We were given the opportunity, on the occasion of our current articles on the new labor law (: Law 4808/2021), to point out that, in essence, the new law “rewrote” labor law. One of its most important changes refers to the law of termination of employment contracts of indefinite duration. Reformed, in part, both the formal and substantive conditions, which must be met for the validity of the complaint. Its reform, however, went even further: in its legal consequences.
In this article we will deal with the formal conditions for the validity of the complaint. We will refer, in addition, to the legal consequences of non-compliance.
The typical conditions for the validity of the complaint are summarized as follows: (a) written form, (b) notice period, (c) severance pay and (d) social security coverage of the employee.
In more detail:
(a) Document type
Termination of an employment contract of an indefinite period constitutes a formal legal act. In other words, it should be in written (art. 1 law 2112/1920 and 5 §3 law 3198/1955). The document of the termination must clearly state the statement of termination by the employer. However, it is not required to state the reason for the termination (: except for those cases that are explicitly required by law – eg: case of termination of employment contract of a pregnant woman, for which a justification and an important reason are required – no. 10 §2 Presidential Decree 176/1997 and 15 Law 1483/1984).
In case of non-compliance with the written form, until recently, there was no possibility of treatment. Such a possibility, however, is provided by law 4808/2021. The provision of article 66 §5 provides that “… if during the termination of the contract of employment the conditions of par. 3 of article 5 of law 3198/1955 (note: including the written form) were not observed and with the exception of the payment of severance pay, the validity of the complaint is strengthened, if the employer covers the omission of the formal condition which was not met within 1 month from the service of the relevant lawsuit or from the submission of a request for settlement of a labor dispute. In the event that the fulfillment of the specific conditions takes place after the above deadline, this fulfillment is considered as a new complaint and the previous one as non-existent “.
(b) Warning period
As a formal condition for the termination of the employment contract of employees (but not, until recently, of workers) is considered the observance of the notice period set, each time, by law. The last (: deadline) suspends the results of the termination while, after its expiration, the employment contract is terminated. Failure to comply with the deadline does not affect the validity of the complaint. In case of non-compliance, the complaint loses its character as aν ordinary termination and becomes dismissal without notice.
The duration of the notice period (four months, maximum) depends on the duration of employment of the employee whose contract is to be terminated.
The observance (or not) of the due notice period forms the amount of the legal dismissal compensation to be paid by the employer.
In case of dismissal without notice (: the most common case), the employer owes the entire compensation provided by law (which is proportional to the duration of employment of the employee). On the contrary, in case the employer terminates an employment contract, observing the (mandatory) notice period, they are obliged to pay only half of the full dismissal compensation (art. 1 law 2112/1920, 4 law 3198 / 1955).
When the termination of the employment contract is selected in compliance with the notice period, the employment contract remains in force during it. This means that the relevant, main and ancillary obligations of the employer and the employee are also in force. In this context, under the previous legislation, the employer could not refuse to accept the employee’s services during the notice period. In any other case, they become overdue. In the event that the employer unilaterally decided not to accept the services of the employee, this decision was equivalent – with the pre-existing legal regime, with a new dismissal without notice. In this case, full compensation was due.
The specific data could not be ignored by the employer in case of termination of employment contracts. The stay of an employee at work, for a period of one (1) to four (4) months, while they know that their contract has been terminated, carries, without a doubt, very serious risks for the business – related, among other things, to confidentiality issues and competitive actions. Respectively, the imminent termination of the employment contract deprives the employee of the incentive for the best possible performance of their duties. This data may, reasonably, push the employer to eliminate the notice altogether. This, in the end, is to the detriment of the employee, who, all of a sudden, find themselves looking for a new job.
With the new legislative data (art. 64 §1 law 4808/2021): “all discrimination between employees and craftsmen regarding the notice period is abolished…”.
The obligatory provision of the services of the employee (employee or craftsman) also ceases (art. 65) during the notice period. The employer, from now on, has the option to release (unilaterally) the employee from the obligation to provide work (either partially or in total), after the notification of the termination. In this case: (a) the remuneration of the employee is paid in full until the expiration of the notice period and (b) the employer does not become overdue in terms of acceptance of the work.
