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Employment Law amendments boosts Foreign Direct Investments (F.D.I.)

December 2011 - Employment. Legal Developments by Pistiolis - Triantafyllos & Associates Law Fir.

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Pistiolis-Triantafyllos & Associates law firm has one of the most dynamic and business-oriented corporate employment & labour law practices in Greece. We represent national and international corporations and we make it our business to keep up with the ever-changing complexities of employment law, so corporations can focus on running their business. Employment law is one of the most rapidly changing areas of our legal system. Against a backdrop of new legislation, regulations and reported cases, maintaining best practice is a real challenge.

Our firm's goal is to provide immediate and pragmatic advice, regardless of where the issues arise, a cost effective approach aimed at helping our clients achieve results and to create the right framework for good employee relationships. We work side by side with corporations and business executives to implement the necessary methodology in respect of reducing the labour cost and establish efficient employment relationship to the business. We focus on understanding market needs, relating to large-scale restructurings, mergers and acquisitions, redundancies, business transfers and collective disputes and the establishment of employee benefits and incentives.

Now more than ever corporations in Greece possess the tools and the know-how to reduce the labour cost. Day by day we regain the trust of both markets and investors.

An uncompetitive environment

Employment law in Greece is probably the most regulated employment framework - in terms of legislation - in the world. The legislative restrictions, in the creation, function and termination of the employment relationship led to a very cumbersome and therefore often problematic relationship.

This complex regulation was founded upon the idea that the employer-employee relationship is unequal. However this can only partially justify the multiplicity of regulations, which posed serious problems and large economic costs in doing business in Greece.

As a result, Greece had until recent legislative developments, a key competitive disadvantage, which beyond anything else created an unattractive investment environment. It was widely accepted that services and products in Greece were expensive. The above fact combined with the lack of innovation, turned away any possible investors.

The restrictions on the number of redundancies, the increased trade union freedoms and the high employees' wages are just some of the Greek peculiarities which caused intense skepticism in both domestic and foreign investors.

Thus the last few years' corporations and their representatives required radical changes in employment law from the Greek government in order for Greece to attract investment and productive orientation.

Employment law previously

Beyond the national safety net which determines the minimum salary rates, in our country the minimum salary levels in each industry sector is being set beyond the level of agreement between employer and employee, and more often it is determined by industry trade and employers' organisations so these limits have been increased unnecessarily.

In addition Greek labour legislation encloses provisions for employment during Saturdays and Sundays, off premises, in case of overtime etc. Therefore, beside the legal or contractual salary, the employees are entitled of an incremental increase in case they provide labour under the above mentioned circumstances.

The employer was obliged to follow very strict rules in case of mass redundancies, which constricted the business decision to continue operation which less employment force. The condition of four lay-offs each month for companies employing up to 200 employees and up to two percent for companies employing more than 200 was considered as very restrictive by market experts.

Employment law today

Nevertheless, the recent labour legislation developments constitute a unique opportunity to change an, until recently, insufficient environment.

Throughout this year the legal framework has changed rapidly in order to meet the national and international investing requirements.The employment relationship has become more flexible and less cost-effective.

The so called Exceptional Company Collective Agreement, a contract between the management of the company and the company's labour union, is a recent introduction to our legal system. In such an agreement the contractual parties could consent on salaries lower than those regulated by any sectoral collective agreements, but not less than the National General Labour Collective Agreement. Recently under consideration is the possibility for even lower salaries. It could be considered as a useful tool to decrease the labour cost. 

In addition to this and according to the terms of the new legislation, the right of the employer to conclude a single agreement or accumulatively successive fixed-term agreements (maximum 3), has been increased from two to three years. Moreover, Greek legislation allows a probationary employment period of twelve months for the indefinite employment-term contracts instead of two months that was previously allowed. Within that period, a company is entitled to dismiss the employee without a compensation payment.

Furthermore in case of collective dismissals, the total number of dismissed employees per month have been increased to six Employees for Companies employing 20 to 50 persons and up to five percent of the total number of employees and up to 30 employees for companies employing more than 150 people.

Finally an employment agreement of an indefinite term can be terminated at any time without notice. In this instance the law provides the standard severance payment based on the years of service within the company (1-24 salaries). However the severance payment could be half of the above in case of prior notice.  Prior notice period is also based on the years of service within the company. Under the new legislation the prior notice period has been decreased to the maximum of six months instead of the maximum of 24 months.

Currently we face a rather hostile economic environment and the legal professionals specialising in employment law must provide effective solutions to ensure the viability or profitability of the investment. Now more than ever we possess the tools and the know-how for such a task. Day-by-day we regain the trust of both markets and investors. It has been a good start so far, but yet we have a long way ahead.   

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