New law on maximum working time and working time arrangements

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In August 2005, Law 3385/2005 regarding 'Regulations on employment promotion, strengthening of social cohesion and other provisions' was passed. The law introduces new regulations on maximum working time and working time arrangements. Outlined here is a summary of the contents of the law, the remarks made by the competent trade unions and the reactions of the government bodies.

On 2 August 2005, Law 3385/2005 regarding 'Regulations on employment promotion, strengthening of social cohesion and other provisions' was passed. The new law, which was signed by the three ministries - the Ministry of Finance and Economy, the Ministry of Employment and Social Protection, and the Ministry of Justice - came into effect when it was published in the government gazette, except for Articles 1 and 2, which will enter into force on 1 October 2005.

Basic provisions of the law

Article 1 of Law 3385/2005, which replaces Article 4 of Law 2874/2000, stipulates that in companies where a contractual working week of up to 40 hours is implemented, employees may work an extra five hours per week at the employer’s discretion (overtime). These hours of overtime (from the 41st to the 45th hour) are compensated at the current hourly wage, increased by 25%, and are not calculated as part of the maximum overtime work allowed by current provisions. For employees who work a six-day working week, the above-described overtime is eight hours per week (from the 41st to the 48th hour).

Hours worked in excess of 45 hours during a five-day week or 48 hours during a six-day week constitute statutory overtime exceeding maximum working hours, provided that current conditions for legality and approval procedures and formalities are adhered to. Law 3385/2005 does not change the provisions for an increase of 50% of the hourly wage until 120 hours have been worked in one year and 75% for hours in excess of 120 hours; it did not amend the increase in the current hourly wage due to legal overtime exceeding maximum working hours. For every hour of 'exceptional overtime exceeding maximum working hours', i.e. overtime worked without permission or approval of the labour inspectorate, employees are entitled to compensation equal to the current daily wage increased by 100%.

Article 2 of Law 3385/2005 introduces regulations concerning working time arrangements. These provisions attempt to introduce two systems of working time arrangements, one on a four-month and one on an annual basis (reference period).

More specifically, in companies implementing a contractual working week of up to 40 hours for a certain period (period of increased employment), employees may work two hours in addition to the eight-hour day, provided that hours worked in excess of the 40-hour working week are deducted from the working hours during another period (period of decreased employment). Instead of decreased working hours, employees may be given proportional rest days (days off), or a combination of fewer days and more hours of rest. In this case, the periods of increased and decreased employment must be no longer than four months in each calendar year (reference period).

According to Article 2, paragraph 2 of Law 3385/2005, if a company implementing a contractual working week of less than 40 hours experiences a backlog of work owing either to the nature, type or scope of its business, or to unusual or unforeseen causes, it may be agreed that up to 256 working hours out of the total time worked within one calendar year will be distributed with more hours during certain periods, which may not exceed 32 weeks per year, and proportionally fewer hours during the rest of the calendar year.

According to this law, both the four-month and the annual system of working time arrangements require agreement between the company and the company trade union or works council. In the case, however, of four-month arrangements, when no agreement is reached, or when there is no company trade union or works council and when the company’s employees have not given their consent, the arrangements are decided upon by a five-member committee made up of one labour inspector, two employer representatives and two employee representatives. This Working Time Arrangements Committee is competent to examine requests for arrangements and takes the final decision on whether or not to implement the proposed arrangements.

It must be noted that according to the provisions of Law 3385/2005, employees have the right to refuse to work these additional hours, if they are not in a position to do so and if their refusal is not contrary to the rules of good faith, and therefore does not constitute a reason for terminating their employment contracts.

The existing protective provisions on employees’ rest time should be observed during the period of increased employment. According to the arrangements, average weekly working hours over the year (reference period) - not including overtime or statutory working time exceeding maximum working hours during the period of decreased employment - remain at 40 hours. If a shorter contractual working week applies, they remain at the number of hours of that shorter week. If the above-mentioned hours of overtime and legal overtime exceeding maximum working hours are included, the working week may not exceed 48 hours.

In accordance with the regulations introduced in this new law, if working time arrangements are implemented, an employee may be granted, instead of reduced working hours, a proportional daily rest period (day off) or a proportional increase in annual paid leave, or a combination of reduced hours and rest days, or days of leave. This is to offset the extra hours worked during the period of increased working hours.

Overall, the changes introduced by Law 3385/2005 can be summarised as follows:

• Re-adoption of the overtime regime - this means that five or eight hours of extra work per week (depending on whether the company operates on a five- or a six-day week) may be performed at the employer’s discretion, at a rate increased by 25% (instead of the 50% in force until now) of the hourly wage paid. These extra hours of work are not considered to be overtime exceeding maximum working hours, according to the new regulation.

