. Non-actual standby contract

In cases of non-actual standby contracts, the employee is obliged to (only) partially limit their freedom of movement for the employer. Ultimate goal; the employee’s availability and ability to offer their work at any time. In non-actual standby contracts, the employee also retains the ability to rest or be away from the workplace. The employee is even entitled to engage in other (irrelevant) occupations. That is to say, they are not required to be physically and spiritually alert. In these cases, we are talking about mere or on call standby.

The Greek law does not distinguish the meaning of mere or on call standby. It puts them, as a whole, in the broader category of non-actual standby.

In contrast, the Court of Justice of the European Union considers this distinction to be significant (from merely being standby to being on call). Indeed, in both cases, the employee does not have to be constantly alert. The differences, however, between these two categories of standby is not without significance.

The difference between the two, lies on whether or not a restriction is imposed by the employer on the employee on where they can be (on top of the time restriction).

In particular, in cases of mere standby duty, the employee is not entitled to be away from the workplace, which is determined by the employer.

On the other hand, when the employee is on call, they freely choose where they will be. One necessary condition: to be reachable at all times. That is, the employee must ensure that, should the employer call them, they will be able to provide, within reasonable time, their work (indicatively.: Case C-151/02 (Jaeger)).

IV. The legal importance of distinguishing between actual and non-actual standby contracts

1. Regarding the application (or not) of the provisions of labor law

The distinction of the various types of standby contracts made by Greek case-law is not without significance. This is because each type is approached differently.

In particular, the actual standby contract is fully equated with “normal” work (work offered when an employee takes some positive action) in the eyes of the law. And this, regardless of if the employee will, at the end, be required to provide their work or not. Therefore, all provisions of labor law apply in this case.

On the other hand, a non-actual standby contract is treated by Greek case-law as a peculiar form of work. This is why it does not fall within the regulatory scope of all the provisions of labor law.

2. Regarding the remuneration of employees

The importance of the above distinction (actual/non-actual) is highlighted when dealing with the issue of the salaries owed.

In particular:

(a) In cases when an employee is actually standby, case-law applies, with no exception, all the provisions of labor law regarding the salaries owed. Specifically: the minimum wage limits and increases. Also, the allowances for night and overtime work. Finally, the increments related to work provided on Sundays, holidays or rest days.

(b) In the case of non-actual standby contracts, however, such treatment (as the one described under a) is not reserved. Case-law exempts non-actual standby contracts from the protective provisions of labor law with regards to the minimum wages provided for by Collective Agreements. Also, from the surcharges and compensation due for overtime and night work. Lastly, from the increments related to work provided on Sundays and other public holidays.

The specific exemptions mentioned above do not, however, mean that the employee concerned (being on non-actual standby duty) is not entitled to a remuneration for the restriction of their freedom. According to Greek case law, the remuneration to be paid to this employee is contractually agreed (between the employer and the employee). However, the remuneration agreed may be lower (or substantially lower) than the statutory minimum wage. In the event, however, that the salary is not contractually agreed upon, the ‘ordinary’ salary (653 CC) is paid. And ordinary wages may, in fact, be lower than the legal minimum wage.

It is a fact that in case of a non-actual standby contract, a great number of protective provisions regarding the remuneration of the employees do not apply. However, case-law accepts, in these cases, that the provisions regarding the holidays, holiday and leave pay, do still apply. And that so do the provisions regarding the termination of employment contracts and the dismissal compensation owed.

3. Regarding the working time limits

3.1. The establishment of maximum working time

One of the main concerns of the protective provisions of labor law is the protection of the health of the employee. This objective is achieved, inter alia, by the establishment of maximum permissible working time limits. This aims to: (a) prevent the exploitation of the employee’s financial need for work; and (b) ensure a reasonable time for rest and participation in social life.

3.2. The connection between the maximum working time and actual standby duty.

From the aforementioned, it becomes clear that the provisions setting time limits fully apply to the actual standby contract.

However, the same is not true of the non-actual standby contract. Case-law does not accept the application of the relevant provisions in this type of employment contract. We are therefore led to the conclusion that the employer could agree with an employee (who is on non-actual standby duty), the latter’s availability to provide work around the clock.

However, this extreme assumption is obstructed by EU law.

3.3. The connection of mere standby duty with EU law

Mere standby duty is connected with EU law via the adoption of three Directives, regulating the organization of working time. These are: (a) Directive 93/104/EC, which has been transposed into Greek law by P.D. 88/1999 (B) Directive 2000/34/EC, which amended Directive 93/104 and transposed it into Greek law by P.D. 76/2005, and lastly (c) Directive 2003/88/EC, which codified the provisions of the two previous Directives.

EU law, therefore, provides for maximum working time limits. It requires, at the same time, that the employee be provided with at least eleven (11) consecutive hours of rest within 24 hours. Directive 93/104/EC distinguishes time between ‘working time’ and ‘rest time’. These two concepts are mutually exclusive.

The ECJ accepts that working time is the time during which the employee is at work, at the disposal of their employer, and perform their duties in accordance with national laws or practices.

3.4. The time while the employee is on call is not considered working time

Moreover, the ECJ consistently held that the time while on mere standby is working time. On the basis of this assumption, protective provisions setting working time limits apply in these cases (of mere standby). Indeed, at this point the distinction of the ECJ between the concepts of mere standby and standby on call (as discussed under III.3) is essential. This is because the latter is treated differently by law.

In particular, the ECJ does not consider as a working time the time the employee is on call. In such cases, working time starts when the employee receives a call to provide the agreed work. The end of the working time coincides with the completion of the assigned task. As a consequence, only for this period (start-end) the working time limits apply.

3.5. Deviations from working time limits

The needs of a business may, provided the employee agrees, lead to deviations from the maximum working time (Article 17 of Directive 93/104). Some of those deviations will mostly occur under actual or, mainly, mere standby. However, in such cases it is mandatory, in accordance with the ECJ, to provide the employees concerned with equivalent periods of compensatory rest at intervals, immediately following the corresponding working time. In addition, such a reduction in the daily rest period should not result in exceeding the maximum weekly working hours.

V. Technology and standby

The employee’s continued availability/standby by utilizing/using digital technology should be equated with on call duty. A readiness to provide work that is practically possible through a laptop, a tablet and even the employee’s smartphone.

The employee is at the disposal of their employer (only theoretically?) on a continuous basis. The employee can, and is no longer unusual, undertake and perform a task that does not require their physical presence.

It is obvious that reading a professional e-mail could be seen as tantamount to interfering with the employee’s private life and time. And it can happen at any time. Off-hours included. So, combining digital technology with the non-application of legal work time limits regarding the on call standby duty is problematic. This is because it may deprive the employee, at least in part, of their right to rest.

VI. In conclusion

Standby contracts for specific activities, sectors and businesses are, undisputedly, a real and present need. Many businesses are adopting standby contracts and they have seen positive results because of them. And those contracts also have satisfactory (and often desirable) results for employees.

So, there can be no doubt that the existence of standby contracts is absolutely necessary.

The legality of this conclusion is not in dispute. Their regulatory framework, however, is only determined by case law. Unfortunately, there is no relevant legislation. This inevitably results in legal uncertainty. Of course, for employees as well. But especially for businesses.

The involvement of the legislator proves necessary. After all, it is the legislator who is able to make the necessary adjustments.

