Standby Contracts: Blessing or a curse?
I. Preamble
Numerous companies are called upon to satisfy drastically changing needs. Sometimes, those needs are emerging as a result of circumstances no one could predict. It is, of course, not possible for a business to employ a significant, at times, number of employees just because “maybe, at some point, some of them may be necessary”. The costs involved would be unbearable. And, consequently, deterrent.
A suitable solution for such businesses (and such cases) are the so called “standby contracts”. The business-employer agrees with specific employees that the latter will be available and ready to offer their work. As long as the relevant need arises. (Of course) For a fee.
Standby contracts are an institution that, unfortunately, is not provided for by law. But how does case-law approach this institution?
II. The concept of employment
“In the beginning was…” (one could argue) the concept of employment, under labor law. And that one would have a strong argument. The existence of employment is a prerequisite for the application of the provisions of labor law.
The importance of the concept of employment is fundamental. We have yet to manage, however, to agree on how employment is determined. Or, to take it a bit further, to include in a legal text a (commonly accepted) definition of it. The distinction of an employment contract from contracts and concepts close to it often proves very difficult.
Theories on what constitutes employment vary and are constantly changing. And what is changing as well is what case-law considers as criteria for identifying employment. The Supreme Court has found that: “for the purposes of the application of the provisions of labor law, employment shall normally mean the provision of the employee’s intellectual or physical activity, which is carried out under the control of the employer and is intended to achieve an economic result”.. This assumption may, however, give rise to the misconception that employment requires the positive action of the employee in order to be understood as such. However, the Supreme Court makes clear, that “… there is an employment relationship even when simply the freedom of the employee is restricted, when the latter undertakes the obligation to be standby and ready to offer their work, when this is required by the employer”. (indicatively SC 814/2014).
It is settled case-law that one’s readiness for work is a form of employment. Standby contracts, however, are not provided for by law. The results of this particular regulatory gap is the difficulties in defining employment and its various forms. Most importantly: the uncertainty and ambiguity around the rules that govern it.
III. The forms of a standby contract
1. In general
Case-law distinguishes two basic forms of a standby contract:
(a) actual standby contract and
(b) non-actual standby contract (mere or on call).
The criterion for this distinction is the degree to which the employee is standby.
Case-law has found in some cases that there are “intermediate standby stages”. These are contracts found between the two aforementioned categories. Contracts that are entered into in the context of the freedom of contract (CC 361) and are characterized by the intensity of the alertness required from the employee (indicatively: SC 110/2014, SC 8114/2014, SC 70/2010).
It is for the competent Court to determine the degree to which an employee is standby at any given point. Also, the degree to which an employee is required to be alert. Depending on the ruling of the court, the standby contract will fall into one of the two basic categories mentioned above.
2. Actual standby contracts
When actually standby, the employee must:
(a) Be for a specific period at a predetermined location (in the business or outside of it) and
(b) Maintain their mental and physical alertness so as to be able to offer their services the moment the employer or circumstances so require.
That is, it is not a simple restriction of the employee’s freedom. The employee, when actually standby, is required to, simultaneously, constantly be alert and available to the employer. And do so for the time predetermined by the employer.
3. Non-actual standby contract
In cases of non-actual standby contracts, the employee is obliged to (only) partially limit their freedom of movement for the employer. Ultimate goal; the employee’s availability and ability to offer their work at any time. In non-actual standby contracts, the employee also retains the ability to rest or be away from the workplace. The employee is even entitled to engage in other (irrelevant) occupations. That is to say, they are not required to be physically and spiritually alert. In these cases, we are talking about mere or on call standby.
The Greek law does not distinguish the meaning of mere or on call standby. It puts them, as a whole, in the broader category of non-actual standby.
In contrast, the Court of Justice of the European Union considers this distinction to be significant (from merely being standby to being on call). Indeed, in both cases, the employee does not have to be constantly alert. The differences, however, between these two categories of standby is not without significance.
The difference between the two, lies on whether or not a restriction is imposed by the employer on the employee on where they can be (on top of the time restriction).
In particular, in cases of mere standby duty, the employee is not entitled to be away from the workplace, which is determined by the employer.
On the other hand, when the employee is on call, they freely choose where they will be. One necessary condition: to be reachable at all times. That is, the employee must ensure that, should the employer call them, they will be able to provide, within reasonable time, their work (indicatively.: Case C-151/02 (Jaeger)).
IV. The legal importance of distinguishing between actual and non-actual standby contracts
1. Regarding the application (or not) of the provisions of labor law
The distinction of the various types of standby contracts made by Greek case-law is not without significance. This is because each type is approached differently.
In particular, the actual standby contract is fully equated with “normal” work (work offered when an employee takes some positive action) in the eyes of the law. And this, regardless of if the employee will, at the end, be required to provide their work or not. Therefore, all provisions of labor law apply in this case.
On the other hand, a non-actual standby contract is treated by Greek case-law as a peculiar form of work. This is why it does not fall within the regulatory scope of all the provisions of labor law.
2. Regarding the remuneration of employees
The importance of the above distinction (actual/non-actual) is highlighted when dealing with the issue of the salaries owed.
In particular:
(a) In cases when an employee is actually standby, case-law applies, with no exception, all the provisions of labor law regarding the salaries owed. Specifically: the minimum wage limits and increases. Also, the allowances for night and overtime work. Finally, the increments related to work provided on Sundays, holidays or rest days.
