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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Greece

Notice period

In Greece, labor law stipulates specific notice periods for both employers and employees when terminating an indefinite-term employment contract. These requirements are outlined in the amended Article 1 of Law 2112/1920.

Notice Period Based on Length of Service

The notice period required varies based on the employee's length of service:

  • 1-2 Years: One month's notice
  • 2-5 Years: Two months' notice
  • 5-10 Years: Three months' notice
  • 10 Years and Above: Four months' notice

This applies to situations where the termination is due to reasons such as redundancy or personal grounds, without fault by the employee.

Exceptions to Notice Periods

There are exceptions where notice periods may not be required:

  • Serious Misconduct: If an employee commits serious misconduct as defined by their employment contract or labor law, they may be dismissed without notice.
  • Mutual Agreement: Both employer and employee can agree to terminate the contract without following the standard notice period.
  • Fixed-Term Contracts: Fixed-term contracts typically expire on the predetermined date without requiring notice. However, early termination due to unforeseen circumstances might require notice depending on the reason.

Employer Obligations During Notice Period

  • Salary Payment: Employers are obligated to continue paying the employee's regular salary throughout the notice period.
  • Paid Time Off: Employees can utilize their accrued paid time off during the notice period.
  • Garden Leave: Recent legislation (Law No. 4808/2021) allows employers to place employees on "garden leave" during the notice period. This means the employee is still paid but not required to work.

Employee Obligations During Notice Period

  • Availability to Work: Employees are generally expected to remain available for work during the notice period unless on approved leave.
  • Duty of Loyalty: Employees still have a duty of loyalty to their employer during the notice period. This means they should not engage in activities that could harm the company's interests.

Severance pay

Severance pay in Greece is a critical aspect of employment termination, governed primarily by Law 3198/1955 and Law 2112/1920.

Who is Entitled to Severance Pay?

Employees who have worked under an indefinite-term contract are generally entitled to severance pay upon dismissal by the employer. However, certain categories are excluded from severance pay entitlements, including employees with fixed-term contracts (unless terminated early by the employer), employees dismissed for serious misconduct, and employees of certain specified small enterprises.

Calculating Severance Pay

Severance pay is calculated based on the employee's most recent regular monthly salary. The amount of severance pay increases with the employee's length of service, as outlined by Law 3198/1955. The exact calculation depends on whether the employee is classified as a salaried employee or a wage laborer.

Additional Severance Under Certain Circumstances

Under Law 4808/2021, the court can award additional severance pay if the termination of employment is deemed unfair. This additional severance can amount to up to double the statutory severance payment.

Situations Where Severance Pay is Not Due

If an employee resigns from their position, they are not entitled to severance pay. Similarly, if the termination is due to serious misconduct on the part of the employee, severance pay is forfeited.

Important Notes

While the law sets the minimum severance pay, employers and employees can negotiate more favorable terms. In some industries, collective agreements may provide for enhanced severance packages.

Termination process

Employment contracts in Greece can be terminated in several ways, each with specific procedural requirements outlined in Greek labor laws.

Types of Termination

  • Termination by Employer (Dismissal): The employer can terminate the contract based on objective reasons such as economic or operational reasons (e.g., redundancy), disciplinary reasons (misconduct), or the employee's inability to perform tasks.

  • Termination by Employee (Resignation): Employees can resign by providing written notice. The required notice period depends on the terms of their employment contract or collective agreement.

  • Mutual Termination: Both the employer and employee can mutually agree to terminate the contract, usually with a settlement agreement outlining terms such as compensation.

Termination Procedure for Employers

  1. Written Notice: The employer must provide a written notice of termination, clearly stating the reasons for the dismissal and the effective date.

  2. Submission to Employment Authorities: Inform the relevant employment authorities (typically the Labor Inspectorate Office) about the termination.

Considerations for Fair Termination

  • Valid Reasons: Ensure the reasons for dismissal are legally valid and justifiable.

  • Fair Hearing: Law 2112/1920 emphasizes the right to a fair hearing, especially in terminations due to employee-related reasons (misconduct, performance). Allow the employee an opportunity to respond to allegations before termination.

Contesting Unfair Termination

  • Labor Dispute Resolution: Employees can challenge dismissals they consider unfair through the Labor Inspectorate or file a lawsuit with the Labour Courts.

  • Remedies: If termination is deemed unfair, potential remedies include reinstatement, re-engagement, or compensation.

Important Notes

  • Contractual Agreements: Always review any employment contracts or collective agreements as they may outline additional termination procedures or entitlements.

  • Industry-Specific Regulations: Some sectors may have specific termination regulations.

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