The basis for a legislation on standby contracts should be based on: (a) the particular circumstances of particular sectors and businesses, (b) their increased need to have employees on standby at specific times and/or for specific activities and (c) the potential of digital technology and the reality that it shapes.

The relevant legislative intervention is not a luxury.

It is simply an undue need.

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (March 8th, 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.

March 8, 2020
Businesses may continuously operate, but Employees cannot

Businesses may continuously operate, but Employees cannot: The misunderstanding around the institution of industrial enterprises that may continuously operate

I. Preamble

Recent public statements by the government regarding the operation of businesses for seven days a week have kicked off a relevant public debate. It seems that on the one side are the defenders of the liberal market, while on the other the defenders of labor rights. The latter are of the opinion that such arrangements violate acquired rights. Although it is an undisputed fact (see the inactivation of Collective Agreements) that labor rights shrank during the decade of the Greek crisis, this institution is not one such example. Its essentially was first introduced with a presidential decree issued during the 1932 Government of Eleftherios Venizelos.

It is valuable to form an opinion on the subject so that we can clearly understand and distinguish the concept of “work” from the concept of “continuous operation”. Also, to objectively assess the value of this measure for both the employer and the employee, in the present social and economic circumstances.

II. The legislative provision for the nature of “continuous operation” enterprises

Article 2 of Presidential Decree 27.6 / 4.7.1932 codifies the provisions regulating working time limits. Employees of industrial and craft undertakings shall not, under this provision, work for more than eight hours per day and forty-eight hours per week. Article 1 §2 of the same regulation states that factories or parts of factories are classify as “continuous operation” if the daily working time of the employees exceeds ten (10) hours.

III. The rotating employees shift system

In businesses which are by default continuous operation businesses, the staff works in rotating shifts. This is in order to ensure the continued operation of the business throughout the seven-day or six-day week. The continuous operation of a business requires a differentiated modus operandi and entails changes in the timing and manner of work of the employees of the business. Employees have a say in whether or not they participate in working conditions that suddenly (and beyond the original agreement) go beyond what is common. Specific rules were laid down by law, to limit the unpleasant consequences and burden of this type of work (especially of the work offered at night) on the life of the employees.

IV. Balancing overtime and the special circumstances.

1. Average working hours in more weeks

The eight-hour working hours per day limit, applicable to each employee, may be exceeded as long as the working hours are not more than fifty-six (56) per week. And that is, provided that the average working hours of the weekly working time do not exceed forty (40) hours per week on average, calculated in eight (8) weeks. Subsequently, overtime for employees under this scheme is calculated by offsetting the working hours throughout the eight-week period.

2. Provision for night employees shift

In addition, provision should be made, so that employees covering night shifts for one week will cover day shifts the following week.

3. Provision for weekly holidays

Finally, it is necessary to ensure: (a) that employees who work on Sundays are required to rest on another day of the week, and (b) that once every three weeks it is mandatory that the employees will have Sunday as a rest day, along with the preceding or following day.

V. Conditional extension of the regulation to undertakings not considered to be of “continuous operation”

1. The rotating working groups (shifts)

According to Article 7 of the Presidential Decree 27.6 / 4.7.1932, when it comes to employees working in shifts, the working hours may be extended to exceed eight hours a day and forty-eight hours per week on average, calculated in three weeks. The weekly average should not exceed 8 hours per day and 48 hours per week.

2. Continuous operation of the whole business or of parts of it, in businesses not considered to be of “continuous operation” by default

Pursuant to article 40 of Law 1892/1990, businesses and holdings which are not by their nature continuous, may operate continuously in whole or in part, with a system of alternating working groups. Necessary conditions: (a) the consent of the employee working in shifts and (b) compliance with all the above-mentioned conditions.

3. The extra employees shift of the weekend

Undertakings which are not of “continuous operation” by default, may, if necessary, operate as a whole (or in part) continuously over the weekend as well, even if its employees are not consenting to the business operating seven days a week.

In this case, the employer will be required to employ a new, independent group of employees, which will work two additional days a week. Specifically, the additional staff “weekend team” will work twelve hours each day of the weekend, during a given weekend. The remuneration of this group of staff for these twenty-four hours is equal to the remuneration of employees for a forty hour – five-day week. Of course, the exceptional days for that particular, additional, staff are not counted as such.

The above is also clarified in Opinion 97/2009 of the State Legal Council, which states that even if there is a Collective Agreement in place that provides for a five-day workday for employees of a particular specialty, it does not contravene the provisions of article 40 of Law 1892 / 11990. This is because a five-day week in no way negates or at least affects the possibility of six-day or even seven-day operation, with the creation of the fourth employees shift.

VI. In conclusion

By combining the above provisions, we realize that companies whose character justifies their continued operation or are in need to extend their operations partially or even in whole, can operate with shifts. In particular, subject to the conditions of employment protection provided for by law, companies licensed by the relevant Labor Inspectorate, and with appropriate legal advice to familiarize with the provisions and formulate and apply the right rules, can operate with shifts.

As a result, it is possible, under legal and legitimate conditions, for a company to “work” twenty-four hours a day and seven days a week with its employees working eight hours a day and five days a week!

Petrini Naidou
Senior Associate

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

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

March 1, 2020
Employment contracts: The necessary content

The (rather necessary) content of the employment contract

I. Preamble

“I keep your words painted on paper …”, Marinella, a famous Greek singer, has been singing since 1970. She was probably not referring to written agreements. However, the commitments deriving from written texts are definitely binding. So says the Roman quote: “Verba volant, scripta manent” (: “talks fly away, written words stay put”).

We have seen in a previous article that it is not generally necessary to conclude employment contracts in written.

However, we concluded that: “The (written) employment contract, though optional, can prove valuable. As long as it has the right content. ”

This article will address the (possible) necessity of written employment contracts. As well as their (desirable) content.

II. The purpose of (written) employment contracts

The aforementioned article was the comparative overview of the employment contract in relation to the disclosure of its essential terms, which derives from the P.D. 156/1994.

There we found, inter alia: “But the purpose of the employment contract is significantly broader and more important. And this is the case despite it not (always) being mandatory – as opposed to the individual working conditions disclosure document. The contract regulates (and should regulate) all the rules governing the employment relationship. Not just the essentials.

First of all, it may achieve the purpose of informing on the essential terms and thereby nullify the reason for the existence of the separate document. In addition, it can be an important tool in the hands of the employer with regard to all the terms and conditions of the employment relationship. The employment contract may place the employment relationship in a predetermined framework. It may preventively address a multitude of issues. It may act as a deterrent for actions which may result in litigation between the parties.”

Therefore: The conclusion of (written) employment contracts, although not obligatory, is nevertheless very important – if not necessary.

III. Regarding the structure and content of the employment contract:

1. The structure

The structure of employment contracts must serve, in addition to its content, the above (under II) purposes and goals.

There may be two main sections. The first should refer to the specific information of each employment relationship (eg employee name, duration, etc.). The second is the uniform, for all employees, contractual arrangements. In this second section, it is important that no unauthorized person intervenes.

2. The content of the employment contract

The content of the employment contract may be, where appropriate, extremely broad or focused on particular issues. But it is important that it covers all the specific needs of the each business. It may include, indicatively, provisions concerning:

2.1. The duties

The duties of the employee need not be described in full detail in the employment contract. This is because they are essentially defined by the employer in the context of their managerial right. The employment contract is, moreover, an ongoing legal relationship. The needs of the employer are likely to change over time. Therefore, strict demarcation of employee duties is not only undesirable. It often turns out to be impossible. It is essential, however, that the employer has reserved the right to move freely within a predetermined framework.

