BANKRUPTCY OF THE EMPLOYER
| GREECE |
| PTÓKHEFSI ERGODÓTI πτωχευση εργοδότη BANKRUPTCY OF THE EMPLOYER |
Entrepreneurs are declared bankrupt by a court judgment when they cease to be in a position to pay their business debts. Bankruptcy, which constitutes a means of general and collective compulsory "execution" (i.e. recovery of debts from remaining assets), has special implications for employees because it threatens them with the loss both of their outstanding pay and of their jobs. The protection of legal property and, more generally, of claims relating to work as an employee led to the abolition of the fundamental bankruptcy law principle of equal treatment of creditors, and the introduction of a preferential position for employees. Thus, claims deriving from work as an employee, in so far as they have accrued within the two years immediately preceding the date of the bankruptcy judgment, rank third in the list of preferential claims. Furthermore, employees' contracts of employment are not automatically terminated by the declaration of the employer's bankruptcy but continue to exist until such time as they are lawfully terminated by the trustee. What is at stake in the event of a bankruptcy is not so much the payment of outstanding pay as the preservation of jobs. Consequently, an attempt is made to maintain the level of employment by rescuing the enterprise: Law 1386/1983, which set up the state Business Restructuring Organization (Οργανισμοζ Οικονομικηζ Ανασυγκροτησηζ Επιχειρησεων), represents the first instance in Greek legislation of a radical approach to the use of financial aid in dealing with the problem of enterprises which are in debt but still viable. This is a procedure "emancipated" from the framework of bankruptcy law whose purpose is not to meet creditors' claims but to rescue the enterprise (see insolvency of the employer ).
Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.
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