Δικηγορικό Γραφείο Παλαιολόγος Παλαιολόγος και Συνεργάτες - The New Labour Law In Greece Is Unconstitutional

Palaiologos P. Palaiologos, Lawyer in Athens, Greece

The serious social, financial and political developments in Greece during the last 4 years challenge every social, historical and economical scientist or analyst. However, an in-depth  of recent labour law regulation gives another meaning to the social and political phenomenon currently taking place in Greece.

The country’s submission to international probation and especially the assignment of fields such as those of labour, economy and the civil services, to non-elected or not democratically legitimised, extra-institutional agencies, the so-called troika (IMF, EU, ECB), has shrunk and abolished one of the primary characteristics underlying the Greek state since the political changeover of 1975, namely the social state and the state ruled by law.

Social State and Rule of Law under Attack

Greek democratic evolution lead to the formation of social principles such as protection of physical life, human dignity and personality, equality and freedom, acquisition of property, health and education for every citizen and safeguard of labour rights. These principles are also inscribed in the Universal Declaration of Human Rights, the European Social Charter and the modern Constitution of Greece recently revised version of 2001.

These principles of a social state are in continuous conflict with the principles of the free market, in which the state is a necessary evil whose restriction is a constant pursuit of the neoliberal powers.

For many years already, there have been attempts to implement violent financial and social changes in Greece. These attempts have eventually found a fertile ground during the crisis. The changes are applied by bypassing and demolishing the fundamental principles on which the social state has been based, thus violating the Greek Constitution. A new institutional framework has been implemented that does not enjoy any democratic legitimacy. It consists of the so-called ”memoranda”.    

The “Memoranda” and New Greek Labour Law

Greek law 3845/2010, entitled ‘Measures for the application of the support mechanism for the Greek economy by euro area Member States and the International Monetary Fund’ ratified two memoranda : (1) the ‘Memorandum of Economic and Financial Policies’ and (2) the ‘Memorandum of Understanding on Specific Economic Policy Conditionality’. On 14th February 2013, law 4046/2012 was adopted, introducing another memorandumentitled  ‘Approval of the Draft Financial Assistance Facility Agreements between the European Financial Stability Facility (E.F.S.F.), the Hellenic Republic and the Bank of Greece, approval of the Draft Memorandum of Understanding between the European Commission, the Hellenic Republic and the Bank of Greece and other urgent provisions for the reduction of the public debt and the rescue of the national economy’.

The aforementioned statutes together with a host of executive regulations (in these times, the executive often operates as legislator) have revoked labour rights and have deregulated labour relations. The changes amount to serious violations of the Greek Constitution. These are the changes:

