Coronavirus: the invisible (?) enemy of jobs (: dismissal prevention measures)
1. The pandemic COVID-19 is in full swing.
Its end is not, in any case, visible.
The global health crisis is, for all of us, unprecedented. It will inevitably lead the world economy to a recession. And, of course, the national economy as well.
The vast majority of businesses are experiencing the dramatic consequences of the pandemic. Entrepreneurs (and those with corresponding responsibilities) are looking (sometimes desperately) for ways to survive.
The most important challenge we all must face is to safeguard life and health.
Immediately after: the survival of the national economy, of the businesses. Last, unfortunately, in order: the survival of employment relations.
In our country, soon after the confirmation of the first cases, there has been significant turmoil in the labour market (one could more accurately call it panic).
2. The administrative measure of suspension of operation of specific businesses (: necessary to prevent the spread of the virus) consequently resulted in a large number of redundancies.
March is already showing a negative balance in the labour market. According to the government, layoffs exceeded 40.000 in the first two weeks of March. According to the opposition, 110.000. The numbers are dramatically high.
Stopping the phenomenon constitutes a national emergency. Legislative intervention has been necessary to achieve the halt. A Legislative Decree was issued on the 20.3.2020 (Government Gazette A 68 / 20.3.2020) –Emergency measures to address the consequences of the COVID-19 coronavirus spread, to support society and to ensure the smooth functioning of the market … This Decree introduces, inter alia, new regulations to employment relations. It introduces measures to prevent dismissals and suspension of employment relations.
3. The specific measures (preventing dismissals and suspension of employment relations) concern:
(a) Businesses whose operations have been temporarily prohibited.
(b) Businesses which operate in sectors that (according to the Ministry of Finance) are severely affected by the pandemic.
The above Legislative Decree has already been analysed in a previous article (: “Coronavirus and Business: The Second Decalogue For Businesses and Employment Relations“).
However, it is necessary to take a more careful look into saving as many jobs as possible.
For the benefit of the national economy and businesses. And, of course, for the benefit of the employees and the community as a whole.
II. THE MEASURES
1. Employment relations with businesses suspending their operation (by decision of a public authority)
(a) Suspension of operations
Enterprises operating in specific sectors, which have been placed under a temporary ban or have been suspended by decision of the Administrative Authority (e.g.- student tutoring centers, private schools, retail outlets).
The financial blow they suffer is unquestionable.
The first (reasonable) thought of those responsible was to mitigate the economic impact. The reduction of expenditure. Especially of the wage costs.
(b) The prohibition (and invalidity) of dismissals
In order to halt dismissals, businesses whose operation was suspended were prohibited by law to dismiss their employees.
The abovementioned (under I) Legislative Decree stated, in particular, that: “Businesses – employers who suspended their operation by order of a public authority, and for as long as the COVID-19 measures are in place, shall be obliged not to reduce their staff by termination of employment contracts ”(Art. 11 par.1(a)).
Nevertheless, in the case of non-compliance and termination of employment contracts (from the part of the business concerned), the invalidity of such is provided for (Article 11 par.1 (b)). The nullity of dismissals is retroactive. It, retroactively, covers those dismissals that have taken place from the 18th of March.
(c) The “reward” to balance out the prohibition of dismissals
In return for the above (under b) prohibition of dismissals, the aforementioned companies are not required to pay wages at the time of suspension of their operation.
Their employees, on the other hand, are entitled to emergency financial assistance (provided for by the state) of € 800 (special purpose remuneration).
2. The operation of businesses with safe operation personnel
The measure providing for the safe operation personnel is another measure to prevent dismissals. It concerns (as per the Legislative Decree of 20.3.2020) all businesses. Information leaks from the Ministry of Labour imply that the Ministerial Decision that will provide for the details of implementation of this measure will limit its scope. Specifically: that it will only concern the businesses that are operating in the sectors that are on the Ministry’s list of the sectors affected. This measure will provide for fewer days (and therefore weeks) of employment per month, alternating between working days (or full weeks) and non-working days, at the decision of the employer. At its core, it is therefore similar to the measure of a unilaterally imposed rotational work. However, the conditions of the implementation of this measure laid down in the Decree (Article 9) significantly distinguish this measure from that of the unilaterally imposed rotational work.
