Accountancy in Greece

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Labour contracts

In Greece, employment contracts are distinguished between indefinite and definite term.

Indefinite term employment contract

This is in place when a time of expiration does not derive, whether expressly or tacitly, from the contract. It should be noted that even an employment contract that has been entered into for a definite period, provided it can be established that this was done to circumvent the law, is treated as an indefinite term contract (i.e. the criterion is substance as opposed to legal form).

In principle, the first twelve-month period of an indefinite term employment contract could be described as an employment on probation contract, for the employer

to become acquainted with the abilities and suitability of the individual (within the provisions of the law). During this period, the employer is entitled to dismiss the salaried employee without paying compensation.

Definite term employment contract

A definite term employment contract is in place when its term either derives expressly through the will of the parties or can be concluded tacitly and indirectly through other facts (a provision of the law, type and purpose of contract, etc.). A definite task employment contract is fully equated with a definite term employment contract.

The main distinction between a definite term employment contract and an indefinite term employment contract is that the former automatically ceases upon expiration of the time for which it was mutually agreed, while the latter expires only upon rescission by either party.

A definite term dependent employment contract may not be rescinded prior to its expiration, except on significant grounds. Otherwise, all salaries to its expiration become due.

An employment contract that has been mutually agreed upon for a definite term is regarded to have been renewed for an indefinite term if, following the expiration of its term, the employee continues work without the employer raising objections.

The execution of successive definite term employment contracts with which the employment relationship with the same salaried employee is renewed is unwarranted. In such instances, it is considered that an indefinite term employment contract is in place and the applicable law concerning the rescission of an employment contract shall apply.

The employer is obliged to formally announce within eight days electronically to ERGANI the termination of an employment contract not only if it is rescinded, but also when it occurs for other reasons, such as the lapse of the time agreed upon in the definite employment contract or the completion of a task in the case of a definite task contract.

All salaried employees (employees, attendants, technicians) are entitled to a regular leave, regardless of the type of the contract (definite or indefinite term).

There is also an obligation for the company to appoint a Security Technician.

Statute-imputed pension rights of employees and dismissal compensation

Termination of employment is permitted provided that the employer pays a statutory severance indemnity that is calculated on a graduated scale that is linked to qualifying years of service. Dismissal without notice results in the amount of indemnity being doubled. For salaried employment dismissal, statutory severance compensation is capped at 24 months of pay as defined under the Law. Group dismissals are regulated.

Under the terms of Greek Labour Legislation, employees reaching retirement age are entitled to lump sum compensation from their employer at the time of reaching such age. The statuteimputed lump sum pension compensation is calculated at a rate of 40% of the amount to which they would have otherwise been entitled, had they been subject of dismissal without notice on the day of reaching retirement age.

The statutory entitlement calculation addresses current emoluments as defined under the law (regular pay including overtime and recurring bonus amounts and allowances) with a capping at Euro 2.000 of entitled dismissal indemnity for the years beyond the 12th year. The qualifying emoluments are subjected to a multiple that directly depends on the number of years of the employee’s total service with the company including years of service with previous employers that have been expressly recognized as qualifying for termination purposes upon joining the company.

Employees voluntarily leaving service with the employer are not entitled to any compensation under the Law. Consequently, instances of voluntary departures result in a release of the related liability reserve that has been cumulatively and diachronically (trans- temporally) created to the date of such departure.

The imputed pension entitlement in respect of the afore-described 40% accrual of the compensation eventually payable to employees upon retirement (based on the Company’s maximum exposure to termination settlement under the Law at each year-end) is required to be provided in the Company’s books and be reflected under “Liability Reserve for Pensions” in accordance with the provisions of Greek Company Law Valuation Guidelines.

Contribution Percentages Employer Employee Total
Pension 6,67% 13,33% 20%
Health care (contribution in kind) 2,15% 4,30% 6,45%
Health care (contribution in money 0,40% 0,25% 0,65%
Total 17,88% 9,22% 27,10%

The above percentages are applied to  the gross monthly salaries and wages. Company’s maximum exposure to termination settlement under the Law at each year-end) is required to be provided in the Company’s books and be reflected under “Liability Reserve for Pensions” in accordance with the provisions of Greek Company Law Valuation Guidelines.

These elements, to the extent provided in the Financial Statements, do not constitute a deductible expense for Fiscal purposes until the accounting period during which the related expense is actually disbursed or within a period of 12 months from the end of that period.

Social security

Social security contributions are payable to the Social Security Institution Main fund (?FKA). Employees’ social security contributions are withheld monthly and are payable, together with the employers’ contributions, to EFKA.

Latest version updated 31st October 2017

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