Employment Contract (distinctions from related concepts and the protection of the business)

Employment Contract (distinctions from related concepts and the protection of the business)

The concept of employment (contracts) in the context of Labor Law presupposes dependence. The protection offered by Labor Law (something like the Magneto helmet, for “The X-Men fans”) presupposes the provision of dependent employment services. But when one is and one is not dependent? When the work offered is classified as dependent when is it “something else”? Are there clear boundaries between the employment contract and the contract of independent services, the works contract and / or the contract under which commission is payable? And how, after all, is a business protected?


Regarding dependency and dependent work

It is well known that dependency is a fundamental concept in labor law. The legislator chose, however, not to legislate on it. This has resulted in the development of various views and theories about its content. Their common goal? Identifying the (safe) criteria for designating (or not) a contract as an employment contract. The individual issues concerning the contract of employment were addressed in our previous article (: Employment Contracts: What are they exactly?) There we approached the varius views, theories and criteria that each of them adopts. Also: the impossibility of defining, with certainty, the concept of dependence. Finally, we have been given the opportunity to approach the critical (and non-critical) indications adopted by case law for the evaluation of a contract as an employment contract. The inability to clearly define the content and meaning of the employment contract is a given. Its boundaries remain fluid. As a result, it is extremely difficult to distinguish between related concepts and contracts. Among them: the contract for independent services and the works contract. And -sometimes- the contract under which commission is payable.


Related contracts

The distinction from the contract of independent services

This is perhaps the most difficult distinction between related contracts. The reason does not seem strange: independent service and employment contracts have a number of common features. On the other hand, the object of both is the provision of paid work. Their common grounds are many. This is also the reason why the Civil Code itself places them in the regulatory scope of the same set of provisions (articles 648 et seq.). This is despite the fact that some of them refer, exclusively, to the employment contract. The only criterion for distinguishing the two conventional forms is the concept of dependence. The lack of dependence, moreover, is what directly refers to an independent service contract.

According to case law, “…contracts of independent services… exists when the employee provides their services in lieu of wages, without being subject to the control and supervision of the employer and being obliged to comply with the latter’s orders and instructions, in particular as to the how and the time of provision of their services ”(Ind .: Supreme Court 602/2017).
However, as also noted in case law, there is some form of commitment and dependence in the independent service contract as well. As is the case, after all, in any case where (contractual) obligations are undertaken. For this reason, the compliance from the part of the one offering the work with what has been contractually agreed (regarding, inter alia, the place or time frame of their work) does not imply, without a doubt, the “worker’s” dependence on the employer. Based on the above data (but especially the ambiguity of the concept of dependence), the difficulty of distinguishing between the two types of contracts arises as self-evident. In many cases, in fact, the discrimination proves to be extremely difficult.

The distinction from the works contract

At first glance, distinguishing between an employment contract and a works contract seems easy. Moreover, the purpose of the two, specific, contracts is different. Specifically, with the employment contract, the parties aim at the work itself, which will be provided for a definite or indefinite period of time. On the contrary, with the works contract (681 AK), the parties aim to achieve a specific, final, result. The realization of this certain result implies the automatic termination of the contractual relationship of the parties (Ind .: Plenary session of the Supreme Court 19/2007, Supreme Court 223/2011). However, according to case law "… when the provision of labor is intended for a certain result, but which is outside the power of the worker, who undertakes not to produce it, but simply to do what is possible for them to produce it, then there is an employment contract and not a works contract, even if it has been agreed between the parties that the salary will be paid only if the desired result occurs” (Supreme Court 376/2006).
In any case, the works contract (as well as the independent services contract) is characterized by a lack of dependence on the employer. Proof of this assumption is the fact that the contractor has the initiative in the execution of the project. The latter is the one who chooses the time and the way of execution of the project within the contractual deadlines. They are not obliged to comply with the (non-contractual) instructions and orders of the employer. They are not even subject to the control of the latter. The contractor undertakes to execute / deliver the agreed project. The developer-employer reserves the right to receive a properly executed project. The fluid boundaries of the concept of dependency clearly make it difficult to properly characterize an individual contract (: employment or works contract). However, it is extremely difficult to distinguish between the two types of contracts when we have at hand successive projects for the same employer, under the same contractual terms. In such cases, successive contracts are likely to cover the employer’s ongoing and permanent needs.


The distinction from the contract under which commission is payable

The independent services contract and the works contract are the closest contracts to the concept of employment. The employment contract, however, has more common features with the works contract (articles 713 et seq. of the Civil Code). In both contracts, for example, a work supply is agreed upon, while compliance with the instructions of the employer or principal respectively is required.
However, from the works contract regulated in the Civil Code, the element of remuneration is missing. In contrast, in the employment contract, the salary is the employee’s compensation
and the means of subsistence. The salary is therefore one of its essential elements. The existence or non-existence of remuneration is therefore what makes it relatively easy to distinguish between employment and works contracts. (Let us not forget, of course, the special form of the paid order contract concluded with in-house lawyers).