2.2. Place of the performance of work

Businesses may have local or supra-local activity. It is not advised that they limit themselves, in one case or another, regarding the place where their employee’s services should be provided. Greek case-law gives some directions for when dealing with this particular issue: An entire geographical area, regardless of its size, can be agreed upon as the place of work of the employee. Even the whole of Greek territory – though this is dictated by the type and nature of the work provided.

2.3. Providing services to a Business Group

It is not uncommon for employees hired and paid by a company that is a member of a Group to (also) work for other “sister” companies. This practice created a problem, the content and solution of which we have already discussed in a previous article: (Employing employees in multiple companies in the same group: a chronic problem found its solution). We referred there to the Supreme Court’s Decision No. 10/2018, which held that: “… on a group of companies having common financial interests, even where the employee’s employment contract was drawn up with one of the group companies and their work is offered to other companies in the same group, the company which hired the employee remains their employer, and it is it which exercises managerial powers over the employee’s work and is responsible for the payment of all their remuneration.”

This assumption turns out to be extremely important for company groups. The reason? The companies that make up the Group will be able to “employ” “sister” company employees. This is without exposing them to legal risks against these employees and / or the state. Also, without the employee being entitled to object to providing their services to other companies in the same Group. This discretion, however, presupposes appropriate contractual arrangements, so that its content, that is positive for the Group, does not end up exposing them to risks.

2.4. Duration of the contract

The employment relationship is agreed as fixed-term or for an indefinite period. The employment contract must, therefore, regulate matters concerning its termination, either if it is fixed-term or indefinite. More specifically and by way of indication, a fixed-term contract should provide for the possibility of premature termination (and without the invocation of a valid reason) by applying, at the same time, the applicable law on termination compensation for indefinite-term employment contracts (Article 40 of Law 3986/2011). Provisions should accordingly be made with regard to the part-time employment contracts. It is reasonable, for example, to provide a notice period, after which the employee will be entitled to leave his / her job (subject, of course, to the existing legal framework). Also, a number of other issues related to the employee resigning.

2.5. Duration / working hours

The maximum working time limits are set on a daily and weekly basis. These are set by law and may not be provided for restrictively in the employment contract. Unless we are talking about part time work or rotational work.

2.6. Earnings:

The employer and the employee are, in principle, free to agree on the salary to be paid. However, they are bound by the thresholds set by the existing institutional framework. This is, in this case, the “legal salary”. The agreed upon salary may be higher than the legal salary. In employment contracts, it is possible (in this case) to agree that the excess of the agreed upon salary (in relation to the legal) will cover overtime pay, work provided on a Saturday, Sunday or public holidays as well as night work.

2.7. Voluntary benefits

These are voluntary benefits, in cash or in kind, offered voluntarily by the employer, without them being bound to provide them by law or contract. The employment contract must provide for an express freedom of the employer to offer such benefits. Otherwise, if they offer them for a long time, they run the risk of creating a precedent. The result of which? Creating an obligation for the employer to offer them in perpetuity.

2.8. Employee Obligations:

The main obligation of the employee is to provide the agreed work (article 648 Civil Code). However, in the context of the employment relationship, the employee assumes a number of other obligations. What we call “ancillary”. These obligations include, but are not limited to: the obligation of employee loyalty, the obligation for obedience, confidentiality, information, to undergo medical examinations. Also the (contingent) obligations to not act in a competitive manner and to not enter into parallel employment. Indeed, in some exceptional cases (and depending on the nature of the work provided), the employee may also be bound to act (or not act) in a certain manner even outside of the context of their work. Failure to comply with the ancillary obligations may result in the employer terminating the employment contract. Therefore, such obligations are reasonable (and possibly mandatory) to be included in employment contracts.

2.9. Protection of Personal Data – GDPR:

Given the mandatory application of EU General Data Protection Regulation 679/2016 (GDPR), businesses (among others) have to comply with the requirements of the Regulation regarding the protection of personal data which is processed as a result of their activity. In a logical sequence, each of their employees must comply as well. Compliance with the relevant obligations is clearly the responsibility of the company concerned. The latter, as an employer, must – inter alia – explicitly inform its employees of its “Privacy Policy. Also, it must provide them with clear and detailed instructions on how they should process the Personal Data to which they gain access when providing their work. The fines imposed by the Regulation on those who violate it are extremely high. Written proof that the company has provided instructions to its employees regarding the processing of personal data is required. The written indication of their obligations and the consequences of any violations. All this either as an annex to existing contracts or as a new part of contracts to be concluded.

2.10. Confidentiality

An important challenge that all businesses face is that of ensuring that their confidential information is protected as such. Especially that they will not leack to the competition. This safeguard seems to be one of the important prerequisites for most business’s development. As we have already pointed out in a previous article (Companies and Confidentiality), it is of major importance that employment contracts provide for arrangements for limiting the use of confidential information to which employees gain access when providing their work. Of major importance is also: to provide for the obligations of employees during a specific period after the termination of their employment (eg return of forms, documents, notes, deletion or return of electronic files). Even more so: to provide for penalties for breach of their relevant (contractual and post-contractual) obligations (usually high penalties – in addition to general compensation claims).

2.11. Patents

It is vital for businesses to be able to protect their commercial as well as technical know-how. Often employees, in order to provide their work, have to gain access and use their employer’s know how. But such information may be the quintessence of a business’ business. It must, consequently, ensure their protection. An enterprise has the right, (as well) through the employment contract, to impose restrictions on those employees who become have access to such information. And to also impose sanctions (eg high penalties for violations). This is achieved through contractual provisions concerning the duration of the employment relationship (contractual terms) and also the period following its termination (post-contractual terms).

IV. In conclusion

Numerous large companies in our country, with numerous employees, do not have written employment contracts. They mistakenly believe that disclosing the essential terms of the employment relationship is sufficient. Even worse: that it provides adequate guarantees.

But it is more than obvious that writing (and pre-emptively) arranging a significant number of work-related issues can be valuable to the business.

Not just useful.

Sometimes it is absolutely necessary for its survival and development.

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 16th, 2020).

February 16, 2020
Employment Contract=Disclosure of its Essential Terms
Employment Contract = Written Disclosure of its Essential Terms (urban myth or not?)

I. Preamble:

“A hare’s eyes cannot see as well as an owl’s can.” A proverb used in Greece to indicate that not all things are the same. Not all have the same value.

This is how life is.

The same goes when dealing with employment relationships.

It is widely held that the employment contract is identical to the written disclosure of essential terms of the employment relationship. Even in the HR departments of big corporations.

But is this position correct?

Or is it a general misunderstanding?

II. In General: The principle of the “informality” of contracts

It is generally not a prerequisite in our legal order for a contract to be in written, in order for it to be valid.

Our Civil Code (Article 158 of the Civil Code) states the relevant rule: Specific formalities are only required where the law specifically requires them. This is the so-called “principle of informal transactions”.

This principle (rule) is proven by the existence of exceptions. There are exceptions in cases where formalities are required by a specific law. Also, under conditions, subject to the agreement of the parties (Article 159 of the Civil Code).

III. The (non) necessity of the “written document” in employment contracts
1. The rule
The “principle of informal transactions” also applies, not unequivocally, to the field of labor law. Employment contracts, of course, included.