In addition (and it is indeed important), if the employer relieves the employee of the obligation to provide work, the employee is entitled to take up employment with another employer during the notice period. In this case, in fact, the results of the termination and the amount of severance paid are not affected. That is, an explicit exception is established from the provisions of article 656 of the Civil Code and the objection of the “earnings from other sources”.
(c) Dismissal compensation
The payment of the foreseen severance pay to the employee seems (and is) the most important, among the formal conditions, regarding their protection.
The severance pay is paid either in full on the day of termination (or the expiration of the notice period – if it is observed) or in installments, in cases and in the manner prescribed by law (: no. 74 Law 3863/2010). The amount of the severance pay depends, as already mentioned, on the years of service of the employee to the employer. According to the case law of the Supreme Court, this compensation constitutes “in a broad sense the exchange of the provided work” (32/2005 Plenary Session of the Supreme Court, NOMOS).
Any non-payment of the legal severance pay (in full or in part) results in the invalidity of the termination of the employment contract (articles 5 §3 law 3198/1955, 3 §1 law 2112/1920, 1144/1983 Plenary Session of the Supreme Court, NOMOS).
The above is not changed by the provisions of the new law. The non-payment of the dismissal compensation is explicitly excluded from the formal conditions that can be treated based on what the law stipulates (art. 66 §3 law 4808/2021).
It is expressly provided, however, that “when the amount of the compensation paid is less than the amount of the legal compensation, due to an obvious error or reasonable doubt as to the basis for its calculation, the annulment of the complaint is not recognized, but its completion is ordered” (66 §3 in fine Law 4808/2021). Corresponding treatment was accepted by the jurisprudence under the previous regime. Specifically, the validity of the complaint was saved, in cases where the incomplete payment was justified on the basis of good faith checks (eg: in cases of forgivable error or reasonable doubt of the employer for the full amount due -ind .: 918/2013 Supreme Court, 585/2011 Supreme Court, NOMOS).
One of the main changes brought by Law 4808/2021 concerns the abolition of discrimination between employees and craftsmen, which enters into force on 01.01.2022 (articles 64 and 80 §2). Under the current regime, until 31.12.2021, the compensation for dismissal of craftsmen is significantly lower than that of employees. This unfavorable treatment raises, as part of the theory, questions of constitutionality. This, however, is not accepted by the case law. From the new year, every provision, which governs the termination of the employment contracts of employees, also applies to the craftsmen.
The distinction between employees and craftsmen (as far as severance pay is concerned) is no longer valid. From 1.1.2022 they are equalized. For their equation, as regards the severance pay, it is provided that “… the monthly wage of the craftsman is considered to be the 22 wages, unless they are already paid a monthly salary” (article 64 §3).
(d) Social security coverage
The fourth and last condition for the legal (and third in terms of validity) termination of the employment contract by the employer is the obligation of social security coverage of the employee. In other words, the obligation of the employer to have registered the employment of the dismissed in the salaries kept for the IKA (now EFKA) or to have insured the dismissed (article 5 §3 law 3198/1955).
Failure to comply with the above condition invalidates the termination of the employment contract. Its validity, however, is strengthened, if the employer covers the formal omission within one month from the filing of a relevant lawsuit or the submission of a request for resolution of a labor dispute (article 66 §5 of law 4808/2021).
The termination of the employment contract of an indefinite period is very important for the employee. Undoubtedly for the employer as well. In order to ensure its validity, it is extremely important that certain formal conditions are met. Under the pre-existing legal regime, failure to comply with them led to the annulment of the complaint. The case law sometimes saved the day (in cases, for example, of incorrect, unintentional, calculations of the compensation due).
The recent law rationalizes the relevant data. Its above-mentioned interventions (regarding the formal conditions of the complaint) are moving in the right direction. And not just because they facilitate the smooth running of the business. In addition, they relieve the courts of a significant burden of cases, without particular value, which were brought before them. They also release the extremely large number of persons involved in such (meaningless) trials (: parties, witnesses, lawyers) to engage in the real economy. For the benefit, no doubt, of the latter.
In the next article, however, we will be concerned with the other, extremely interesting, issues arising from the new law, which are related to the termination of the contract of indefinite employment.
Also for the benefit of employees, businesses and the economy.-
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (November 14th, 2021).
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.