Tag: new law on employment contracts

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
Wages due? (:The risks of the business)

I. Preamble

The “I am not paying” movement first appeared in 2008. Originally as a refusal to pay tolls. Following: refusal to pay for public transport, property tax and solidarity levy …

Some claimed to be smarter than the rest of us, refusing to pay what was legally due. While the rest of us kept on paying …

This Movement blew over when some of those who drove its actions came to power. Even more so: when it turned out that the law applies not only to those who respect it, but to the “smart” ones as well.

What would the consequences be if a business decided to adopt the “I am not paying” logic with regard to the salaries of its employees? What are the consequences when a company chooses not to pay the salaries owed to one or more of its employees? Or when it truly is unable to pay them?

II. The employer’s obligations under the employment contract – especially the obligation to pay wages.

1. When an employer concludes an employment contract with an employee, they (the employer) undertake several obligations. Among them: protecting the life, health and personality of the employee.

2. One obligation, however, stands out as the principal among the others. That of the payment of the established under the law or, where appropriate, the agreed upon salary (article 648 of the Civil Code). It is the employer’s consideration for the employee’s work.

The employer’s obligation to pay the salary (whether it is the salary established under the law or the agreed upon salary) is complex. It includes the payment of the basic salary, as well as the payment of other, additional, wage benefits – e.g. of allowances.

Salaries are not considerations freely agreed-upon. A salary is the means an employee supports their and their family’s livelihood. It is precisely this function that imposes certain thresholds. Those thresholds are set by law or a collective agreement.

3. Specific legislative provisions aim at protecting wages and ensuring that they are paid. These include those relating to the claim by the employee of their (unpaid) salary – detailed below under III.

However, the provision of article 48 of Law 4488/2017 added another weapon to the arsenal that the employee has at the expense of their employer. Possibly disproportionately powerful. In particular, the provision of Article 636A has been added to the Code of Civil Procedure. It specifically provides the employee with the option of issuing a payment order for wages due.

III. The options of the employee in case their salary is not payed

If the employer fails to pay the salary due, the employee shall be entitled:

(a) To file a lawsuit. Requested: The wages due and even the relevant interest due, adding up from the date the salaries were due. Also: compensation for any damage suffered by the employee due to non-payment.

(b) To apply for interim measures. Requested: Provisional award of the salaries demanded (728 Code of Civil Procedure) and / or any other appropriate measures.

(c) To exercise the right stop providing their work. That is, to stop providing their work until the employer pays them the wages owed. By exercising this right, the employee renders the employer “defaulting” in accepting their work. This means, in practice, that as long as the employee refuses to provide his / her work (in the context of the above right), the employer continues to owe him / her his / her wages. As if the employee was working.

(d) Apply for a payment order in respect of wages due. This procedure is initiated, as mentioned above (under II.3) under the (new) provision of section 636A of the Code of Civil Procedure.

IV. Specifically: The issuance of a payment order for wages due to employees

1. In general

Of the above (under III) options given to employees, the most problematic and dangerous for the employer is the latter. In particular, the issuance of a payment order against them for wages owed. This is because through this process, the employee enjoys a number of important advantages. These advantages are related to the ease with which a payment order can be issued, as well as to the legal effects it brings. And these specific advantages are, at the same time, significant disadvantages for the employer …

2. The provision of Article 636A of the Code of Civil Procedure

According to Paragraph 1 of Article 636A of the Code of Civil Procedure: ‘… an order for payment of a remuneration may be requested, provided that the conclusion of the subordinate employment contract and the amount of the salary are proved by a public or private document or by an interim decision, which has been issued upon acknowledgment or acceptance of the application by the debtor, and if written notice has been served with a bailiff at least fifteen (15) days prior to the filing of the application. The work corresponding to the salary for which the order for payment is requested is presumed to have been provided. ”

3. The facilitation of the Employee and the problems for the business

The above (under 2) arrangement is beneficial for the employee and, at the same time, particularly problematic for the business. And this is because:

(a) The employee (very easily) acquires an enforceable title against the business for their wages due, by having a payment order issued. This takes very little time and comes at a very low cost. At the same time, with this specific order (: payment order), the employee may seek enforcement (e.g. seizure) at the expense of their employer. The fact that an employee can acquire an enforceable title so fast is why the payment order has such a significant advantage compared to a lawsuit for wages due.

