New law regulates temporary agency work

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In October 2001, the Greek parliament passed a new law on employment services, which includes provisions regulating temporary agency work and the operation of temporary employment agencies. The new legislation for the first time lays down specific rules on the establishment, operation and obligations of agencies and the employment rights of temporary agency workers

A new law on the restructuring of the Labour Force Employment Organisation (OAED) - the public body responsible for Greek employment policy and services - and other provisions (GR0110106F) was passed by the Greek parliament on 23 October 2001. Among other matters, the law regulates for the first time the legislative framework regarding the establishment and operation of temporary employment agencies and the employment rights of the people they employ. The temporary agency work provisions of the new law, which was published on 6 November 2001 (Government Gazette 258A), are set out below.

Temporary employment agencies

According to Article 20 of the new law, temporary employment agencies (TEAs) are companies whose scope of activity includes the provision of labour by their employees to another employer (the 'indirect employer') in the form of temporary employment. Such companies are not allowed to carry on any other activity, but exceptionally they may be granted special permission to mediate in finding jobs. Provided they meet the requirements of the law, they are also allowed to carry out human resources evaluation and/or training.

Temporary employment via a third party means work provided to another employer (the indirect employer), for a limited period of time, by employees associated with their employer (the direct employer) under a contract or a relationship of subordination for a fixed or indeterminate period. This is allowed only under the terms and conditions set out in the new law.

Conditions for the establishment and operation of agencies

A TEA may (according to Article 21 of the new law) be set up only in the form of a public limited company with share capital of at least GRD 60 million. To establish and operate a TEA, a special licence from the Ministry of Labour is required, following an opinion from the Temporary Employment Control Commission.

Employment rights of temporary agency workers

A prior written fixed-term or open-ended contract is required in order to provide labour through temporary agency work (Article 22 of the law). Such a contract is concluded between the TEA (direct employer) and the employee, and reference must be made therein to: the terms, conditions and length of employment; the terms and conditions of provision of labour to the indirect employer(s); the terms and conditions of the employee's pay and social insurance; and any other data of which, in good faith and in the circumstances, the employee must be aware with regard to the provision of his or her labour.

Such contracts also determine the amount of the employee's pay, which cannot be lower than that set by the sectoral, occupation-based or enterprise-level collective agreements applicable to the indirect employer's staff, and in no case may it be lower than that provided for in the current National General Collective Agreement (GR0006175N). The pay of employees while not providing labour to an indirect employer cannot be lower than that provided for in the current National General Collective Agreement. If, at the time the contract is concluded, it is not possible to make reference to the specific indirect employer or to determine the period during which the employee will provide his or her labour to that employer, the contract must mention the framework of terms and conditions for the provision of labour to an indirect employer, with which the employee must agree. An indirect employer may make no financial charge to the employee with regard to his or her employment.

The length of time the employee is employed by the indirect employer may not exceed eight months. Written renewal with the same indirect employer is permitted, on the condition that the total length of such renewal does not exceed eight months, unless the existing employment contract is converted into an open-ended contract.

In the event that the employee continues in the employment of the indirect employer after the contract expires and the contract is renewed for a period of over two months, the employee's contract of employment with the TEA shall be deemed to have been converted ipso facto into an open-ended employment contract between the employee and the indirect employer.

Any clause directly or indirectly forbidding or hampering the permanent employment of the temporarily employed employee shall be deemed to be invalid and neither the employee nor the employer shall bear any legal consequences thereof.

In addition, any clause directly or indirectly hampering the trade union rights of the employee or impairing his or her social insurance rights shall be deemed to be invalid. The provisions regarding the indirect employer's staff with similar qualifications shall apply with regard to insurance.

A contract concluded in writing between the TEA and the indirect employer shall determine the particulars of the employee's manner of payment and insurance for the period for which the employee provides his or her services to the indirect employer. The indirect employer must specify in the contract, before the employee is made available to it, the required vocational qualifications or skills, the particular characteristics of the job to be filled, and any necessary medical care associated with the job. The indirect employer must also specify any major or particular risks associated with the specific job. The TEA is obliged to make this information known to employees.