In other words: the existence of a written document is not a prerequisite for the validity of the employment contract.
1. The exception
There are two exceptions to the rule of non-necessity of a written document. Specifically, where the written document is either (a) provided as necessary by a specific legal provision or (b) the parties (employee-employer) opt for it.

In the field of labor law, however, the exceptions to the rule appear to be several. For the validity of some employment contracts the law requires the written form.

In the cases listed below, the written form is mandatory (that is, without a written document, there is no valid contract). This happens:

(a) In employment contracts with the State and with Public Legal Entities (Articles 80 & 84 Law 2362/1995),

(b) In the cases of part-time contracts (Article 38 of Law 1892/1990),

(c) In cases of renewals of fixed-term contracts (Article 5 (2) of Presidential Decree 81/2003),

(d) In the cases of temporary employment contracts (Article 124 of Law 4052/2012).

IV. The document with which individual employment conditions are disclosed
1. The employment contract and the disclosure of its terms
The employment contract must not be confused with the document with which the employment conditions of each employee are disclosed. We have already mentioned (above under III.1) that there is usually no need for a formal document for the validity of an employment contract. A (common) contract in the private sector, for example, can be oral. That is, no conventional text is required to be signed.

However, the employment contract (whether compulsorily concluded or the parties opt for it) should not be confused with the document with which individual employment conditions are disclosed.
1. The obligation to disclose the employment conditions
The employer is obligated to provide a document with which the employment conditions are disclosed, an obligation deriving from the PD. 156/1994.

Directive 91/553 of the Council of the European Union required every employer to inform the employee of the terms of their contract or employment relationship. The aforementioned Presidential Decree was issued in the context of the relevant harmonization of (Greek) labor legislation.

The specific obligation of the employer relates to the essential terms of the employment contract or relationship.

The employer must fulfill this obligation within two months after drawing up the employment contract (Article 3 §1 PD 156/94) and within one month after any -possible- amendments (Article 5 §1 PD 156/94).
1. The content of the (mandatory) disclosure document
The above PD lists (not restrictively) the terms which must necessarily be included, as a minimum, in the information provided by the employer (Article 2 §2).

The document providing information to the employee must at least contain:

(a) The identity of the parties.

(b) The place of employment, the seat of the business or the place of residence of the employer.

(c) The position or specialty of the employee, their title, the category of employment and the scope of their work.

(d) The date of commencement of the contract or employment relationship and its duration, if drawn up for a specified period.

(e) The duration of the paid leave that the employee is entitled to and the manner and time it will be granted.

(f) The amount of compensation due and the deadlines to be met by the employer and employee according to the applicable laws in the event of termination of the employment contract or relationship.

(g) Any remuneration to which the employee is entitled and the when it should be paid.

(h) The duration of the employee’s regular daily and weekly employment.

(i) Metion of the collective arrangements that apply and determine the minimum remuneration and working conditions of the employee.

It is clarified that the information referred to in points (e), (f), (g) and (h) above may also be given by referencing to the applicable provisions of Labor Law.

V. The purpose of the obligation to disclose the conditions of the employment compared to the purpose of the employment contract

The above (under III) obligation of the employer is not a requirement for the validity of the employment contract.

(Possible) Non-compliance does not affect the validity of the contract.

The purpose of this requirement is purely to inform. This is also explicitly stated in the relevant case-law. It is therefore acknowledged that “… when the employer fulfill their obligations under p.d. 156/1994, the employee is simply informed of the conditions of the employment contract or relationship, as those are defined by law and the individual contract, and this action itself has no effect on the particular employment contract or relationship”(Inter: Supreme Court 860/2010).

On the contrary, non-compliance with the obligation to provide information gives rise administrative sanctions (Article 7 Presidential Decree 156/1994). A fine is imposed on the liable employer by the competent Labor Inspector. The latter is the one who will check the existence (or not) of the (completed) forms of disclosure of the essential working terms of each employer in the workplace.

The information contained in this form is, in fact, essential. It is precisely the importance of the information that makes it necessary to include them in any (possible) written employment contract. That is why the Presidential Decree also provides that, in addition to any ‘other document’, the information can be provided to the employees through the ‘written employment contract’ (Article 3 §2).

It is therefore possible that the above incorporation may not actually take place (: notice through a written contract). The (mandatorily) separate document for the disclosure will then work in parallel with the employment contract.

In any case, however, it must be understood that the two documents serve different purposes.

The notification of the PD is purely informative. It indirectly, therefore, evidences some basic working conditions.

But the purpose of the employment contract is significantly broader and more important. And this is the case despite it not (always) being mandatory – as opposed to the individual working conditions disclosure document. The contract regulates (and should regulate) all the rules governing the employment relationship. Not just the essentials.

First of all, it may achieve the purpose of informing on the essential terms and thereby nullify the reason for the existence of the separate document. In addition, it can be an important tool in the hands of the employer with regard to all the terms and conditions of the employment relationship. The employment contract may place the employment relationship in a predetermined framework. It may preventively address a multitude of issues. It may act as a deterrent for actions which may result in litigation between the parties.

VI. The (potential) content of the employment contract

We have already seen that the employment contract (possibly) has a significantly wider content than that of the (mandatory) disclosure of the essential terms of the employment. Even on issues where (prima facie) the content of the two seems identical, it is worthwhile to have an extended approach of them written down. Such issues may include, inter alia:

(a) The duties of the employee

(b) The place of the provision of the services – especially for undertakings which have or may develop transnational activities

(c) The provision of services to a Group of Undertakings

(d) Duration of the contract

(e) Working Hours

(f) Remuneration

(g) Voluntary benefits

(h) Employee obligations

(i) Personal data matters

(j) Confidentiality

(k) Potential patents

VII. In conclusion

The employment contract is quite different from disclosing the essential terms of the employment relationship.

The first is optional. The second compulsory.

Failure to do either does not affect the validity of the employment relationship.

The (written) employment contract, though optional, can prove valuable.

As long as it has the right content.

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 9th, 2020).
February 9, 2020
Valid reason for dismissal

Valid Reason for Dismissal (: Do I need one to fire my employee?)

I. Preamble

Much has been said during the past year about the termination of employment contracts set for an indefinite duration. The reason is the May 2019 law that introduced the need for a “valid reason” for the validity of such dismissals. The problems this law created were, in fact, too many. We have analyzed them in a previous article. Its abolition (“after it came into force”) came as a pleasant surprise in August 2019. We have already mentioned the benefits of this (necessary) legislative correction.

However, the need for the existence of a valid reason for a dismissal is also provided for in the Revised European Social Charter.

Which provision prevails?

Can Businesses / Employers feel (completely) safe?

I personally think it is worth taking a closer look at the subject…

II. Brief Review: the status of the termination of the employment contract of an indefinite duration

1. The termination of an employment contract of an indefinite duration

1.1. We all knew, until May, that an employment contract set for an indefinite duration could be terminated by the employer at any time. Without the employer having to invoke any reason. The only condition: the payment of the redundancy compensation (: Article 5 § 3 of Law 3198/1955).

When an employee considered that their dismissal was unfair, they had the right to appeal to the competent courts. Their main claim: cancellation of the dismissal and, in addition, returning to work. The burden of proof of the claims laid with the employee.