(b) The employee has a lower burden of proof through this procedure. (This fact is also explicitly mentioned in the explanatory memorandum to Law 4488/2017-which introduced the provision of article 636A of the Code of Civil Procedure). The employee is required to prove in writing the conclusion of an employment contract and the amount of their salary. However, according to the explanatory memorandum to Law 4488/2017, the employee may use a wealth of evidence, such as “the printed extract from the employee’s personal account held in a governmental information system, such as the Labor Inspectorate, the Single Social Security Agency, the Independent Public Revenue Office or the offices of the Ministry of Finance, on the basis of information provided by the debtor employer or the public authority itself. ”

If the employee uses any of these documents, he / she obtains an important (even if it is disputable) presumption. Specifically, that they actually provided the work corresponding to the salaries claimed.

There is no doubt that in this way the employee’s burden of proof is facilitated in an absolute way. At the expense of the employer.

(c) The employee shall be empowered to move rapidly and efficiently at the expense of their employer’s property. The employee (making use of the provision of Article 724 of the Code of Civil Procedure), may take advantage of another opportunity offered, one of major importance. They have the right, through the process the payment order, to register a charge or a preventive attachment on their employer’s real estate. Most importantly: they have the right to impose a conservative seizure on any of the employer’s other assets. However, what is most dangerous for the employer is the potential for the conservative seizure of their bank accounts and deposits.

And all this, without requiring them to, at least, be served with the payment order. Such a “freeze” of the bank accounts of the business can only prove absolutely distressing and dangerous.

V. The formal requirement of the (earlier) out-of-court declaration of the employee and the vigilance of the employer

In order for the employee to obtain the payment order for wages due, the employee must notify the employer in writing. In particular, the employee must have served an out-of-court nuisance to his or her employer at least fifteen days prior to the filing of the request for the payment order. This formal requirement serves as a warning to the employer of the imminent issuance of the payment order, which may, within an extremely short time, bring about the extremely adverse consequences discussed above (IV).

Once such an out-of-court declaration has been served, the employer must act immediately. In particular, the employer must either immediately overcome their inability to pay the wages due or prepare for the intended opposition (and suspension of execution?) against the payment order – and not only that. Their defense will be the proof that the salaries claimed are not due (Article 636A §3 Code of Civil Procedure). But even in this case, the consequences of (possibly) freezing their bank accounts will likely still be there (and still be extremely distressing). Working directly with their legal representative seems necessary …

VI. In conclusion

The employer’s potential inability (or refusal – even if it is justified) to pay their employees’ wages triggers indefinitely strong forces. The provision of Article 636A of the Code of Civil Procedure may prove extremely harmful to the employer.

An employee who is or claims to be owed salaries is entitled to have a payment order issued. Then, without even giving it to their employer, the employee is entitled to make a conservative seizure of their employer’s bank accounts. It essentially blocks its operation completely. Either if the employer actually owes them money or the employee simply claims they owe it. Even if the employee is acting in bad faith.

The ability of the employee to have a payment order issued is an (extremely dangerous and disproportionately powerful) weapon in their hands.

The employer must be vigilant. Especially when they receive an out-of-court declaration from their employee for wages due. Even when they aren’t really due.

Rationales of the “I am not paying” nature, even if “I do not have to pay” can prove to be problematic in this case as well. And dangerous. Even for the operation and the very existence of the employer’s business.

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (January 5th, 2020).

January 5, 2020
Changes regarding the termination of Employment Contracts

Changes regarding the termination of Employment Contracts that are initially set for an Indefinite Period: The New, Important, Data

1. Preamble

All of us, no matter our political beliefs or which party we support, seem to want the (long-awaited) development of our country. We will all, most likely, agree that this development requires, among others, private investments and the creation of new jobs (when we, permanently, succeed in breaking away from Carl Marx’s position that: “Capital is dead labor, that, vampire-like, only lives by sucking the blood of the living labor. The more it lives, the more labor it sucks”).