(b) In the case of non-actual standby contracts, however, such treatment (as the one described under a) is not reserved. Case-law exempts non-actual standby contracts from the protective provisions of labor law with regards to the minimum wages provided for by Collective Agreements. Also, from the surcharges and compensation due for overtime and night work. Lastly, from the increments related to work provided on Sundays and other public holidays.
The specific exemptions mentioned above do not, however, mean that the employee concerned (being on non-actual standby duty) is not entitled to a remuneration for the restriction of their freedom. According to Greek case law, the remuneration to be paid to this employee is contractually agreed (between the employer and the employee). However, the remuneration agreed may be lower (or substantially lower) than the statutory minimum wage. In the event, however, that the salary is not contractually agreed upon, the ‘ordinary’ salary (653 CC) is paid. And ordinary wages may, in fact, be lower than the legal minimum wage.
It is a fact that in case of a non-actual standby contract, a great number of protective provisions regarding the remuneration of the employees do not apply. However, case-law accepts, in these cases, that the provisions regarding the holidays, holiday and leave pay, do still apply. And that so do the provisions regarding the termination of employment contracts and the dismissal compensation owed.
3. Regarding the working time limits
3.1. The establishment of maximum working time
One of the main concerns of the protective provisions of labor law is the protection of the health of the employee. This objective is achieved, inter alia, by the establishment of maximum permissible working time limits. This aims to: (a) prevent the exploitation of the employee’s financial need for work; and (b) ensure a reasonable time for rest and participation in social life.
3.2. The connection between the maximum working time and actual standby duty.
From the aforementioned, it becomes clear that the provisions setting time limits fully apply to the actual standby contract.
However, the same is not true of the non-actual standby contract. Case-law does not accept the application of the relevant provisions in this type of employment contract. We are therefore led to the conclusion that the employer could agree with an employee (who is on non-actual standby duty), the latter’s availability to provide work around the clock.
However, this extreme assumption is obstructed by EU law.
3.3. The connection of mere standby duty with EU law
Mere standby duty is connected with EU law via the adoption of three Directives, regulating the organization of working time. These are: (a) Directive 93/104/EC, which has been transposed into Greek law by P.D. 88/1999 (B) Directive 2000/34/EC, which amended Directive 93/104 and transposed it into Greek law by P.D. 76/2005, and lastly (c) Directive 2003/88/EC, which codified the provisions of the two previous Directives.
EU law, therefore, provides for maximum working time limits. It requires, at the same time, that the employee be provided with at least eleven (11) consecutive hours of rest within 24 hours. Directive 93/104/EC distinguishes time between ‘working time’ and ‘rest time’. These two concepts are mutually exclusive.
The ECJ accepts that working time is the time during which the employee is at work, at the disposal of their employer, and perform their duties in accordance with national laws or practices.
3.4. The time while the employee is on call is not considered working time
Moreover, the ECJ consistently held that the time while on mere standby is working time. On the basis of this assumption, protective provisions setting working time limits apply in these cases (of mere standby). Indeed, at this point the distinction of the ECJ between the concepts of mere standby and standby on call (as discussed under III.3) is essential. This is because the latter is treated differently by law.
In particular, the ECJ does not consider as a working time the time the employee is on call. In such cases, working time starts when the employee receives a call to provide the agreed work. The end of the working time coincides with the completion of the assigned task. As a consequence, only for this period (start-end) the working time limits apply.
3.5. Deviations from working time limits
The needs of a business may, provided the employee agrees, lead to deviations from the maximum working time (Article 17 of Directive 93/104). Some of those deviations will mostly occur under actual or, mainly, mere standby. However, in such cases it is mandatory, in accordance with the ECJ, to provide the employees concerned with equivalent periods of compensatory rest at intervals, immediately following the corresponding working time. In addition, such a reduction in the daily rest period should not result in exceeding the maximum weekly working hours.
V. Technology and standby
The employee’s continued availability/standby by utilizing/using digital technology should be equated with on call duty. A readiness to provide work that is practically possible through a laptop, a tablet and even the employee’s smartphone.
The employee is at the disposal of their employer (only theoretically?) on a continuous basis. The employee can, and is no longer unusual, undertake and perform a task that does not require their physical presence.
It is obvious that reading a professional e-mail could be seen as tantamount to interfering with the employee’s private life and time. And it can happen at any time. Off-hours included. So, combining digital technology with the non-application of legal work time limits regarding the on call standby duty is problematic. This is because it may deprive the employee, at least in part, of their right to rest.
VI. In conclusion
Standby contracts for specific activities, sectors and businesses are, undisputedly, a real and present need. Many businesses are adopting standby contracts and they have seen positive results because of them. And those contracts also have satisfactory (and often desirable) results for employees.
So, there can be no doubt that the existence of standby contracts is absolutely necessary.
The legality of this conclusion is not in dispute. Their regulatory framework, however, is only determined by case law. Unfortunately, there is no relevant legislation. This inevitably results in legal uncertainty. Of course, for employees as well. But especially for businesses.
The involvement of the legislator proves necessary. After all, it is the legislator who is able to make the necessary adjustments.
The basis for a legislation on standby contracts should be based on: (a) the particular circumstances of particular sectors and businesses, (b) their increased need to have employees on standby at specific times and/or for specific activities and (c) the potential of digital technology and the reality that it shapes.
The relevant legislative intervention is not a luxury.
It is simply an undue need.
Stavros Koumentakis
Senior Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (March 8th, 2020).
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.