The (rather necessary) content of the employment contract
I. Preamble
“I keep your words painted on paper …”, Marinella, a famous Greek singer, has been singing since 1970. She was probably not referring to written agreements. However, the commitments deriving from written texts are definitely binding. So says the Roman quote: “Verba volant, scripta manent” (: “talks fly away, written words stay put”).
We have seen in a previous article that it is not generally necessary to conclude employment contracts in written.
However, we concluded that: “The (written) employment contract, though optional, can prove valuable. As long as it has the right content. ”
This article will address the (possible) necessity of written employment contracts. As well as their (desirable) content.
II. The purpose of (written) employment contracts
The aforementioned article was the comparative overview of the employment contract in relation to the disclosure of its essential terms, which derives from the P.D. 156/1994.
There we found, inter alia: “But the purpose of the employment contract is significantly broader and more important. And this is the case despite it not (always) being mandatory – as opposed to the individual working conditions disclosure document. The contract regulates (and should regulate) all the rules governing the employment relationship. Not just the essentials.
First of all, it may achieve the purpose of informing on the essential terms and thereby nullify the reason for the existence of the separate document. In addition, it can be an important tool in the hands of the employer with regard to all the terms and conditions of the employment relationship. The employment contract may place the employment relationship in a predetermined framework. It may preventively address a multitude of issues. It may act as a deterrent for actions which may result in litigation between the parties.”
Therefore: The conclusion of (written) employment contracts, although not obligatory, is nevertheless very important – if not necessary.
III. Regarding the structure and content of the employment contract:
1. The structure
The structure of employment contracts must serve, in addition to its content, the above (under II) purposes and goals.
There may be two main sections. The first should refer to the specific information of each employment relationship (eg employee name, duration, etc.). The second is the uniform, for all employees, contractual arrangements. In this second section, it is important that no unauthorized person intervenes.
2. The content of the employment contract
The content of the employment contract may be, where appropriate, extremely broad or focused on particular issues. But it is important that it covers all the specific needs of the each business. It may include, indicatively, provisions concerning:
2.1. The duties
The duties of the employee need not be described in full detail in the employment contract. This is because they are essentially defined by the employer in the context of their managerial right. The employment contract is, moreover, an ongoing legal relationship. The needs of the employer are likely to change over time. Therefore, strict demarcation of employee duties is not only undesirable. It often turns out to be impossible. It is essential, however, that the employer has reserved the right to move freely within a predetermined framework.
2.2. Place of the performance of work
Businesses may have local or supra-local activity. It is not advised that they limit themselves, in one case or another, regarding the place where their employee’s services should be provided. Greek case-law gives some directions for when dealing with this particular issue: An entire geographical area, regardless of its size, can be agreed upon as the place of work of the employee. Even the whole of Greek territory – though this is dictated by the type and nature of the work provided.
2.3. Providing services to a Business Group
It is not uncommon for employees hired and paid by a company that is a member of a Group to (also) work for other “sister” companies. This practice created a problem, the content and solution of which we have already discussed in a previous article: (Employing employees in multiple companies in the same group: a chronic problem found its solution). We referred there to the Supreme Court’s Decision No. 10/2018, which held that: “… on a group of companies having common financial interests, even where the employee’s employment contract was drawn up with one of the group companies and their work is offered to other companies in the same group, the company which hired the employee remains their employer, and it is it which exercises managerial powers over the employee’s work and is responsible for the payment of all their remuneration.”
This assumption turns out to be extremely important for company groups. The reason? The companies that make up the Group will be able to “employ” “sister” company employees. This is without exposing them to legal risks against these employees and / or the state. Also, without the employee being entitled to object to providing their services to other companies in the same Group. This discretion, however, presupposes appropriate contractual arrangements, so that its content, that is positive for the Group, does not end up exposing them to risks.
2.4. Duration of the contract
The employment relationship is agreed as fixed-term or for an indefinite period. The employment contract must, therefore, regulate matters concerning its termination, either if it is fixed-term or indefinite. More specifically and by way of indication, a fixed-term contract should provide for the possibility of premature termination (and without the invocation of a valid reason) by applying, at the same time, the applicable law on termination compensation for indefinite-term employment contracts (Article 40 of Law 3986/2011). Provisions should accordingly be made with regard to the part-time employment contracts. It is reasonable, for example, to provide a notice period, after which the employee will be entitled to leave his / her job (subject, of course, to the existing legal framework). Also, a number of other issues related to the employee resigning.