In our country, we have encountered all possible employment models: from medieval working conditions to the uncontrolled (most likely met as a pre-election campaign strategy and usually catastrophic for our country’s economy) benefits given to the private and public sector employees.

We will also (most likely all) agree that, we will have to by all means protect the balance between conflicting interests in employment relationships, in order to avoid leading the country to dead ends, as past practices have done; dead ends that contributed to the “crisis” that brought us in the current adverse financial situation.

There has been an intense discussion for the past month (which peaked in the recent vote, on Friday, 17^th of May, of article 48 Act 4611/2019, which replaced subparagraph 1 par.3 article 5 Act 3198/1955) about how making terminating employment contracts set for an indefinite period more complex affects employment relationships: the existence of a “valid reason” for the termination of the employment contract from the part of the employer was added to the requirements, with the employer being responsible for invoking and proving its validity.

But what has the status been so far and what will be happening from now on?

2. The important changes made

2.1 Terminating employment contracts initially set for an indefinite period in the previous legal scheme

According to the first subparagraph of par. 3 of article 5 of Act 3198/1955:

“3. Termination of the employment agreement is valid, as long as it is done in writing, the compensation due has been paid and the employment of the employee being laid off has been registered with IKA (insurance body of Greece) or the laid off employee has been insured”.

Therefore: The termination of the employment contract set for an indefinite time was valid without the employer invoking any reason. The only obligation of the latter was the payment of the compensation that was due to the employee. When the latter regarded the employer was misusing the right given to them by law to terminate the employment agreement, the employee could appeal before the courts and as for the cancellation of the termination and the continuation of the employment relationship. In this case, the employee had to prove the claims they made.

2.2 The New Legislation

With the provision of article 48 of Act 4611/2019, the first subparagraph of paragraph 3 of article 5 of Act 3198/1955 (‘A 98), is replaced, effective immediately, as follows:

“3. The termination of employment is valid, only if it is based on a valid reason, as such is defined in Article 24 of the revised European Social Charter, ratified by article one of law 4359/2016 (A’ 5), it is done in writing, the compensation due has been paid and the employment of the laid off employee has been registered with IKA or the laid off employee has been insured. In case the termination is challenged, the employer is responsible for invoking and proving that the requirements were met”.

Therefore: From this point forward, the law requires, in order the termination of an employment contract set for indefinite period to be valid, a “valid reason”, which the employer terminating the employment has to invoke and prove. For the definition of the term “valid reason” (in detail below, under 3.3) the provision is referring to the revised European Social Charter (below, under 3.3), which is already ratified by Greece, (with an increased formal power) and more specifically in article 24 of said Charter (below, under 3.2).

2.3 What changed comparing to the previously exiting legal scheme when it comes to terminating an employment contract initially set for an indefinite time?

According to the pre-existing legislation, the employer could terminate any employment contract set for an indefinite time, with the main requirement being the payment of the compensation of dismissal. When the employee considered there was a misuse of this power, they applied to the competent courts and the employee was responsible for proving the misuse of thee employers right.

The new regulation brings fundamental changes: the employer now must invoke and prove the requirements of a valid termination are satisfied, therefore the existence of a (now required) valid reason.

This position the Greek law has taken is compatible with the explanatory memorandum of the recent (article 48 of act 4611/2019) regulation concerning the necessity of the existence of a valid reason (see the report), as well as with the position the European Committee of Social Rights took on the provision of article 24 of rESC.

2.4 In Conclusion

In contrast with what was been happening so far, the employer can no longer rest assured just by paying the compensation of dismissal when terminating an employment contract initially set for an indefinite time. They shall keep in mind that a valid reason must be invoked. This reason should have something to do with the behavior or the skills of the employee, or the operational requirements of the establishment. Even more so: invoking and proving the existence of this valid reason, is theirs (the employer’s) responsibility.

