Greece: Industrial relations profile
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The economic crisis in Greece continued in 2011 and led to further recession, with GNP at -4%, a deterioration of living standards in the country and social degradation. As a result, in early 2012 a new loan agreement was concluded with the EU and the IMF, along with a restructuring of the Greek debt, which was accompanied by the signing of a Memorandum prescribing Greece’s commitments in order for the related assistance to be provided.
Significant changes in legislation regarding industrial relations were recorded in 2011 and early 2012, implementing the policies foreseen by the Memorandum described above. Two relevant pieces of legislation are discussed below.
Omnibus Law 3986/2011 on fixed-term contracts
This law prescribes that the unrestricted renewal of fixed-term employment contracts be allowed only if justified by an ‘objective reason’ as determined by law. If an objective reason does not exist, and as long as the duration of the successive fixed-term contracts or employment relationships exceeds a total period of three years, they are presumed as intended to meet fixed and permanent needs of the enterprise or undertaking; as a consequence, they are converted into employment contracts or relationships of indefinite term. If, during the three-year period, there are more than three renewals of successive employment contracts or relationships, they are presumed as intended to meet fixed and permanent needs of the enterprise or undertaking; as a consequence, they are converted into employment contracts or relationships of indefinite term. In any case, the employer carries the burden of counter-proof.
The enactment of the new Law 4024/2011, in particular Article 37, introduced a number of significant changes to labour legislation, placing particular emphasis on facilitating the conclusion of business-level agreements between the employer and employees.
Furthermore, the terms and conditions for the conclusion of business-level agreements are specified, aiming at an easy and quick conclusion thereof, as the workers can now be represented by the Associations of Workers, in the absence of a business-level trade union.
Business-level collective employment agreements (CEAs)
The business-level CEAs may not contain work terms less favourable to employees than those of the National General Collective Employment Agreement (EGSSE). Therefore, the reduction of earnings cannot exceed the minimum salary specified by the EGSSE.
After the conclusion of the business-level CEA, the reduction of wages and the other terms shall apply to the entire personnel.
The selective application of the reduction of wages, or of other terms contained in the business-level CEA, to certain employees or to employees of a particular specialty, requires the application of the provisions of Law 3896/2011 on equality, principle of equal treatment of workers. As a consequence, if the terms of the business-level CEA do not contravene the provisions on equality of Law 3896/2011 and are not deemed as discriminatory, they may apply to only part of the staff.
Moreover, according to Article 37, no time limit is set regarding the duration of the business-level CEA.
It is important to note that, throughout the period of fiscal adjustment, the business-level collective employment agreement will prevail in cases of overlapping with a sectoral collective employment agreement; in any case, it may not contain working terms less favorable to employees than those of national collective agreements.
Capacity to conclude collective bargaining agreements
The following persons and entities have the capacity to conclude collective bargaining agreements:
- Trade unions of employees and employers of all levels in the field of their activity, as well as associations of workers under the terms and conditions mentioned above.
- More specifically, as for the national general collective bargaining agreements, the most representative third-level trade union has the capacity to conclude collective employment agreements on the workers’ side. As for the remaining collective agreements, the most representative trade union of workers within the scope of the collective bargaining agreement has the capacity to conclude a collective employment agreement on the workers’ side.
- Each employer for the workers they employ in their business.
- For employees in lawyer, notary public and other offices, the relevant collective agreement will be signed or the arbitration proceedings will be conducted between the trade union of employees and the relevant public law corporate bodies, which cover the employers.
More specifically, it is prescribed that business-level collective agreements are concluded, in order of priority, by the enterprise’s trade unions covering the workers, or if there is no trade union in the enterprise, by an association of workers, regardless of the category, position or specialty of the workers in the enterprise. If there is no workers’ association, the agreement will be concluded by the respective first-level sectoral organisations and the employer.
Association of Workers
An Association of Workers is established by at least three-fifths of workers in the enterprise, regardless of the total number of the enterprise’s workers, and its duration is not subject to a time limit.
The associations of workers are recognised as trade unions of a temporary nature by Law 1264/1982, having no legal personality and no capacity to conclude collective agreements.
This enables small businesses, in which employees are not represented by a business-level union because such a union is not present, to easily establish associations of workers to take trade union action and defend and promote the workers’ interests.
It should be noted that the role of the association of workers is quite strong, as, in the absence of a business-level trade union, the association has the capacity to enter into business-level agreements.
New measures on employment relationships in 2012
Collective employment agreements
Collective employment agreements can now only be fixed-term, with a minimum duration of one year and a maximum duration of three years. Previously, collective agreements could be made for an indefinite term.
Collective agreements (sectoral and occupational) that have been in place for 24 months or more will expire no later than one year after the new act was adopted, on 14 February 2013.
Collective agreements signed on or after 14 February 2010 can be valid for three years, but employers have the right to terminate them and start a new bargaining round after one year.
The previous system of ‘extension’ of collective agreements meant that even after expiry, an old collective agreement would remain in force while a new round of bargaining started. The agreement could be extended for up to six months. If, after this period, no new collective agreement had been signed, the ‘after-effect’ principle meant that employees’ salaries and allowances would remain unchanged and would become a legally binding part of their individual employment contract.
Under the new legislation the possible extension period is reduced to three months. The objective of this statutory intervention has been altered to ensure that employers are not obliged to pay all the allowances and bonuses contained in the previous agreement, but only the basic salary of that sector, occupation or firm, and only allowances related to seniority, children, studies and hazardous work. This can be imposed without the employee’s consent and will continue to apply until replaced by a new collective agreement or individual contract, which might contain even more disadvantageous terms.
Provision is made for a freeze of pay increases after one year’s service with an employer, the so-called ‘service maturity’, with suspension of the effect of any relevant law, provision, collective agreement or even arbitration award.
The new legislation provides that arbitration takes place exclusively under an agreement between employer and employee, and applies only to basic salary and/or basic remuneration and does not include any other issue such as allowances, benefits or institutional regulations.
Permanent contracts in the broader public sector
As of 14 February 2012, employment contracts that would normally only expire on retirement or reaching the statutory retirement age, and that employers could not terminate under any other circumstances, are now to be regarded as collective agreements of indefinite duration.
This change makes it possible for employers to terminate such contracts as long as they comply with the relevant legislation on matters such as compensation and proper notification. This affects a large number of employees in the broader public sector, and also some bank workers who had ‘permanent’ employment contracts that protected them from dismissal.
Industrial relations context
As part of the EU/IMF financial support programme for Greece, the government agreed to cut the cost of the public sector by reducing staff. To do this, a labour reserve will be introduced for 30,000 employees with a view to saving €300 million in 2012. Unions have been extremely critical of the plan. They intend to appeal to Greek and European courts, saying the measures conflict with the Greek constitution and EC law. They also threatened to strike at sectoral and national level.
After difficult negotiations lasting almost three months, the management of Greece’s biggest telecommunications company (ΟΤΕ), and the Federation of OTE Employees (ΟΜΕ-ΟΤΕ) reached a preliminary agreement on 23 September to cut labour costs. The deal sets out a tough programme of pay cuts and reduces the firm’s working week to 35 hours, but avoids layoffs and secures industrial peace for the next three years. The agreement is due to be signed after final approval by the parties involved (GR1110019I).
Following the government’s invitation in January 2012, the main employer and employee associations joined discussions related to improving Greek competitiveness by reducing wage costs. As a result of the debate, they drafted a joint letter on 3 March 2012, opposing any exceptions and derogations from the National General Collective Employment Agreement (EGSSE), which lays out the salary and hours thresholds for the entire private sector in Greece. (GR1202049I).
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