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Labour Law developments in Greece increase flexibility of employment

30/03/2012

Recent labour law reforms in Greece significantly modify the labour scene regarding the employees working hours, their salaries and severance payment and other employment matters. All changes have been made in the spirit of preserving employment, increasing cost reduction and boosting competitiveness.
 
The main changes are outlined as follows:
 
1) Unilateral imposition of a “rotative employment” system
If the activities of a business are reduced the employer is now entitled, rather than terminating an employee’s employment contract, to unilaterally implement a system of “rotative employment” under which employees would work fewer (than five) days a week, or fewer (than four) weeks a month, or fewer (than 12) months a year but under full time employment contracts. This system can only be imposed for up to nine months in each calendar year, giving employers a true alternative to redundancies. (Article 17, para 3 of Law 3899/2010).
 
2) Increase in the period of fixed term contracts for employees hired through temporary work agencies
Law 3899/2010 provides that the maximum duration of fixed term contracts for employees hired through temporary work agencies, which was previously reduced from 18 to 12 months, may not exceed 36 months in total.
 
3) Reduction in severance pay and adjustment to notice periods
The first twelve (12) months of an indefinite employment contract are considered probationary period; such contract can be terminated without notice and without severance pay unless the employee and employer agree otherwise. (Article 17 paragraph 5 of Law 3899/2010).
The severance pay for cases of dismissal without notice is given in the following table:
 

Seniority Severance pay, if dismissed without notice
0-12 months 0
1-4 years 1/12 of yearly salary x 2
4-6 years 1/12 of yearly salary x 3
6-8 years 1/12 of yearly salary x 4
8-10 years 1/12 of yearly salary x 5
10 years 1/12 of yearly salary x 6
11 years 1/12 of yearly salary x 7
 
For seniority of more than 11 years, compensation increases by 1/12 of yearly salary for each additional year of seniority in the business, up to a maximum total of 24 x 1/12 of yearly salary. Such legal severance is reduced by half when timely notice of termination is given.
 
Notice periods are adjusted to more realistic periods than they used to be, extending up to 24 months, and give employers a real incentive to actual invoke them in order to cut costs whereas previously the usual practice was to make the employee redundant without notice in any case. 
Notice period is a function of seniority, as follows:
 
Seniority                                                        Notice period
0-12 months 0
1-2 years 1 month
2-5 years 2 months
5-10 years 3 months
10-15 years 4 months
15-20 years 5 months
More than 20 years 6 months
 
4) Increase of the period of conversion of fixed term contracts to indefinite term employment contracts
Article 41 of Law 3986/2011 provides that if during a period of 3 years the number of contract renewals, successive contracts or employment relationships exceed 3, then such contracts/relationships shall be converted to contracts or employment relationships of indefinite duration as it is deemed that through them the permanent and continuous needs of a business are attempted to be covered.
Before this law was implemented the period that determined when fixed term contracts convert to indefinite term contracts was (2) years.
 
5) Decrease of the minimum wage (Law 4046/2012)
With retrospective effect from 14 February 2012 the minimum monthly and daily wage as this were provided by the National General Collective Labour Agreement dated 15-07-2010 and were in force on 01-01-2012 is decreased by 22%.
For young individuals up to 25 years of age, irrespective of specialty and sector, a 32% decrease is applied.
 
This provides a real incentive to employers and assists in combating unemployment.
 
Athens, March 30, 2012
Avramopoulos & Partners
 
 
 
For further information please contact:
 
Mina Manakidou
Avramopoulos & Partners Law Firm
Email: manakidou@avralaw.gr
Tel.: +30 210 6912200
Fax: +30 210 6911211
 
Important Note: The information contained in this newsletter is provided for your information only and should not be regarded as a legal advice.