Valid Reason for Dismissal (: Do I need one to fire my employee?)
I. Preamble
Much has been said during the past year about the termination of employment contracts set for an indefinite duration. The reason is the May 2019 law that introduced the need for a “valid reason” for the validity of such dismissals. The problems this law created were, in fact, too many. We have analyzed them in a previous article. Its abolition (“after it came into force”) came as a pleasant surprise in August 2019. We have already mentioned the benefits of this (necessary) legislative correction.
However, the need for the existence of a valid reason for a dismissal is also provided for in the Revised European Social Charter.
Which provision prevails?
Can Businesses / Employers feel (completely) safe?
I personally think it is worth taking a closer look at the subject…
II. Brief Review: the status of the termination of the employment contract of an indefinite duration
1. The termination of an employment contract of an indefinite duration
1.1. We all knew, until May, that an employment contract set for an indefinite duration could be terminated by the employer at any time. Without the employer having to invoke any reason. The only condition: the payment of the redundancy compensation (: Article 5 § 3 of Law 3198/1955).
When an employee considered that their dismissal was unfair, they had the right to appeal to the competent courts. Their main claim: cancellation of the dismissal and, in addition, returning to work. The burden of proof of the claims laid with the employee.
1.2. On the 3rd of May 1996 the Revised European Social Charter was signed. The Revised European Social Charter is an international convention for the protection of social rights. It is already a domestic law as it was ratified by law (Law 4359/2016). It is, in fact, higher – ranking than Greek laws (Article 28 § 1 of the Greek Constitution).
3. Article 24 of the Revised European Social Charter
One of the rights guaranteed under the Revised European Social Charter is the right to protection in cases of termination of employment. Article 24 of the Revised European Social Charter provides:
“With a view to ensuring the effective exercise of the right of workers to protection in cases of termination of employment, the Parties undertake to recognize:
a. the right of all workers not to have their employment terminated without valid reasons for such termination connected with their capacity or conduct or based on the operational requirements of the undertaking, establishment or service;
b. the right of workers whose employment is terminated without a valid reason to adequate compensation or other appropriate relief.
To this end the Parties undertake to ensure that a worker who considers that his employment has been terminated without a valid reason shall have the right to appeal to an impartial body.”
4. The legislative provision regarding the requirement for the existence of a valid reason
4.1. Much later after the Revised European Social Charter was ratified in our country (2016), the first subparagraph of article 5, paragraph 3 of article 31 of Law 3198/1955 was replaced (article 48 of Law 4611/2019) as follows:
“The termination of employment shall be considered valid only if it is due to a valid reason within the meaning of Article 24 of the Revised European Social Charter ratified by Article 1 of Law 4359/2016 (A ‘5), invoked in writing, if the redundancy compensation due has been paid and if the employment of the dismissed employee has been registered in EFKA (IKA) or the dismissed employee has been insured. In the event of dispute, the burden of invoking and proving the validity of the conditions invoked for a valid termination shall rest with the employer.”
4.2. This provision has proved to be problematic on many levels as it has resulted in:
(a) stigmatizing the employee by any of the “valid reason” options regarding their “behavior” or “abilities” in the event of termination of their employment contract;
(b) the employers being reluctant to enter into indefinite-term contracts
(c) the leaning towards fixed-term employment contracts, the termination of which does not require any “valid” reason; and
(d) the increase of extrajudicial and judicial disputes.
6. The abolition of the requirement to invoke a valid reason
The Greek legislator, fortunately, listened to the legitimate reactions that the establishment of the “valid reason” requirement had caused. With a surprising move, it abolished the (problematic) provision of Article 48 of Law 4611/2019 — less than three months after it came into force.
The provision of Article 117 § 2a of Law 4623/2019 (Government Gazette A 134 / 09.08.2019) provides that the provision of Article 48 Law 4611/2019 “shall be abolished after its entry into force” and that “the provisions of Law 2112/1920, as applicable, and Law 3198/1955, as applicable, in conjunction with Article 24 of the Revised European Social Charter, ratified by Article 1 of 4359/2016 (A ‘5) shall not be affected”.
III. What is the “value” of Article 24 of the Revised European Social Charter?
1. The questions raised
The debate around the “valid reason” (as a prerequisite for a termination of indefinite term contracts) had begun since the Revised European Social Charter became state law. The questions that we have been dealing with since then (and until May 2019), and we are still dealing with (after August 2019), are:
(a) What is the legal binding effect of Article 24 Revised European Social Charter in the Greek legal order? and
(b) Is Greek law in conformity with Article 24 of the Revised European Social Charter?