In particular, the conditions for its implementation concern: (a) The minimum monthly employment of employees. (b) The minimum number of employees who may be subject to the measure. (c) The maximum duration of the measure.
(a) The employee who will work as Safe Operation Personnel shall be employed for a minimum of two (2) weeks per month. Continuously or intermittently.
(b) At least 50% of the staff of the business must be designated as safe operation personnel. Therefore, the business should employ the employees that have not been designated as safe operation personnel full time. The exact organization of work time can be determined on a weekly base.
(c) The implementation of the measure of operation of a business with safe operation personnel cannot be permanent. This measure can be implemented until 20.9.20, at the latest.
At the same time, the employer has two obligations.
The first concerns the declaration of the implementation of the measure on ERGANI. It must be declared at the end of each month.
The second obligation is of utmost importance. The employer who chooses to operate their business with safe operating personnel is required to retain their employees.
Details are expected to be determined by a decision of the Minister of Labour and Social Affairs.
3. The transfer of personnel to companies within the same group
It is an additional measure in the (national) effort to prevent redundancies.
Under the current legal framework, the company is entitled to transfer its staff to another company of the same Group (to which it belongs). The courts have already dealt with this issue, despite the measure being newly introduced. The Supreme Court accepted the possibility of employing employees in different companies in the same group. And that, no matter which company in the Group is the employer. We have already analysed this issue in a previous article (: employing employees in companies of the same group)
Article 10 of the Legislative Decree of 20.3.20 (expressly) provides for the possibility of transferring staff to companies within the same Group. This provision has limited application. It concerns, in particular:
(a) Companies affected by the Covid-19 pandemic
(b) Companies whose operation has been suspended by the competent authorities in response to the pandemic
The Legislative Decree imposes specific obligations on the companies concerned.
The first obligation is the existence of a written agreement between the companies.
The second requires the maintenance, in total, of the same number of employees as before the transfer.
Details are expected to be determined by the Ministerial Decisions to be issued.
4. Employment relations in businesses that are (significantly) affected by the pandemic
(a) Affected sectors and the regulation of employment relations
On March 20, the Ministry of Finance announced the classes of the NACE Revision 2 affected by the spread of coronavirus. The list is constantly expanding.
Although these businesses are allowed to operate, unfortunately, given the circumstances, they run at a low capacity. In order to avoid dismissals, as a result of the reduction of their business activity, the option to suspend part or all of their employment contracts was also provided to these businesses. Specifically:
(b) Suspension of employment contracts and related obligations of the employer
(i) The individual characteristics of the suspension of the employment contract
This is a measure which is introduced in the Greek legal order for the first time. It is similar to unpaid leave. However, during its implementation, it does not affect the acquired rights of employees (as this time seems to be taken into account, for example, when calculating the time of service and retirement). In this case, the maximum duration of the measure is one month. However, it can be extended (provided a relevant JMD is issued).
(ii) The option
Affected businesses have the option to choose whether or not to suspend (part or all of) their employment contracts. However, if they so choose, the termination of employment contracts is expressly prohibited. And that goes for all their staff.
(iii) The prohibition and invalidity of the redundancies
Nevertheless, in the case of non-compliance and termination of employment contracts (from the part of the business concerned), the invalidity of such is provided for
(iv) Maintaining jobs
In addition to prohibiting the termination of employment contracts for undertakings which opt for the suspension measure, there is an additional, quite important, obligation. The Decree provides that “… after the expiry of the suspension of the employment contracts, they are required to maintain the same number of jobs for a period equal to that of the suspension”. In other words: even if the aforementioned businesses fire an employee, they must hire another employee in its place. And this goes for as long as the suspension lasts and for a period equal to that, after the suspension expires.