Concluding: The requirement for the existence of a valid reason for the termination of the employment contract set for an indefinite time and also the “burden” of invocation and proof of such reason being on the employer, is certain to fill the court halls (a first “taste” of the stand the courts will take under 4), boosting our (lawyers’) bank accounts -no matter whose side you are defending.

Let us all just hope that it will have positive effects not only in ensuring the employees’ rights (as the law maker intends it to) but also to the development of the economy, the businesses and the country.

3. The Revised European Social Charter and the “Valid” Reason

3.1 The European Social Charter and the Revised European Social Charter

According to the explanatory memorandum for the Ratification of the revised European Social Charter:

“The European Social Charter (ESC), international convention for the protection of social rights, was adopted by the Council of Europe in 1961 and ratified by Greece with Act 1426/84 (Government Gazzette No 32A/21-2-84).”

The ESC is constantly developing by the precedents set by the European Committee of Social Rights, which oversees its application, and by incorporating Protocols in the ESC that widen the range of the rights protected and improve the mechanisms set to control. In 1998, the Additional Protocol was added to the ESC, which expanded the scope of the Charter with the recognition and protection of new rights. In 1995, a new Additional Protocol was added, providing with a system for Collective Complaints. Greece ratified the two Additional Protocols with the Act 2595/98 (Government Gazzette 63A/24-3-98). In 1991, the amending protocol was added, which improved the mechanisms set to ensure the application of ESC and was ratified with Act 2422/1996 (Government Gazzette 144A/4-7-96).

In 1996, the European Social Charter was revised, in order to be more up to date and to include more rights. The Revised European Social Charter was adopted on the 3rd of May, 1996, in Strasbourg, where it was open for signing, and was entered into force in the 1st of July, 1999, after the three necessary ratifications. It takes in consideration the developments in labor legislation and social policy, the ones that happened since the creation of the Charter in 1961, and intends to replace it.

The rights protected by the ESC divided to four areas: a) Employment, Training and Equal Opportunities, b) Health, Social Insurance and Social Protection, c) Labor Rights and d) Protection of Children, Family and Immigrants.

Greece has already signed the Revised European Social Charter in the 3rd of May 1996. The ratification of the Revised Charter improves, beyond any doubt, the level of protection provided in the area of social policy and proves the active interest of our country in the protection of human rights.

The Revised European Social Charter is already national law since its ratification with Act 4359/16. In addition, it is protected under the Greek Constitution (article 28 par. 1).

3.2 Article 24 of the Revised European Social Charter (RESC)

The European Social Charter (ESC) is, as already mentioned, an international convention for the protection of social rights. In 1996, the ESC was revised in order to be more up to date and to include more rights.

According to article 24 of RESC: “In order to reassure the effective application of the right of protection of the employees in cases of termination of the employment relationship, the parties must recognize that: a. the right of all employees to not have their employment relationship terminated without a valid reason relating to their ability or behavior, or based on the operational requirements of the establishment, of the facilities or the agency, b. the employees’ right, those ones whose employment relationship is terminated without a valid reason, to a sufficient compensation or other proper rectification. For this reason, the parties have to make sure that the employee, believing that their employment relationship is terminated without valid reason, has the right to appeal to an impartial body.”

3.3 What constitutes a “Valid reason” according to Article 24 of RESC

It is accepted that the valid reason required by article 24 of RESC (and now by paragraph 3 of article 5 of Act 3198/1955) is the one justifying the proper use (and not misuse) of the termination.

There is no obstacle in ratifying this article, as long as the causality of the termination of employment coincides with article 281 of the Greek Civil Code, which is setting the requirement of good faith intention and in accordance with the financial and social objective of the right of the employer to terminate the employment contract. The reasons for termination mentioned in article 24.a. are related to the reasons that lift the unfairness of the termination of the employment contract …”

The current position of the legal theory on the “valid reason” is basically the same as the abovementioned opinion of the European Economic and Social Committee Draft Law “Ratification of Revised European Social Charter”.