There are two ways to approach this issue.
2. The first view
(: Article 24 of the Revised European Social Charter does not affect the protection against dismissal)
2.1. According to the first view, Article 24 of the Revised European Social Charter did not have, nor does it exercise, any influence on the Greek system of protection against dismissals. This view (that the signatory shares) seems to prevail in jurisprudence. A series of decisions attests to the truth (SC 1512/2018, First-Instance Court of Athens 237/2019, First-Instance Court of Athens 2180/2018, First-Instance Court of Thessaloniki 10675/2018, First-Instance Court of Thessaloniki 19510/2017).
According to this view, termination of an indefinite-term employment contract continues to be an employer’s right. Most importantly: it continues to not require the invocation of any reason. In other words: “its validity does not depend on the existence or defect of the cause of it.”
2.2. We all agree that this right (as well as any other right) is subject to restrictions. All rights must be exercised within the limits of good faith, the principle of morality and their socio-economic purpose. When the employer’s right to dismiss an employee is abused, the termination is invalid. The relative burden of proof lies, of course, with the employee. The declaration of invalidity presupposes an assessment. In addition: a court ruling.
2.3. The ratification of the Revised European Social Charter does not affect the specific, preexisting, legal provisions in our country. The conditions laid down in Article 24 of the Revised European Social Charter are (more than) fulfilled in the Greek legal order. This is because the “obligation of the employer to indemnify the employee has long been recognized in domestic law (…) in every termination (with the exception of a termination due to criminal charges) and is not waived even when the employer could prove a valid reason for the termination of the employment. Consequently, the affirmative or negative reference to a valid reason for the termination is irrelevant. That is why the validity of the complaint is still being examined individually only with the application of the article 281 of the Civil Code, as before, after the employee has filed a lawsuit with the competent court ” (SC 1512/2018).
2.4. The (recent -August 2019) abolition of the requirement for the existence of a “valid” reason was also based on the above (under 2.3) decision of the Supreme Court. It is therefore obvious that the legislator itself is in favor of not requiring, after the ratification of the Revised European Social Charter, any reason in order for a termination of an employment contract of an indefinite duration to be valid.
3. The second view:
(not requiring the invocation of any reason is incompatible with Article 24 of the Revised European Social Charter)
This view is only slightly reflected in Greek jurisprudence. There are only two decisions, so far, that approach the termination of an employment contract this way: First-Instance Court of Pereus 3220/2017 and the most recent First-Instance Court of Lasithi 17/2019.
As the latter mentions: “… On the basis of the foregoing considerations it becomes clear that after the ratification of the revised Charter the principle of objectively justified dismissals was directly introduced into Greek law and hence the Greek courts should further investigate on the one hand the existence or not of a valid reason, with valid reasons being those restrictively cited in Article 24 of the revised Charter and, on the other, consider any dismissal not based on such a ground to be unlawful. This can be done either by direct reference to Article 24, the wording of which, at least in this respect, is precise, clear and unconditional, in conjunction with the provisions of Articles 174 and 180 of the Civil Code. – a view considered to be more correct by this Court, or interpretatively, through Article 281 of the Civil Code, whereby any dismissal that is not in accordance with the provisions of Article 24 of the revised Charter shall be regarded as abusive.”
IV. In conclusion
Article 24 of the Revised European Social Charter requires the existence of a valid reason for the termination of an indefinite-term employment contract.
For a quarted it was legally required by the employer to invoke and prove the existence of one. It is not anymore.
Case-law (and correctly, in the signatory’s view) in its majority states that the provision of Article 24 of the Revised European Social Charter does not have any bearing on the Greek system of protection against dismissals. Termination of an indefinite-term employment contract remains the employer’s right. Its validity does not depend on the existence or (possible) defect of its cause. The only limitation: to not abusively exercise this right.
However, the opposite view has been recorded in case law.
It is well known that, in the Greek legal system, jurisprudence is not binding. This means that the approach of case-law can be changed. Moreover, none of the decisions reflecting the minority have so far been appealed before the Supreme Court.
The sole decision of the Supreme Court (SC 1512/2018) dealt with the issue secondarily. However, it made it clear that the employer is not required to do anything more than pay the redundancy compensation.
And rightfully so.
Stavros Koumentakis
Senior Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 2nd, 2020).