• Change in the regime of overtime exceeding maximum working hours - weekly working hours beyond the 45th or the 48th hour are considered in the new regulation as overtime. These hours are paid at a rate increased by 50% of the hourly wage until 120 hours have been worked in one year, and at a rate increased by 75% of the hourly wage for hours worked beyond 120 hours, as has been the case to date. At the same time, however, the rate for illegal overtime exceeding maximum working hours has been reduced: compensation for such overtime, which has been dubbed 'exceptional overtime exceeding maximum working hours', is increased by 100% instead of 150%, which has heretofore the case.

• Change in working time arrangements - apart from the 12-month arrangements in effect up to now, the new law introduces four-month working time arrangements for all companies without exception. However, this law does not contain provisions for a simultaneous reduction of the average weekly working time to 38 hours nor does it prohibit the use of overtime exceeding maximum working hours. A company may employ an employee two extra hours per day over and above the eight-hour day without extra pay, and such hours will be returned in the form of days off, leave or reduced working time.

• Within one year, arrangements may apply to up to 256 hours (instead of the 138 hours heretofore in effect) and up to 32 weeks of increased working time, with proportionally fewer working hours during the rest of the year. During the period of reduced working time, rates are the hourly wage increased by 30% for overtime, and 75% for overtime exceeding maximum working hours.

• Arrangements may emanate from an agreement between the company and the company trade union or works council, or the whole workforce in the absence of a representative body of the employees, in the case of four-month arrangements. If consultation is unsuccessful in the case of four-month arrangements, the five-member Working Time Arrangements Committee takes the decision. Employees have the right to refuse to work extra hours if they are not in a position to do so and if such a refusal is not counter to 'good faith'.

• A fundamental breakthrough provided for by the law is that it eliminates the obligation to make arrangements by means of a collective agreement and referral to mandatory arbitration, when no agreement is reached (in the case of four-month arrangements).

Responses from the social partners

The Greek General Confederation of Labour (GSEE) expressed strong opposition to the regulations, stressing that 'GSEE was and is opposed under all circumstances to working time arrangements, because they are an extreme form of flexibility which is prejudicial to workers'.

According to GSEE’s position, the new arrangements abolish the maximum limits on daily and weekly work (eight and 40 hours) - limits which are necessary as regards both quality of work and worker health and safety. Working time is calculated on an annual basis; the eight-hour day and 40-hour week, instead of being maximum limits, are now calculated as the average of increased or decreased working hours, within a (reference) period of more than one week (e.g. four months or one year), depending on the needs of the company.

This manner of reorganising working time, according to GSEE, apart from being dangerous and exhausting for employees, has two additional damaging effects: the disruption of employees’ family and social life and the loss of any financial benefit they would have derived from overtime exceeding maximum working hours, for which the arrangements are substituted.

At the same time, GSEE points out that any legislative regulation on arrangements should authorise the social partners to regulate by themselves - depending on the special conditions and circumstances of each sector, occupation or company - the special terms of any arrangements through free collective bargaining and agreements, which would include offsetting benefits for the employees’ side.

On the other side, the Federation of Greek Industries (SEV) expressed criticism of the new regulation. The SEV executive stresses that the new legislative framework is moving in the right direction; however, SEV is demanding greater flexibility in labour relations and warns that 'companies will leave Greece if an employment regime similar to the one in effect in most European countries is not put into effect'.

SEV called the new legislative framework on labour relations a 'half measure', and stressed that the new regulations are 'Greek improvisations' that compromise competitiveness. In SEV’s opinion, if additional measures are not taken, companies will be forced to relocate. At the same time, SEV proposes that the managerial prerogative should be put into effect, since 'a company’s CEO is the person who, at the end of the day, takes the final decisions and has the responsibility for the constant improvement of the company’s financial standing'.

Commentary

The philosophy of the draft law’s clauses relating to overtime, overtime exceeding maximum working hours and working time arrangements is influenced by the need to adapt the labour force to companies’ requirements for lower labour costs, in the context of boosting the competitiveness of the economy. In Greece, in particular, the seasonal character of many enterprises and their mode of operation appear to lead to working time arrangements that are adapted to the changing needs of production. However, any changes that are adopted in the provisions of labour legislation should be aimed at improving the status and quality of work and should not lead to a deregulation of labour relations. At the same time, any changes adopted on labour relations’ issues should be made in the framework of social dialogue, by enshrining them in collective agreements rather than imposing them through the procedures of the Working Time Arrangements Committee, the majority of which are in favour of working time arrangements. (Ada Stamati, INE/GSEE)