Valid reason is any reason relating to the employee them self, the way they work and their attitude as an employee, the technical and financial aspects of the establishment (not necessarily the establishment’s financial difficulties) or its operational requirements. Such a valid reason could not be tolerated, of course, outside this specific context: The dismissal of an employee for reasons irrelevant to the employment relationship and business could not be tolerated (i.e. vindictiveness, union activity, sexual orientation, political beliefs, racial discrimination etc.).

Therefore, we could conclude that valid reason is any reason that negatively affects the employment relationship and justifies its termination from the part of the employer.

4. How will the courts react?

(A First Taste of The Future… From The Past)

Obviously, we cannot possibly know how the courts will rule on, very recent, new regulation. However, there is a very interesting ruling coming from the past.

The ruling of the Court of First Instance of Piraeus 3220/2017 is definitely the first, and till this day only one, as far as the writer knows, published court decision that accepts that the status of unjustified termination (ruled according to subparagraph 1 par.3 article 5 Act 3198/1955) was not compatible with Article 24 of RESC. This ruling accepted that RESC had already (after its ratification with Act 4359/16 – and according to Article 28 of the Greek Constitution) increased formal power over common Greek laws.

“With the above provision (Article 24 of RESC) is introduced for the first time in the European legislation for Human Rights a new fundamental right, which is the protection of the employee from dismissal with the initiative of the employer. The main scope of the provision is that an arbitrary and unjustifiable dismissal offends the merit and the dignity of the employee. The protection Article 24 of RESC ensures that: a) every termination of an employment contract by the employer must be based on a valid reason, which should be relevant to the behavior or the skills or the operational requirements of the establishment, b) the employer must be properly compensated for being unjustifiably dismissed by the employee, or be provided with some other form of rectification and c) adequate lawful protection must be ensured.

After the ratification of Article 24 of RESC it is clear the status of the “unjustified” termination by the employer is not compatible with the termination due to a valid reason as required by the new article. Therefore, the principle of justified termination is directly adopted by the Greek legislation and from now on the Greek courts should investigate the existence or not of a valid reason and deem invalid every dismissal that is not based on such a reason. This can be done by either directly referring to Article 24, which sets precise requirements that are explicit and free of contingent, at least regarding this issue, of course along with the provisions of 174 and 180 of the Greek Civil Code – solution that is deemed more appropriate by this Court -, or by interpretating Article 281 of the Greek Civil Code, resulting to deeming all dismissals not taking place in accordance with Article 24 of RESC (par. 23) unfair.

Regarding the consequences of unjustified terminations – besides them being invalid according to article 174 and 180 of the Greek Civil Code, the employer has to provide adequate compensation or other form of rectification, as required by national law. It should be noted that the European Committee for Social Rights has consistently held rulings that the invalidity of the dismissal and the claim of salaries of late payment and the reinstatement of the invalidly dismissed, are considered as adequate rectification, so there is no need for financially compensating the illegally dismissed. [Gavalas, What is changing to labour law after the ratification of the revised European Social Charter, E.L.L.(ΕργΔ) 2016, 130 and on].

In view of all of the above, it is clear that the rulings the court made until now resulting that a dismissal is valid even if it is not based on a valid reason (due to its “acausal” nature) and that in order for a dismissal to be considered unfair it is not enough for the reason the employer based the dismissal on to be untrue or for the dismissal to lack an obvious cause, but the for the dismissal to be invalid it should be considered to oppose to article 281 of the Greek Civil Code, should be considered to contradicts to the provision of Article 24 of the RESC, which forbids the arbitrary and unjustifiable dismissal of the employee”.

In other words: The court rulings addressing cases about actions for the cancelation of terminations of employment contracts set for an indefinite time will focus on investigating the existence of a “valid reason”. When the employer succeeds in proving the existence of a “valid reason” (relevant to the behavior or the skills or the operational requirements of the establishment) the relevant action will be dismissed. But when the judge is not convinced by the argument of the employer, the action of the employee is upheld and the employer is obliged to reinstate and pay all the salaries of late payment.

What a great opportunity this is!

Stavros Koumentakis
Senior Partner

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (May 25th, 2019).

May 25, 2019

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