1.2. On the 3^rd of May 1996 the Revised European Social Charter was signed. The Revised European Social Charter is an international convention for the protection of social rights. It is already a domestic law as it was ratified by law (Law 4359/2016). It is, in fact, higher – ranking than Greek laws (Article 28 § 1 of the Greek Constitution).

3. Article 24 of the Revised European Social Charter

One of the rights guaranteed under the Revised European Social Charter is the right to protection in cases of termination of employment. Article 24 of the Revised European Social Charter provides:

“With a view to ensuring the effective exercise of the right of workers to protection in cases of termination of employment, the Parties undertake to recognize:

a. the right of all workers not to have their employment terminated without valid reasons for such termination connected with their capacity or conduct or based on the operational requirements of the undertaking, establishment or service;

b. the right of workers whose employment is terminated without a valid reason to adequate compensation or other appropriate relief.

To this end the Parties undertake to ensure that a worker who considers that his employment has been terminated without a valid reason shall have the right to appeal to an impartial body.”

4. The legislative provision regarding the requirement for the existence of a valid reason

4.1. Much later after the Revised European Social Charter was ratified in our country (2016), the first subparagraph of article 5, paragraph 3 of article 31 of Law 3198/1955 was replaced (article 48 of Law 4611/2019) as follows:

“The termination of employment shall be considered valid only if it is due to a valid reason within the meaning of Article 24 of the Revised European Social Charter ratified by Article 1 of Law 4359/2016 (A ‘5), invoked in writing, if the redundancy compensation due has been paid and if the employment of the dismissed employee has been registered in EFKA (IKA) or the dismissed employee has been insured. In the event of dispute, the burden of invoking and proving the validity of the conditions invoked for a valid termination shall rest with the employer.”

4.2. This provision has proved to be problematic on many levels as it has resulted in:

(a) stigmatizing the employee by any of the “valid reason” options regarding their “behavior” or “abilities” in the event of termination of their employment contract;

(b) the employers being reluctant to enter into indefinite-term contracts

(c) the leaning towards fixed-term employment contracts, the termination of which does not require any “valid” reason; and

(d) the increase of extrajudicial and judicial disputes.

6. The abolition of the requirement to invoke a valid reason

The Greek legislator, fortunately, listened to the legitimate reactions that the establishment of the “valid reason” requirement had caused. With a surprising move, it abolished the (problematic) provision of Article 48 of Law 4611/2019 — less than three months after it came into force.

The provision of Article 117 § 2a of Law 4623/2019 (Government Gazette A 134 / 09.08.2019) provides that the provision of Article 48 Law 4611/2019 “shall be abolished after its entry into force” and that “the provisions of Law 2112/1920, as applicable, and Law 3198/1955, as applicable, in conjunction with Article 24 of the Revised European Social Charter, ratified by Article 1 of 4359/2016 (A ‘5) shall not be affected”.

III. What is the “value” of Article 24 of the Revised European Social Charter?

1. The questions raised

The debate around the “valid reason” (as a prerequisite for a termination of indefinite term contracts) had begun since the Revised European Social Charter became state law. The questions that we have been dealing with since then (and until May 2019), and we are still dealing with (after August 2019), are:

(a) What is the legal binding effect of Article 24 Revised European Social Charter in the Greek legal order? and

(b) Is Greek law in conformity with Article 24 of the Revised European Social Charter?

There are two ways to approach this issue.

2. The first view

(: Article 24 of the Revised European Social Charter does not affect the protection against dismissal)

2.1. According to the first view, Article 24 of the Revised European Social Charter did not have, nor does it exercise, any influence on the Greek system of protection against dismissals. This view (that the signatory shares) seems to prevail in jurisprudence. A series of decisions attests to the truth (SC 1512/2018, First-Instance Court of Athens 237/2019, First-Instance Court of Athens 2180/2018, First-Instance Court of Thessaloniki 10675/2018, First-Instance Court of Thessaloniki 19510/2017).

According to this view, termination of an indefinite-term employment contract continues to be an employer’s right. Most importantly: it continues to not require the invocation of any reason. In other words: “its validity does not depend on the existence or defect of the cause of it.”

2.2. We all agree that this right (as well as any other right) is subject to restrictions. All rights must be exercised within the limits of good faith, the principle of morality and their socio-economic purpose. When the employer’s right to dismiss an employee is abused, the termination is invalid. The relative burden of proof lies, of course, with the employee. The declaration of invalidity presupposes an assessment. In addition: a court ruling.

2.3. The ratification of the Revised European Social Charter does not affect the specific, preexisting, legal provisions in our country. The conditions laid down in Article 24 of the Revised European Social Charter are (more than) fulfilled in the Greek legal order. This is because the “obligation of the employer to indemnify the employee has long been recognized in domestic law (…) in every termination (with the exception of a termination due to criminal charges) and is not waived even when the employer could prove a valid reason for the termination of the employment. Consequently, the affirmative or negative reference to a valid reason for the termination is irrelevant. That is why the validity of the complaint is still being examined individually only with the application of the article 281 of the Civil Code, as before, after the employee has filed a lawsuit with the competent court ” (SC 1512/2018).

2.4. The (recent -August 2019) abolition of the requirement for the existence of a “valid” reason was also based on the above (under 2.3) decision of the Supreme Court. It is therefore obvious that the legislator itself is in favor of not requiring, after the ratification of the Revised European Social Charter, any reason in order for a termination of an employment contract of an indefinite duration to be valid.

3. The second view:

(not requiring the invocation of any reason is incompatible with Article 24 of the Revised European Social Charter)

This view is only slightly reflected in Greek jurisprudence. There are only two decisions, so far, that approach the termination of an employment contract this way: First-Instance Court of Pereus 3220/2017 and the most recent First-Instance Court of Lasithi 17/2019.

As the latter mentions: “… On the basis of the foregoing considerations it becomes clear that after the ratification of the revised Charter the principle of objectively justified dismissals was directly introduced into Greek law and hence the Greek courts should further investigate on the one hand the existence or not of a valid reason, with valid reasons being those restrictively cited in Article 24 of the revised Charter and, on the other, consider any dismissal not based on such a ground to be unlawful. This can be done either by direct reference to Article 24, the wording of which, at least in this respect, is precise, clear and unconditional, in conjunction with the provisions of Articles 174 and 180 of the Civil Code. – a view considered to be more correct by this Court, or interpretatively, through Article 281 of the Civil Code, whereby any dismissal that is not in accordance with the provisions of Article 24 of the revised Charter shall be regarded as abusive.”

IV. In conclusion

Article 24 of the Revised European Social Charter requires the existence of a valid reason for the termination of an indefinite-term employment contract.

For a quarted it was legally required by the employer to invoke and prove the existence of one. It is not anymore.

Case-law (and correctly, in the signatory’s view) in its majority states that the provision of Article 24 of the Revised European Social Charter does not have any bearing on the Greek system of protection against dismissals. Termination of an indefinite-term employment contract remains the employer’s right. Its validity does not depend on the existence or (possible) defect of its cause. The only limitation: to not abusively exercise this right.

However, the opposite view has been recorded in case law.

It is well known that, in the Greek legal system, jurisprudence is not binding. This means that the approach of case-law can be changed. Moreover, none of the decisions reflecting the minority have so far been appealed before the Supreme Court.

The sole decision of the Supreme Court (SC 1512/2018) dealt with the issue secondarily. However, it made it clear that the employer is not required to do anything more than pay the redundancy compensation.

And rightfully so.

