Radical changes in collective employment relationships

Greece’s accession to the European Financial Stability Facility agreed on 25 March provided for a radical economic structural reform programme. A series of laws to implement this were passed in 2010. The last of these was passed in December and provides for ‘special company-related agreements’ which will be less favourable to workers than sectoral agreements. The only role left to the Organisation for Mediation and Arbitration (OMED) will be to set minimum wages.

Provisions of the previous law covering collective bargaining

Law 1876/1990 on ‘free collective bargaining and other provisions’ is the principal law that sets the institutional framework for collective bargaining in Greece. According to its provisions, the minimum limits of protection for salaried workers throughout the country are set by the National General Collective Labour Agreement (EGSSE), which is signed by third-level employers’ and workers’ organisations and has the force of law. Sector-related, business-related and occupation-related collective employment agreements (CEAs) must not include employment terms that are less favourable than the employment terms set by the EGSSE. If different CEAs are in conflict, the principle of implementing the provisions most favourable to the workers applies (favourability principle or Günstigkeitsprinzip). As for extending CEAs, the Minister of Labour and Social Security may extend and declare as binding on all the employees of a sector or profession a CEA that is already binding on employers employing 51% of the sector’s or profession’s employees. If bargaining between the parties to conclude a CEA fails, interested parties may appeal to the Organisation for Mediation and Arbitration (OMED). The mediator’s proposals are not binding; however, the arbitrator’s award is equated with a CEA and is binding. Any interested parties may request the appointment of a mediator. Where an employer rejects a mediator’s proposals, the workers’ trade union that accepts those proposals may refer the matter unilaterally to arbitration.

Flexibilisation of employment relationships

The agreement dated 25 March, which signified Greece’s accession to the European Financial Stability Facility and its borrowing from the euro zone countries and the International Monetary Fund, is accompanied by a series of annexes (‘Memoranda’) which provide for a structural reform programme in terms of economic, fiscal, financial and labour market policy. Based on the reforms provided for by the Memoranda, a series of laws were passed in 2010 that make radical changes to employment relationships (GR1005019I, GR1006019I, GR1007019I, GR1011029I) aimed mainly at making the labour market more flexible and at minimising labour costs.

On collective employment relationships, the Memorandum of Economic and Financial Policies dated 3 May 2010, the Memorandum of Understanding on Specific Economic Policy and Conditionality dated 3 May 2010 and the new updated Memorandum dated 6 August 2010 provide for:

• reforming the legal framework for wage bargaining in the private sector, ‘including by eliminating asymmetry in arbitration … so that both parties can resort to arbitration if they disagree with the proposal of the mediator’;

• adopting ‘legislation on minimum wages to introduce sub-minima for groups at risk, such as the young and long-term unemployed’, and ‘measures guaranteeing that current minimum wages remain fixed in nominal terms for three years’;

• adopting legislation which ‘shall allow local territorial pacts to set wage increases below sectoral agreements and introduce variable pay to link wages to productivity performance at company level’;

• withdrawing the provision that allows the Minister of Labour and Social Security to expand sectoral agreements to those persons who are not represented in the bargaining.

The new regulations

Law 3899/2010, the last law concerning the labour market passed in December 2010, brought significant changes to the collective labour law that was in force until then. These significant changes are outlined below.

Special company-related CEAs

Until law 3899/2010 was passed, the principle of applying a regulation that is more favourable to the employee in case of concurrent CEAs applied absolutely; there was no possibility of departing from it. Law 3899/2010 introduced a new type of company-related CEA, the ‘special company-related CEA’, which may provide for remuneration and other working terms that are less favourable than the remuneration and working terms provided for by the respective sectoral CEA. Minimum wages and minimum working conditions at national and intersectoral level are still laid down by the EGSSE. Law 3899/2010 subjects the conclusion of the special company-related CEA, as well as its extension and renewal, to a preliminary procedure: parties interested in concluding a special company-related CEA submit to the Social Inspection Council of the Labour Inspectorate (SKΕΕΕ) a joint explanatory statement setting forth the reasons that justify their intention to enter into a special company-related CEA. SKEEE’s opinion is not binding, however. This means that parties may proceed to conclude the special company-related CEA despite the Council’s opinion otherwise.

New regulations on arbitration

The most important regulations introduced by Law 3899/2010 with respect to the institution of arbitration are those on referring matters to arbitration and the scope of the arbitration award. More specifically, the new regulations still offer the possibility of being able to refer matters unilaterally to arbitration. This means arbitration is still mandatory, as arbitration proceedings may be initiated freely by only one litigant party, but result in an arbitration award which is binding on both parties. However, Law 3899/2010 provides that, should mediation be unsuccessful, not only the trade unions but also the employer may refer matters unilaterally to arbitration if the other party does not accept the mediator’s proposals. In terms of the scope of arbitration proceedings, the new regulations introduce a significant restriction: arbitration awards shall, from now on, determine only minimum monthly and/or daily wages. Other terms of employment, such as benefits, bonuses, working hours, holidays and the regulation of other employment terms (such as structuring and filling job vacancies, recruitment, termination of employment, grounds for termination and termination procedures, severance pay), can no longer be regulated by arbitration awards.

Sofia Lampousaki, Labour Institute of Greek General Confederation of Labour (INE/GSEE)