EMCC European Monitoring Centre on Change

Temporary dismissal of salaried employees

Greece
Phase: Management
Típus:
  • Response to COVID-19
  • Income support for workers
  • Working time flexibility
Utoljára módosítva: 09 December, 2020
Név:

Διαθεσιμότητα μισθωτών

Angol név:

Temporary dismissal of salaried employees

Coverage/Eligibility

Whole economy.

Due to COVID-19, businesses in the tourism, transport, culture, sports, food and beverage sectors may extend the suspension of their employees' contracts. Businesses that have been financially affected by COVID-19 as per their Activity Code Numbers (ACN), or their operation has been suspended under a state decision, are able  to suspend contracts of employment of part or all of the staff for a continuous period of 45 days. During this period employees’ dismissal is forbidden.

Main characteristics

The conditions and procedure for temporarily laying off salaried employees were given a new legal basis with the 2010 labour act (Act 3846/2010). The relevant provisions provide that firms and undertakings with restricted economic activity may, instead of terminating an employment agreement, serve written notice temporarily laying off salaried employees for no longer than three months annually, provided they have first consulted with the employees’ legal representatives. Employee representatives are defined, in the following order of priority, as:

  • representatives of the firm or undertaking’s representative trade union, covering, according to its statutes, employees irrespective of category, position or skill;
  • representatives of the firm or undertaking’s existing trade unions;
  • the works council;
  • in the absence of trade unions or a works council, the entire workforce is notified and consulted with.

Notification may be via a single notice posted in a conspicuous and accessible place at the firm. Consultation takes place at a place and time set by the employer. At the end of the three-months period, the same employee cannot be temporarily laid off for at least another 3 months.

The relevant departments of the labour inspectorate (SEPE), the Social Insurance Foundation (IKA) and the Labour Force Employment Organisation (OAED) must be notified by the employer in any manner of the declaration of temporary layoffs of all or part of the workforce. For salaried employees in public utility firms or undertakings employing more than 5,000 salaried employees, approval is required from the Ministry of Labour and Social Security, which is granted by application of the employer with the approval of the Plenary Supreme Labour Council.

During the period of temporary layoff, salaried employees receive half of the average of their full employment earnings for the previous two months. When the employer temporarily dismisses salaried employees, OAED pays those who remain unemployed while dismissed 10% of the average of their regular full employment earnings for the previous two months. These allowances are paid for a maximum of three months every year.

Response to COVID-19

Businesses that have been financially affected as per their Activity Code Numbers (ACN), or their operation has been suspended under a state decision due to COVID-19, can suspend contracts of employment of part or of all of the staff for a continuous period of 45 days, during which employees’ dismissal is prohibited. The list of ACNs is dynamic and more ACNs may be included. Should a dismissal take place - regardless of whether that dismissal concerns an employee whose employment has been suspended - it will be considered null and void. The suspension of the employment contracts may be applied for up to one month from 20 March 2020, following a joint decision of the Ministers of Finance and Labour and Social Affairs, taking into account the development of the crisis. The employees, whose contracts have been suspended, are entitled to a special purpose compensation of €800 paid by the state for that period. Additionally, they will have full social security insurance calculated on their full salary and the social security contributions will be covered by the state.

The measure has been extended (art. 37, of the Law 4890/2020, οικ. 23102/477/12.6.2020) for June and July 2020 stating that:

  • Businesses in the tourism, transport, culture and sports sectors which are considered as affected based upon their ACN number, may suspend the employment contracts of their employees for up to 30 days (consecutively) and in any case up to 31 July 2020. Employers may apply the measure of the suspension gradually and for a different number of employees, up to 100% of them, per statement submitted to the ERGANI (on line reporting system of the Ministry Labour and Social Affairs;
  • Businesses in the food and beverage sector may suspend the employment contracts of their employees for up to 30 days (consecutively) and in any case up to 30 June 2020. Employers may apply the measure of the suspension gradually and for a different number of employees, up to the percentage of 100% of them, per statement submitted to the ERGANI. The employees of such business are entitled to the exceptional state benefit of €534 depending on the days of suspension. The above businesses are not allowed to terminate employee's contracts for as long as they apply such measures and for 30 days after the expiration of the suspension.

Funding

  • National funds

Involved actors

National government
Sets the legal framework, supports compensation.
Egyéb
Labour inspectorate and social security authority. Employer through payment of wages up to 50% of the employees' gross monthly salary for two months.

Effectiveness

The measure of temporary layoffs is a tool which has been widely used by businesses since the onset of the economic crisis began to enhance their sustainability and to avoid redundancies. This measure was foreseen by the legislation already before the current economic crisis, however, it was not widely known and it was underused as an industrial relations practice. With the onset of the economic crisis, the law was revised and simplified to facilitate businesses to implement temporary dismissal schemes. There are no specific quantitative or qualitative data on the use and the effectiveness of such schemes during the crisis. However, there has been a significant number of enterprise-level strikes in order to combat their implementation and there has also been a significant number of court cases in the same context. Industrial action has, in many of the most well-known cases, ended up with an agreement between the company and the enterprise level union on the practicalities of the implementation of temporary dismissal schemes.

According to OAED's (National Employment Service) Activity Report March 2015 - June 2019, between this period there were 4,157 beneficiaries for a total amount of €1,229,799.01.

Strengths

Through this measure, dismissals can be hindered and at the same time the employer is saving employment costs in times of crisis.

Weaknesses

An article published by the e-kathimerini newspaper (9 June 2020) sums up the conclusions of a report by the National Institute of Labor and Human Resources (EIEAD). According to it: 'the unprecedented lockdown of many economic sectors due to the coronavirus saw almost one in two private sector workers out of work, either permanently or for a limited period. The report shows that more than 940,000 employees in Greece were laid off or had their contract suspended during the peak of the crisis. Across the 27 European Union Member States, 5.3% of workers have lost their jobs permanently as a result of the health crisis, while the temporary loss of work concerned 23.2% of workers. In Greece, permanent lay-offs lagged the European average and affected 4.7% of workers, but the country had the highest rate in suspended contracts, which affected 41.8% of workers. This puts Greece top among the EU27 in the temporary or permanent loss of work. Although the official figures from the Labour Ministry’s Ergani database have not been published yet, it is estimated that Greece’s rate of suspended contracts could climb to 45% in the private sector, given the €800 subsidies being handed out'.

It is not proved that in times of harsh economic climate this measure alone can hinder business closures.

Példák

Probably the most well-known case of implementation of temporary dismissal scheme was the case of HALYVOURGIKI SA, the largest and oldest company in the steel sector, with more than 60 years in operation. The company's management proceeded with the implementation of temporary layoffs scheme for 200 out of 263 workers in its plant in Elefsina region, from mid- February until the end of March 2014. According to the management’s announcement, the reason for the economic decline of the company is the Hercules economic climate, the huge energy cost and the fall in the demand for steel products in the domestic market. During the period of temporary layoffs, the company continued to pay 50% of the workers’ wages, while an additional 10% was being paid by the National Employment Service (OAED).
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