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 2nd, 2020).

February 2, 2020
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
Senior Partner

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

January 26, 2020
Rotational Work or Dismissals?
Limitation of business activity (: Dismissals or Rotational Work?)

I. Preamble

When Demosthenes, in his work Olynthicus I, proclaimed that “it is harder to maintain wealth than to acquire it”, he probably did not realize the time value of this position of his (nor did he realize that I would be using it today).

The value of this position is self-evident in matters relating to safeguarding personal wealth. The same goes in matters relating to ensuring the existence and health of every business.

It is a fact that every entrepreneur (with no exception) sincerely strives for the development of their business activities.

Sometimes their efforts are not successful. They then face a series of dilemmas: Should I shut my business down? Should I lay off some employees in order to still be able to offer jobs to the rest and keep my vision alive?

Dismissing employees is the first (necessary -obviously not desirable) solution. It results, in any case, in the business saving the expenses it would otherwise occur.

Terminating an employment contract is the most drastic, unilateral, way to intervene on it. When an employer decides to terminate an employment contract, the result is not only the termination but also the loss of the job. Without the employee’s approval.

Safeguarding the interests of both the company and of the employees, is equally important. In order to avoid dismissals (and in the interests of both), the legislature has adopted, among other things, two more mild measures. These of rotational work and suspension. These measures may prove just as appropriate to protect the interests of the business (as well).

In this article we will deal with the first of the two, rotational work.

II. Rotational work -in general (and part-time work)

1. In general

Rotational work is part of the part-time employment institution. We have already referred to part-time employment in a previous article.

2. The legislative framework

2.1. Rotational work is regulated by the provision of article 38 par. a and b of Law 1818/1990-as applicable. This regulation states:

“When drawing up or during the duration of an employment contract, the employer and the employee may, by a written individual agreement, agree to any form of rotational employment.

Rotational employment is considered to be working fewer days per week or fewer weeks per month or fewer months per year, or a combination of these on a full-time daily basis.

The protection provided by this Article shall also cover those employed in accordance with the agreements referred to in the preceding paragraph.”

2.2. Also, par. 3 d’ states:

“The employer may, provided their activities are reduced, instead of terminating the employment contract, impose a rotational employment system on their business, the duration of which may not exceed nine (9) months in the same calendar year, only after they have informed and consulted with the legal representatives of the employees, in accordance with the provisions of P.D. 240/2006 and Law 1767/1988. The agreements or decisions referred to in this paragraph shall be notified within eight (8) days of their drafting or receipt to the relevant Labor Inspectorate. “

3.3. Rotational work is therefore different from part-time work. Rotational work refers to working fewer days per week or fewer weeks per month or fewer months per year or a combination of these. However, in any case, it exclusively refers to full-time employment.

Working less than “full-time” is linked to part-time work.

III. Rotational Work Schemes – Features and Requirements

According to the above, two are the possible rotational work schemes.

The former is the product of an employer-employee agreement.

The second is that imposed by the unilateral decision of the employer.

1. Rotational work as per a relevant agreement

1.1. Conventional rotational work is what is agreed between the employer and the employee. This agreement can take place at two different times. When concluding an employment contract or, alternatively, during a (already existing) full-time contract. In the latter case, the agreement shall modify the original contract.

1.2. In rotational work, employees’ working and non-working days alternate. There is, of course, a corresponding reduction in their remuneration. Despite this rotation, however, the operation of the business (or of the part of the business) continues. It goes without saying that the work is offered full-time. In no case is rotational work allowed when the work is offered part-time.

As for the other provisions of the law:

Switching between working and non-working days is not subject to any restrictions. This rotation can be freely agreed upon, without the need for the working and non-working periods to be the same or similar. For example, on a five-day work system it may be agreed to provide work for any number of one to four days a week, or to provide reduced weekly work only for certain weeks of the month and so on.

1.3. In a bit more detail: There is no restriction on the duration of conventional rotational work (as opposed to the restrictions provided if the rotational work is unilaterally imposed -below under 2.4.iv). The content of the agreement is therefore left to the contractual freedom of the employer and the employee. The law does, however, lay down some clear conditions (below 1.4-1.6) for such agreements to be (legally) concluded.

1.4. In accordance with the provision of §3 e’ Article 38 of Law 1892/1990, if the above agreement between the employer and the employee is not concluded in writing, the full employment of the employee shall be presumed!

1.5. Also, according to the provision of Article 38 § 5 of Law 1892/1990, the written individual contract providing for the rotational work must include specific details. At least:

(a) the identity of the parties;

(b) the place of employment, the place of business or the address of the employer;

(c) the time of employment, the method of allocation and the working hours;

(d) the method of remuneration; and

(e) any conditions for amending the contract.

1.6. Lastly, according to the law the part-time contract must be registered within eight (8) days on the ERGANI information system (Article 38, § 3 e’ 1892/1990).

It is important to stress that in the event of failure to register the agreement, a full-time employment relationship is presumed.

2. The unilaterally imposed rotational work

2.1. The employer may unilaterally impose on their business a rotational system. A prerequisite is the reduction of their activity. The daily working hours for workers must also be equivalent to full-time employment in this case as well. There is also no restriction in this case on the distribution of working days on a weekly and / or monthly basis.

2.2. The unilaterally imposed rotational work relates to a collective arrangement. It cannot be applied, selectively, to individual employees. It should concern all the staff of the business or at least some part of it.

It is obvious that the legislator’s objective is for the business (which now has a reduced activity) to evenly distribute the negative effects of its reduced turnover to all its staff. This is in order to avoid layoffs and save jobs.

The collective nature of the arrangement also derives from the reference to the provision in question to a “rotational employment system”. It is also confirmed by the fact that, for the validity of its enforcement, the employer must inform and consult with the representatives of the employees (as discussed below under 2.4.c).

2.3. The conditions laid down by law for (legally) imposing a rotational employment system are substantive and formal. Specifically:

(a) Substantive requirements:
- The reduction of the business activity of the employer,
- The rotation of employees in the same or in different jobs at different times
(b) Formal requirements:
- Prior notification and consultation of the employee representatives,
- The duration of the enforcement shall not exceed nine (9) months in the same calendar year; and
- The decision of the employer to be registered within eight (8) days on the ERGANI Information System.
2.4. In more detail:

(a) The reduction of the employer’s activity

The first essential prerequisite is that the business’s “activity is reduced”. 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).

Where rotational work is imposed as an extreme measure, but milder than that of the termination of employment contracts, it is a reasonable premise that activity reduction poses a real threat to jobs. In other words, it must be such a reduction of activity that it could lead to dismissals for logistic reasons (SC 771/2017).

(b) The rotation of employees in the same or in different jobs at different times

According to the case law of the Arios Pagos (Supreme Court of Cassation of Greece) (decisions no. 470/2018, 1279/2018, 771/2017 and 1252/2014), the rotational employment system requires that:
- the rotation of employees in the same business, holding or part of a business or holding
- in the same or in different jobs,
- at different times but at regular intervals,
at the same time while the operation of the business remains constant.

This rotation can involve:
- either groups of employees, one of whom will replace the other in succession in employment and in non-employment,
- or one employee at a time, in the sense that one employee at a time will be placed on a compulsory leave, while the other employee will be employed full-time.
Without this interchange of work, which will occupy all employees in the business or part of it that has a significantly reduced activity, the implementation of the system is, in principle, not acceptable.