Accordingly, in the event of an expiration of a fixed-term employment contract (and therefore of its automatic termination), there are two possibilities. Either its renewal will have to take place, or another employee has to be hired at the place of the one whose contract expired.
(v) Special purpose remuneration
Employees of companies that make use of the option to suspend employment contracts are also entitled to a special purpose remuneration.
According to the MD No. 13031 / D1.4551 (Government Gazette 994 / 23-3-2020), employers who declare to ERGANI employees whose contract is suspended, should state that their core business activity has been suspended (!). This is despite the fact that this requirement does not derive from the relevant Legislative Decree. We want to believe that this is, obviously, an unfortunately worded text.
III. What about the dismissals that have already taken place?
The validity of the dismissals that took place until 17/3/2020 is not affected. However, dismissed employees (or employees who resigned), within the period from 1 to 20 March, are entitled to the special purpose remuneration (article 11 par. 2B. (b) Decree of 20.3.20).
IV. Special purpose remuneration and employer obligations
(i) Special purpose remuneration and its characteristics
Suspension of business and suspension of employment creates a new reality in employment relations. For reasons of force majeure, no service is provided by employees. As a result, the salaries cannot be paid (by the employer). It was necessary to provide employees with emergency financial aid. This is what the “special purpose remuneration” is. It is of the amount of 800€ and it covers 45 days.
The cost of paying the above compensation is covered by the state budget. And so is the insurance coverage of employees (article 11 par.2B (f) Decree of 20.3.20).
It is also important to note that the special purpose remuneration cannot be seized and it is tax-free. Also: it is not offset against any debt.
(ii) The (related) obligations of employers
The employers must submit the Analytical Periodical Statements of their employees, whose contracts have been suspended. The cost of their full insurance coverage is calculated on their nominal wages.
In order for the employee to receive the special purpose remuneration, the employer must follow a specific procedure as provided for in the Legislative Decree (article. 11 par. 2.C. a, b, c, d) and the MD No. 13031 / D1.4551 (Government Gazette 994 / 23-3-2020).
In particular, the employer is required to submit an official declaration to ERGANI, mentioning the employees whose employment contracts are suspended: (a) either because of the prohibition of their operation, ordered by a public authority, (b) or because of the utilization of the measure of suspension of employment contracts by the affected business.
In addition, the employer is required to include in the official declaration those employees whose employment contracts have been terminated from 1 to 20.3.20. As already discussed, the provision of the Legislative Decree in this case concerns contracts terminated: (a) either following a complaint by the employer, (b) or because of the employee’s resignation.
The employer is obliged to notify the employee within the day of submission of the official declaration. The notification shall be on paper or electronically. It must, in any case, include the registration number of the relevant act on the ERGANI platform.
(iii) Violation of the employer’s obligations
Failure to submit the above official declaration by the employer does not have serious, damaging, consequences. In particular, an employer who fails to provide an official declaration will not enjoy the suspension measures of facilitations or instalments or partial payment facilities of any type of certified debt they may owe to the State.
V. In conclusion
The decade of the financial crisis brought a heavy blow to entrepreneurship.
Businesses are called upon to face a new crisis.
We hope it will be a short-term one.
Employment relations are being re-tested.
The state is doing, at least for now imperfectly, its duty. It protects employees to a significant extent. It is assisting some of the affected businesses.
The pandemic is inevitably linked to an economic downturn. We are already experiencing it. We hope it will also be short-lived.
The protection of employment relations (sooner or later) will decline. And it must. Let dismissals be the last measure employers will adopt. All the more mild measures continue to exist, uninterrupted.
Employers can always make other choices before deciding on making dismissals: (a) conversion of full-time to part-time employment contracts; (b) the agreement (or enforcement) of rotational work (or) the agreement (or enforcement) of suspension
And, of course, those discussed above.
The negative balance of employment in March will hopefully be a small (bitter) bracket.
For the benefit of the national economy and growth.
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.