Employment Contract = Written Disclosure of its Essential Terms (urban myth or not?)
I. Preamble:
“A hare’s eyes cannot see as well as an owl’s can.” A proverb used in Greece to indicate that not all things are the same. Not all have the same value.
This is how life is.
The same goes when dealing with employment relationships.
It is widely held that the employment contract is identical to the written disclosure of essential terms of the employment relationship. Even in the HR departments of big corporations.
But is this position correct?
Or is it a general misunderstanding?
II. In General: The principle of the “informality” of contracts
It is generally not a prerequisite in our legal order for a contract to be in written, in order for it to be valid.
Our Civil Code (Article 158 of the Civil Code) states the relevant rule: Specific formalities are only required where the law specifically requires them. This is the so-called “principle of informal transactions”.
This principle (rule) is proven by the existence of exceptions. There are exceptions in cases where formalities are required by a specific law. Also, under conditions, subject to the agreement of the parties (Article 159 of the Civil Code).
III. The (non) necessity of the “written document” in employment contracts
-
The rule
The “principle of informal transactions” also applies, not unequivocally, to the field of labor law. Employment contracts, of course, included.
In other words: the existence of a written document is not a prerequisite for the validity of the employment contract.
-
The exception
There are two exceptions to the rule of non-necessity of a written document. Specifically, where the written document is either (a) provided as necessary by a specific legal provision or (b) the parties (employee-employer) opt for it.
In the field of labor law, however, the exceptions to the rule appear to be several. For the validity of some employment contracts the law requires the written form.
In the cases listed below, the written form is mandatory (that is, without a written document, there is no valid contract). This happens:
(a) In employment contracts with the State and with Public Legal Entities (Articles 80 & 84 Law 2362/1995),
(b) In the cases of part-time contracts (Article 38 of Law 1892/1990),
(c) In cases of renewals of fixed-term contracts (Article 5 (2) of Presidential Decree 81/2003),
(d) In the cases of temporary employment contracts (Article 124 of Law 4052/2012).
IV. The document with which individual employment conditions are disclosed
-
The employment contract and the disclosure of its terms
The employment contract must not be confused with the document with which the employment conditions of each employee are disclosed. We have already mentioned (above under III.1) that there is usually no need for a formal document for the validity of an employment contract. A (common) contract in the private sector, for example, can be oral. That is, no conventional text is required to be signed.
However, the employment contract (whether compulsorily concluded or the parties opt for it) should not be confused with the document with which individual employment conditions are disclosed.
-
The obligation to disclose the employment conditions
The employer is obligated to provide a document with which the employment conditions are disclosed, an obligation deriving from the PD. 156/1994.
Directive 91/553 of the Council of the European Union required every employer to inform the employee of the terms of their contract or employment relationship. The aforementioned Presidential Decree was issued in the context of the relevant harmonization of (Greek) labor legislation.
The specific obligation of the employer relates to the essential terms of the employment contract or relationship.
The employer must fulfill this obligation within two months after drawing up the employment contract (Article 3 §1 PD 156/94) and within one month after any -possible- amendments (Article 5 §1 PD 156/94).
-
The content of the (mandatory) disclosure document
The above PD lists (not restrictively) the terms which must necessarily be included, as a minimum, in the information provided by the employer (Article 2 §2).
The document providing information to the employee must at least contain:
(a) The identity of the parties.
(b) The place of employment, the seat of the business or the place of residence of the employer.
(c) The position or specialty of the employee, their title, the category of employment and the scope of their work.
(d) The date of commencement of the contract or employment relationship and its duration, if drawn up for a specified period.
(e) The duration of the paid leave that the employee is entitled to and the manner and time it will be granted.
(f) The amount of compensation due and the deadlines to be met by the employer and employee according to the applicable laws in the event of termination of the employment contract or relationship.
(g) Any remuneration to which the employee is entitled and the when it should be paid.
(h) The duration of the employee’s regular daily and weekly employment.
(i) Metion of the collective arrangements that apply and determine the minimum remuneration and working conditions of the employee.
It is clarified that the information referred to in points (e), (f), (g) and (h) above may also be given by referencing to the applicable provisions of Labor Law.
V. The purpose of the obligation to disclose the conditions of the employment compared to the purpose of the employment contract
The above (under III) obligation of the employer is not a requirement for the validity of the employment contract.
(Possible) Non-compliance does not affect the validity of the contract.
The purpose of this requirement is purely to inform. This is also explicitly stated in the relevant case-law. It is therefore acknowledged that “… when the employer fulfill their obligations under p.d. 156/1994, the employee is simply informed of the conditions of the employment contract or relationship, as those are defined by law and the individual contract, and this action itself has no effect on the particular employment contract or relationship”(Inter: Supreme Court 860/2010).
On the contrary, non-compliance with the obligation to provide information gives rise administrative sanctions (Article 7 Presidential Decree 156/1994). A fine is imposed on the liable employer by the competent Labor Inspector. The latter is the one who will check the existence (or not) of the (completed) forms of disclosure of the essential working terms of each employer in the workplace.
The information contained in this form is, in fact, essential. It is precisely the importance of the information that makes it necessary to include them in any (possible) written employment contract. That is why the Presidential Decree also provides that, in addition to any ‘other document’, the information can be provided to the employees through the ‘written employment contract’ (Article 3 §2).
It is therefore possible that the above incorporation may not actually take place (: notice through a written contract). The (mandatorily) separate document for the disclosure will then work in parallel with the employment contract.
In any case, however, it must be understood that the two documents serve different purposes.
The notification of the PD is purely informative. It indirectly, therefore, evidences some basic working conditions.
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.
VI. The (potential) content of the employment contract
We have already seen that the employment contract (possibly) has a significantly wider content than that of the (mandatory) disclosure of the essential terms of the employment. Even on issues where (prima facie) the content of the two seems identical, it is worthwhile to have an extended approach of them written down. Such issues may include, inter alia:
(a) The duties of the employee
(b) The place of the provision of the services – especially for undertakings which have or may develop transnational activities
(c) The provision of services to a Group of Undertakings
(d) Duration of the contract
(e) Working Hours
(f) Remuneration
(g) Voluntary benefits
(h) Employee obligations
(i) Personal data matters
(j) Confidentiality
(k) Potential patents
VII. In conclusion
The employment contract is quite different from disclosing the essential terms of the employment relationship.
The first is optional. The second compulsory.
Failure to do either does not affect the validity of the employment relationship.
The (written) employment contract, though optional, can prove valuable.
As long as it has the right content.
Stavros Koumentakis
Senior Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 9th, 2020).