The TEA and the indirect employer are jointly and separately liable vis-à-vis the temporary employee with regard to safeguarding his or her rights regarding pay and payment of social insurance contributions. This liability on the part of the indirect employer shall be suspended if the agreement stipulates that the direct employer shall be liable for paying the emoluments and insurance contributions, and the rights of the temporary employee regarding pay and social insurance may be met by forfeiting the TEA's 'indemnity bonds' (with subsidiary liability of the indirect employer) provided for in Article 23 of the law (see below).

With regard to health and safety at work, employees under temporary agency employment contracts enjoy the same level of protection as that provided to the indirect employer's other staff. The indirect employer, notwithstanding contractual provision for the cumulative co-liability of the TEA, is liable for the conditions in which the employee's work is performed and for accidents at work.

Financial and insurance guarantees for agency workers

According to Article 23, every TEA is obliged, in order to obtain an operating licence, to submit two 'indemnity bonds' from banks as a financial guarantees, the first to guarantee the temporary employees' remuneration and the second to guarantee their social insurance contributions. The amounts of the indemnity bonds shall be readjusted every two years, by decision of the Ministry of Labour and Social Security, depending on the number of temporary employees taken on by the company, and in such cases the companies must submit supplementary indemnity bonds within three months, so that their licences are not revoked.

Situations where temporary agency work is prohibited

Employment by an indirect employer under a contract of temporary employment is not permitted (under Article 24):

• when it replaces workers who are exercising the right to strike;

• when the indirect employer had carried out collective dismissals of workers with the same qualifications in the previous year; and

• when the indirect employer is subject to the provisions of Law 2190/1994 regarding 'Establishment of an independent authority to select staff and regulate management issues' or to the provisions of para. 3 of Article 1 of Law 2527/1997, as applicable.

Penalties

Article 25 provides that, for each violation of the law's provisions on temporary agency work, the Labour Inspectorate (SEPE) of the Ministry of Labour and Social Security shall impose a fine on the violator, ranging from EUR 2,936 to EUR 29,360, depending on the severity of the violation. In order to impose the fine, the provisions of Article 16 of Law 2639/1998 (Government Gazette 205A) shall be implemented.

Positions of the social partners

Neither the employers' organisations nor the trade unions gave any reaction, either positive or negative, to the new legislative framework for temporary agency work. This is probably due to the fact that both sides have been aware for some time now of the need to regulate such work and temporary employment agencies, because this specific form of employment has hitherto been operating without any special institutional framework, in the framework only of the general provisions of the Civil Code (Article 651). Nevertheless, referring to the views and proposals put forward by the social partners in the past, the following may be noted:

• the Federation of Greek Industries (SEV) disagrees with the prescribed maximum period of eight months of employment by the indirect employer. In SEV's view, this period should be 12 months, renewable for another 12 months, because frequent changes in employment reduce the worker's chances of acquiring experience and ultimately being retained in a job by an indirect employer;

• SEV also contends that a worker's pay with an indirect employer must be determined solely by relevant sectoral or occupation-based collective agreements. It disagrees with the regulation providing for determination of wages also on the basis of enterprise-level collective agreements. In SEV's view, enterprise-level agreements refer to the particular working conditions and conditions of training and evaluation of regular workers in the indirect employer's enterprise. In this context, SEV contends that enterprises making use of temporary agency work will hesitate in future to conclude enterprise-level collective agreements; and

• with regard to the trade unions, many of the provisions of the new legislative framework on temporary agency work are in harmony with the relevant proposals submitted by the General Confederation of Greek Labour (GSEE) as early as May 1997. The main point of difference is the length of employment by the indirect employer. Thus, in contrast with SEV, GSEE contends that the period during which workers are leased out to an indirect employer should not exceed three months, and that only construction work on engineering and other projects should be exempted from this limitation.

Commentary

The adoption of the new law's provisions on temporary employment agencies is aimed at regulating the content of the flexible forms of employment that have so far been developing only in the framework of general legislative provisions. This produces a range of adverse side-effects with regard to labour rights. The new regulatory framework attempts to strengthen workers' employment rights through a one-way hiring-out relationship that is also acceptable to the trade unions. Finally, the new regulations will obviously contribute to the development of the practice of hiring out labour as a business, ie hiring out staff as a for-profit activity, which to date has represented only around 0.2% of Greek employment, mainly due to the lack of an institutional framework for its operation. (Eva Soumeli, INE/GSEE-ADEDY)