The emerging danger

The incorrect legal characterization of the employment contract is not without legal consequences. Dependence, moreover, is what puts the employee “under the umbrella” and the protection of labor law. There are many cases where the circumvention of labor law is attempted by the use of related contracts, such as the ones mentioned above. Independent services contracts, works contracts and even contracts under which commission is payable conceal, not infrequently, employment contracts. The indistinguishable limits between them are those that are used to exceed the protection of Labor Law. The danger that arises in terms of employees’ rights is undeniable. And given.
On the other hand, however, we should not ignore the existence, regulation and operation of related contracts. Especially the independent services and works contracts. Should we, from the outset, exclude the truth of the intentions of the parties who have chosen an independent services or works contract? In this context, we should avoid an aphoristic generalization about an undercover contract when we are in front of a related contract. Adopting the intention in advance to circumvent labor law by a business which chooses to enter into a contract other than an employment
contract, the freedom of contract is ultimately violated. And, of course, freedom in conducting business. The moment, in fact, when the latter is protected under the Constitution.
Thus, in the context of business freedom, freedom of contract and private autonomy, the desire of the business may indeed be the conclusion of a contract for independent services, works and / or a contract under which commission is payable. Let us not attribute, without a doubt, "bad" intentions to the business. A contract other than an employment contract may indeed reflect the true will of the parties and what has been agreed. And the one that better serves the interests of the parties (and not just the business’ targets).


Restriction of business (and contractual) freedom

However, there are some cases where the aforementioned freedoms of the business are either bent overall or drastically limited. In these cases, the employee’s interest is the one that is exclusively proposed and drastically protected. These are the cases in which the Greek legislator preferred: (a) either to attribute to certain contracts the designation of an employment contract directly, (b) or to establish presumptions in favor of the designation of a contract as an employment contract.

The direct legislative characterization of a contract as employment contract

In specific contracts, the legislator chose to attribute, by themselves, the trait of dependency. These are clearly cases where the boundaries of the employment contract dependent with related contracts become particularly blurred. Typical examples of direct legislative characterization: (a) the contracts concluded by professional athletes with sport SAs for the provision of sports services (article 85 par. 2 and 4 of Law 2725/1999) and (b) the contracts concluded by tour guides (holders of the provided license to practice the profession of tour guides) with tourist – travel agencies, with members of the association of shipowners of passenger ships and with tourist offices abroad for the implementation of tourist programs (article 37 law 1545/1985). However, in the above and in the corresponding legislative interventions, issues and concerns regarding their constitutionality are raised.

The legal presumptions of dependence

In other cases, the legislature limited themselves to introducing (rebuttable) presumptions in favor of the existence of dependent work. In these cases, the assistance of certain facts argues in favor of the existence of an employment contract. However, as the presumption offered by law is defined as rebuttable, the possibility of retaliation is provided. A typical case of introduction of a presumption in favor of dependent work is the provision of article 1 of law 3846/2010. According to this provision: “The agreement between the employer and the employee for the provision of services or work, for a definite or indefinite period, especially in the cases of pay per unit (contract), telework, employment from home, is presumed to conceal an employment contract, if the work is provided in person, exclusively or mainly to the same employer for nine (9) consecutive months”. Despite the existence of the facts which fall within the scope of application of a presumption corresponding to the above, the judge is the one that at the end will determine the existence of dependent work.


The correct legal characterization

In any case, the judge is the one who sovereignly evaluates any case of questioning the characterization of a contract, which is brought before them. It is also known that the characterization (by the parties and / or the legislator) of a relationship as an employment or independent services or works contract or contract under which commission is payable, does not depend on the characterization given to it by the parties or even the legislator.
On the contrary, "this characterization, as a pre-eminent task of the judicial function, as delimited by the provisions of art. 26 § 3 and 87 § 2 of the Constitution, belongs to the court, which, evaluating the facts set out in the lawsuit and those that may possibly subsequently arise during the evidentiary procedure, gives the exact (correct) legal characterization to the contract. “(Ind .: Supreme Court 602/2017, Supreme Court 608/2014, Plenary Session of the Supreme Court 7 & 8/2011, Plenary Session of the Supreme Court 6/2001).


And what is the appropriate attitude of the business?

In the light of all the above, the businessman/woman (and / or their legal representative) could reasonably ask: “So what should I do?” It would be desirable to avoid burdening the business with legal and other, incalculable, risks.
In practice:
(a) Selection of the legally correct contractual type that connects the business with its employee or associate – before the start of their cooperation.
(b) Clear documentation of the legal validity of the contractual type to be selected. Incorporation in the relevant, prescriptive, conventional text of those substantive parameters
that support it.

It is also important to keep this in mind: At some point in the future, any contractual relationship, any contract, any case in which we are involved may be brought before a competent Court for evaluation.

Let’s not be left then to form our own supporting file and arguments.

Because, as is well known, “it is better to prevent than cure”.


Stavros Koumentakis
Managing Partner


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.


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