(c) Prior notification and consultation of employee representatives
1. Prior to the unilateral decision of the employer to impose a rotational employment system, prior notification and consultation of employees’ representatives is required by law (in accordance with the provisions of Presidential Decree 240/2006 and Law 1767/1988). Fortunately, the successful outcome of such communications is not a requirement.
2. 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, based on Articles 3 of PD 240/2006 and 1 of 1767/1988).
iii. According to § 4 of article 38 of Law 1892/1990, as employees’ representatives:

“Are defined in the following order of priority:

(a) representatives of the most representative trade union organization of the undertaking or holding, which in its articles of association covers employees, irrespective of their category, position or specialty;

(b) representatives of the existing trade unions of the business or holding;

(c) the workers’ council

(d) in the absence of trade unions and a workers’ council, all workers shall be informed and consulted.”
1. 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.”
In any case: The briefing should include the reasons that make it necessary for the employer to impose a rotational system. Indicative: evidence of a significant reduction of activity, its possible duration, the proposed scope of rotation (its application, for example, to certain sectors of the business or to the business as a whole), the particular employment distribution system that the employer intends to implement (: SC 771/2017).

It is noted that in businesses with a small number of employees, this information may also be orally communicated to the employees.
1. The invitation of the employer to consult with the representatives of the employees, or in the absence of them, with all of the employees, should also include the place and time of the consultation. The time between the communication and the consultation should be sufficient for the employees to prepare. The (sufficient) time is a crucial requirement and whether or not that requirement is met is examined on a case by case basis. This is because it depends on several factors. Indicative: number of employees, number and complexity of issues to be discussed etc.
2. The consultation under article 38 of Law 1892/1990 has a rather broad framework. 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 company’s difficulties resulting from the reduction of its business. In particular, the creation of a system of allocating the remaining available work to all the staff of the enterprise (or of a specific sector of it) in order to save jobs.
vii. What is encouraging, however, is that, as mentioned above, there is no legal requirement that the consultation on the implementation of rotational work has a successful outcome. There is no need for the employer and employees to reach an agreement.

However, imposing a rotational employment system without prior notifications and consultation is illegal and is (considered to be) unilaterally adversely affecting the working conditions. In this case, the employee may regard the employer’s decision as a termination of the employment contract. The employee then has two alternatives: either (a) to leave and claim the legal compensation or (b) to continue to offer their services in accordance with the terms of the employment contract – rendering the employer at default for not accepting the services offered, which would result in the employer owing the employee all their wages.

(d) Maximum duration of work rotation

As already mentioned, in the case where the rotational work is agreed upon between the parties, there is no time limit. On the contrary, this is not the case when the employer imposes this system unilaterally. The duration of this unilaterally imposed measure shall not exceed nine (9) months within the same calendar year (§3 d’ Article 38, Law 1892/1990).

(e) Registration of the employer decision in ERGANI

The last formal requirement (for the validity) of the unilateral enforcement of a rotational employment system is to register the relevant decision within eight (8) days in the competent Labor Inspectorate. (Already, by virtue of Decision No. 40331 / 19.09.2019 of the Ministry of Labor and Social Affairs, it is mandatory to submit to the ERGANI information system the Labor Inspectorate Body’s appropriate forms, such as Form E9 on rotational work.)

Therefore, the unilateral decision of the employer should be registered with ERGANI within eight days of its adoption.

IV. In conclusion

Imposing a rotational employment system is an important tool in the hands of the employer, in their effort to ensure, in times of distress, the survival of their business.

It can happen by consensus.

It can (fortunately) take place unilaterally.

In this case, the employer needs to pay attention to some crucial legal requirements (evaluation of individual parameters, processing of specific data, planning of strategy, rotational employment system design & implementation, realization …)

However, the employer is required to focus, above all, on the fulfillment (and proof of fulfillment) of the necessary legal requirements.

And all of this is an important, if not necessary, step towards rescuing (troubled) businesses.

Of course, and as a result, in rescuing (the always valuable) jobs as well…

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (January 19th, 2020).
January 19, 2020
Work stress and the death of an employee

Work stress and the death of an employee (An impartial approach of decision no. 1358/2019 of the Athens Single-Member Court of First Instance)

I. Preamble

There has been a lot of discussion lately around the decision no. 1358/2019 of the Single-Member Court of First Instance of Athens.

The case heard? An employee suffered a severe myocardial infarction on his way to work. It was attributed to intense work stress. The business/employer was ordered to pay € 160,000 in damages to the plaintiffs (for mental suffering caused). 80,000 € to the wife of the deceased and the same amount to his son.

Small(?) Detail: The defendant, the business, was tried in absentia.

II. Heart attacks as occupational accidents: (known) facts and the “overturn”

Until now, we knew that a heart attack could (under certain conditions) be subject to the concept of an occupational accident. It is always the court that assesses the fulfillment of the conditions and sovereignly decides on the matter. Depending on the evidence provided.

We all agree that a death resulting from a heart attack suffered by an employee under normal working conditions is not an accident at work. On the contrary, a heart attack will constitute an accident at work when it is linked to excessive efforts made while trying to perform at work. When, for example, the death was linked to excessive working hours (decision no.1959/2017 of the Single-Member Court of First Instance of Athens). Or, alternatively, to other adverse and debilitating conditions: All that goes without saying …

The decision no. 1358/2019 of the Single-Member Court of First Instance of Athens came to “rock the boat”, by (excessively) extending the conditions under which a heart attack could fit into the concept of an occupational accident. What it did was characterize as an occupational accident a heart attack (considered to be) caused by an employee’s stress. A heart attack not purely attributed to the working conditions of the employee, but to the broader course of the employer’s business. Maybe the national economy as well…

III. The facts of the case

We have already seen that the defendant (employer) company did not participate in the trial. We do not know whether this was due to reasons of financial distress or other. And, of course, it is impossible to (even) assume its position.

Therefore the Court, given the employer’s default of appearance, accepted the facts presented by the plaintiffs (the deceased’s wife and son) as true.

The decision accepted the following facts:

The employer decided in early 2011 (i.e. during the financial crisis) to reorganize their business. The reorganization included the elimination of distribution divisions. Obviously, the employer could not afford to keep on going the same way. Among the divisions being eliminated was the one that the deceased was employed in. However, the employer had not clarified the (new) tasks (if any) of those working in the divisions about to be eliminated. Not even those employees’ future in the business (Couldn’t do so? Didn’t know? Were wishing for the best? Unknown…)

In February 2011, rumors regarding the aforementioned reorganization of the business started spreading. The deceased (seems that he) had been overwhelmed by the stress regarding the repercussions of the reorganization and the fate of his job. This anxiety (allegedly) turned into unbearable psychological pressure. Indeed, based on what was accepted, the deceased shared his fears about his future with his colleagues and supervisors. He started (according to the decision) to feel dizzy and have back and stomach aches. However, the employer did not provide clarifications (because they had none?) regarding the impact of the reorganization to the supervisors of the diseased. Much less to the latter.

On 05.05.2011 the unit of the diseased as well as the latter were informed that from 09.05.2011 the new distribution divisions would be taking over. The next morning he left for work. But he returned home. And there he left his last breath. His death was attributed, according to the autopsy, to an “acute myocardial infarction”.