2.5. Duration / working hours
The maximum working time limits are set on a daily and weekly basis. These are set by law and may not be provided for restrictively in the employment contract. Unless we are talking about part time work or rotational work.
2.6. Earnings:
The employer and the employee are, in principle, free to agree on the salary to be paid. However, they are bound by the thresholds set by the existing institutional framework. This is, in this case, the “legal salary”. The agreed upon salary may be higher than the legal salary. In employment contracts, it is possible (in this case) to agree that the excess of the agreed upon salary (in relation to the legal) will cover overtime pay, work provided on a Saturday, Sunday or public holidays as well as night work.
2.7. Voluntary benefits
These are voluntary benefits, in cash or in kind, offered voluntarily by the employer, without them being bound to provide them by law or contract. The employment contract must provide for an express freedom of the employer to offer such benefits. Otherwise, if they offer them for a long time, they run the risk of creating a precedent. The result of which? Creating an obligation for the employer to offer them in perpetuity.
2.8. Employee Obligations:
The main obligation of the employee is to provide the agreed work (article 648 Civil Code). However, in the context of the employment relationship, the employee assumes a number of other obligations. What we call “ancillary”. These obligations include, but are not limited to: the obligation of employee loyalty, the obligation for obedience, confidentiality, information, to undergo medical examinations. Also the (contingent) obligations to not act in a competitive manner and to not enter into parallel employment. Indeed, in some exceptional cases (and depending on the nature of the work provided), the employee may also be bound to act (or not act) in a certain manner even outside of the context of their work. Failure to comply with the ancillary obligations may result in the employer terminating the employment contract. Therefore, such obligations are reasonable (and possibly mandatory) to be included in employment contracts.
2.9. Protection of Personal Data – GDPR:
Given the mandatory application of EU General Data Protection Regulation 679/2016 (GDPR), businesses (among others) have to comply with the requirements of the Regulation regarding the protection of personal data which is processed as a result of their activity. In a logical sequence, each of their employees must comply as well. Compliance with the relevant obligations is clearly the responsibility of the company concerned. The latter, as an employer, must – inter alia – explicitly inform its employees of its “Privacy Policy. Also, it must provide them with clear and detailed instructions on how they should process the Personal Data to which they gain access when providing their work. The fines imposed by the Regulation on those who violate it are extremely high. Written proof that the company has provided instructions to its employees regarding the processing of personal data is required. The written indication of their obligations and the consequences of any violations. All this either as an annex to existing contracts or as a new part of contracts to be concluded.
2.10. Confidentiality
An important challenge that all businesses face is that of ensuring that their confidential information is protected as such. Especially that they will not leack to the competition. This safeguard seems to be one of the important prerequisites for most business’s development. As we have already pointed out in a previous article (Companies and Confidentiality), it is of major importance that employment contracts provide for arrangements for limiting the use of confidential information to which employees gain access when providing their work. Of major importance is also: to provide for the obligations of employees during a specific period after the termination of their employment (eg return of forms, documents, notes, deletion or return of electronic files). Even more so: to provide for penalties for breach of their relevant (contractual and post-contractual) obligations (usually high penalties – in addition to general compensation claims).
2.11. Patents
It is vital for businesses to be able to protect their commercial as well as technical know-how. Often employees, in order to provide their work, have to gain access and use their employer’s know how. But such information may be the quintessence of a business’ business. It must, consequently, ensure their protection. An enterprise has the right, (as well) through the employment contract, to impose restrictions on those employees who become have access to such information. And to also impose sanctions (eg high penalties for violations). This is achieved through contractual provisions concerning the duration of the employment relationship (contractual terms) and also the period following its termination (post-contractual terms).
IV. In conclusion
Numerous large companies in our country, with numerous employees, do not have written employment contracts. They mistakenly believe that disclosing the essential terms of the employment relationship is sufficient. Even worse: that it provides adequate guarantees.
But it is more than obvious that writing (and pre-emptively) arranging a significant number of work-related issues can be valuable to the business.
Not just useful.
Sometimes it is absolutely necessary for its survival and development.
Stavros Koumentakis
Senior Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 16th, 2020).