IV. Subsuming the facts under legal provisions:

According to the decision: ‘the cause of death … is causally linked to the intense work stress that he experienced because of his insecurity and uncertainty regarding his employment status in view of the impending reorganization of the defendant employer, who on the one hand did not receive appropriate preventive measures and did not a priori provide adequate clarifications to protect the employees from the negative effects the redistribution of the work could have on their mental and physical health, and on the other hand took no measures to eliminate the stress of the abovementioned employee, despite that it was known to his superiors (agents of the employer) that he was experiencing severe job stress due to continued uncertainty regarding his work, which had obviously led him to the brink of collapse. ”

The Court, in the light of the foregoing, held that the death of the employee concerned, constitutes an accident at work within the meaning of Law 551/1915.

V. The concrete facts: a brief commentary …

First

Summing up:

(a) A heart attack can, under certain circumstances, constitute an accident at work.

(b) Among the secondary obligations of the employer is the obligation to provide for the welfare of their employees (which derives, inter alia, from: 662, 288 Civil Code, Law 3850/2010, Directives, Regulations)

(c) The employer has a legal obligation to protect the occupational safety and health of their employees, by taking appropriate preventive and repression measures.

Second

In the above (under 1) context, this particular decision recognizes that the employer had to take appropriate action, since one of its employees (allegedly) developed a problem of work-related stress. Despite that stress is not a disease, the Court holds the position that prolonged exposure to stress can have adverse effects. Reduce, e.g. one’s efficiency at work, but also cause serious problems, such as cardiovascular diseases.

The decision accepts the responsibility of the company as “it did not take appropriate preventive measures, nor did it provide adequate clarifications in advance to protect employees from the negative effects of the redistribution of the work on their mental and physical health …”. According to the plaintiffs “clarifying his new duties or the future of his employment status would be sufficient to prevent the outcome”.

The fact that the company did not act in this way constituted (according to the Court) a breach of its obligation to provide for the welfare of its employees.

Third

The protection of the health and safety of employees cannot (of course) be an absolute obligation. Obviously, the same goes for the obligation to have regard for the welfare of the employees. The limits are seen in the light of the “maximum sacrifice” each employer can endure.

Fourth

The employer in this case proceeded to the restructuring in question in May 2011.

Let’s go back at that time: Many businesses in our country were struggling to survive. The financial crisis was ongoing. Many failed. Desperate people (businessmen, unemployed, retired) were committing suicide.

What could that particular business’s financials be back then? Booming?

And the divisions (which ended up being eliminated)? Lucrative?

And what did the business do?

The obvious: it foresaw the need for a reorganization and acted on it, to overcome the financial backlog. The end goal? Survival and safeguarding jobs (as many as possible).

Of course, it is the employer who carries the business risk, which they cannot pass on to their employees. They therefore bear the responsibility of each of their business decisions, as well as of the restructuring of their business. Meaning that the turnover of a business may be reduced. This does not mean, however, that the employer is justified in taking any measures to save their business, without having any regard for their employees. The law imposes (and rightly so) a series of obligations designed to protect employees.

Fifth

But there is a core question. To what extent can an employer’s obligations be extended? All the more so when (we can assume / believe) they derive from vague legal concepts (662 & 288AK etc.) and not, explicitly, from the wording of the law?

What did the company do in this case? It moved forward with a reorganization (as it should). It did not inform about the forthcoming(?) job cuts. Or did it not (untruthfully) assure the employees that their jobs were secure? Should it?

Or, alternatively, should it have hired (and paid for) qualified consultants, irrespective of whether its finances were insufficient to pay the redundancy payments due?

Sixth

One wonders:

How can we expect from a company that takes action to withstand the effects of a financial crisis, to communicate with its employee and reassure him of the future of his job!? In this case, the company, along with the reorganization, had not started laying employees off. We can rightly assume that its goal was to avoid layoffs altogether. However, when an entrepreneur is anxious about the existence of their business, they clearly cannot make any guarantees about the future of their employees in the business. All the more so when the future of the business itself is ominous. It is then and there that a possible employee-employer communication about the former’s job will most likely constitute the “coup de grâce” in an overly stressed – as accepted by the court- employee.

Seventh

The fact that this particular decision accepted that the employee’s cause of death “is causally linked to the intense work stress that he experienced because of his insecurity and uncertainty regarding his employment status” does not appear to be persuasive in the light of its own assumptions.

VI. How the business should have acted (according to the court)

Let’s go back in time: May 2011.

Let us try, for a moment, to align ourselves with the suggestions of the court ruling.

I take on the role of the entrepreneur for reasons of convenience. I invite the supervisor and the distribution division staff to a meeting in my office:

Scenario A:

“Good morning! Given the financial crisis, I am sadly announcing that I have decided (in order to save the business and most of the jobs) to discontinue distributions in Northern Greece. Those working in this division, that is X, Y and Z, will be fired in ten days from today. Thank you for your services. “

Scenario B:

” Good morning! I hear the same rumors as you do. How, for example, given the financial crisis I am going to discontinue (in order to save the business and most jobs) distributions in Northern Greece. And also how those working in the division, that is X, Y and Z, will soon be fired. It’s all lies-all good! “

After ten days I am forced (in order to save the business and most jobs) to discontinue distributions in Northern Greece.

Again, I invite the supervisor and the employees of the distribution division to a meeting in my office and make the following announcement:

“Good morning! Given the financial crisis, I am sadly announcing that I have decided (in order to save the business and most of the jobs) to discontinue distributions in Northern Greece. Those who work in this division, that is X, o Y and Z, are fired effective immediately. Please go by the accounting department for the procedural issues. Thank you for your services.”

Following (: same in scenarios A & B) …

The Supervisor and the distribution division staff look at me frustrated.

Diagnosis for X: Acute myocardial infarction …

I wonder: What would the Athens Single-Member Court of First Instance do in any of the aforementioned scenarios?

VII. The author’s personal views on the matter

At the same time (: 2011) a friend of mine, a brilliant businessman, shared with me the difficulties he was going through.

He asked for my opinion on how to manage a crisis in his business. At the time he was employing more than a hundred people.

His business was impressive and strong, until the crisis started knocking on his door …

My view (albeit harsh) was absolute: personnel reduction and wage cuts.

It was very difficult for him.

My Argument: “If you continue with this payroll cost, the business will be destroyed. One hundred families (not including independent contractors) will be left without the basic income you provide them. Alternatively: You reduce personnel and salaries and seek, conservatively, to overcome the crisis. ”

My advice seems to have made (at least some) impact on him. Most of the jobs were saved. His business didn’t take long to recover. It has come back stronger: it is again a shining example of Greek entrepreneurship.

VIII. In conclusion

A (core) question arises – in the light of this decision:

With the business being on the brink of catastrophe, what should it do for its employees? Hire specialized (and of course very expensive) psychologists to support them, when: (a) it cannot afford the payroll cost; (b) it cannot pay the forthcoming redundancy payments?

Or, according to the decision, to ‘clarify the future’ of specific employees? (e.g. “X, Y and Z are fired!” or “X, Y and Z will be fired within ten days!”)

Decision 1358/2019 of the Athens Single-Member Court of First Instance DOES NOT convince.

It may even prove to be dangerous.

Unfortunately.

But it is instructive for us lawyers: “Let us try to show a (fake) human interest in those hard-pressed employees, so that we have a chance to get away with it …”.

Is this what we need?

Pending the review (if any) of the case, let’s hope that no more decisions like this one will be issued …

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (December 8th, 2019).

December 8, 2019

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