  • Five days after ratifying the first memorandum, law 3846/2010 has been introduced  which allows an employer to unilaterally impose a rotational work system, i.e. the employees work only certain days per week, certain weeks per month and certain months over a nine month period. Employers go as far as to let employee work only for 1 or 2 days per month and refuse to dismiss them in order to avoid paying severance. They also refuse to pay the minimum wage that employees are entitled to. After the yearly nine-month period, to which the system is restricted, employers continue to pay employees less than their usual wages, thus continuing the rotational system far longer than nine months.
  • The same legislation allows employers to demand extra work-hours from part-time employees. The law itself states that in such cases a refusal by the part of employee violates ‘good faith’. Additionally, extra work-hours will not be subject to a rise of wages. A decrease in wages is provided for by law in cases of overtime up to 20 %.
  • Training period has been increased from 2 to 12 months. As a result, many employers hire their personnel on an indefinite time agreement and subsequently dismiss them after 12 months, without being obliged to compensate them. 
  • Severance pay has been decreased, and employers have been overtly facilitated in the way to pay it. According to the new legislation, employers can pay the severance bimonthly. However, the greatest problem is that employers, taking advantage of the plexus of ‘memorandum provisions’, delays of the justice system and the arguments of business flexibility and adjustment, avoid paying the severance altogether. Paradigmatic is the case of the Agricultural Bank, a bank closely linked to the public sector, which dismissed all its employees in August 2012. Today, 14 months later, about 6000 employees have acquired half of their severance, and it is very doubtful that they will see much more of it after the ministerial decree of 11/8/2012 which limits privilege and priority of their compensations in case of the liquidation of this specific enterprise.
  • The institution of leased employees has been developed. Leasing time has been increased from 8 to 36 months. This specific regulation concerns mostly personnel of cleaning services as well as guards of public buildings (metro stations, hospitals, ministries etc). Such employees initially enter into contract with enterprises exclusively occupied with employee leasing. These employees work under harsh conditions and are heavily underpaid to the lessors’ advantage. 
  • Firing limitations have been expanded which permitted mass dismissals, provoking an immeasurable social cost. A few days before the writing of this text, a discussion has started about the concession of further capacities to employers, allowing them more mass dismissals. In this discussion, the Deputy Minister for Labor stated that the regulations of June 2010 already were anachronistic.
  • Special treatment is scheduled for employees under 25 years. They shall receive reduced wages down to 32% of what is agreed upon by national collective labour agreements. The conspicuous illegality of this regulation has been pointed out, amongst others, by the European Commission of Social Rights by virtue of its decisions 65/2012 and 66/2012. Until February 2012, minimum wage was defined by collective labour agreements between employers and amployees. Then, law 4046/2012 was introduced giving government the possibility to define by law minimum wage, which today reaches 585,00€ per month.

Employment in the Public Sector

The ‘memoranda’ laws have cut down not only the monthly standard salary, but also the Christmas and Easter allowances of civil servants. As of now, many civil servants have already reached the limits of poverty. The first memorandum has reduced the salaries of all employees in the public sector. In December2010, their salaries were once again reduced by 25%. Finally, in November 2011, a maximum level of salaries was introduced for every single business of the public sector. Initially with the pretext of employees’ redundancy and now with the pretext of alleged general corruption, a system of temporary layoffs has been imposed. Under this regime, the working relation can be suspended for 8 monthsuntil the layoff is discontinued after the 8 month period. The layoff regime is gradually implemented and has already caused huge social problems, especially in education where many students are not taught because their teachers have been placed under layoff regimes. 

Collective Labour Law

In collective labour law, there has been a significant limitation of trade associations and their ability to sign collective agreements. More specifically, in accordance with law 4046/2012 “…. Minimum wages that are determined by the national general collective agreement will be reduced by 22% compared to 1-1-2012 rates”. The law also suspends provisions of collective agreements for wage increases. The expiry date of collective agreements after which they cease to be valid is changed to the effect that the possibility of extension or denunciation of collective agreements compulsory for all sector or trade workers, in case of sectoral or trade-related agreements respectively, is abolished as well as the possibility of any after-effect extension. Essentially, collective agreements can now remain valid only for a period up to three months after their expiration.     

The New Greek Labour Law is Unconstitutional

All these new Greek labour law regulations abolish substantial and fundamental labour rights. In doing so, they violate articles 2, 4, 5, and 22 of the Greek Constitution. The new laws also infringe article 1(2), and article 4(1) and (4) of the second part of the European Social Charter which has been ratified by Greece through law 1426/1984 and, according to article 28(1) of the Greek Constitution, prevails over any contrary provision. The European Social Charter recognizes ‘the right of workers to a remuneration such as will give them and their families a decent standard of living’. 

Article 2(1) of the Greek Constitution states: ‘Respect and protection of the value of the human being constitute the primary obligations of the State’. According to this provision it is forbidden to proceed to successive wage or pension deductions which fall below the poverty level and render citizens unable to fulfill their basic needs in nutrition, housing, clothing, transportation and education.     

According to article 5(1) of the Greek Constitution, ‘all persons shall have the right to develop freely their personality and to participate in the social, economic and political life of the country, insofar as they do not infringe the rights of others or violate the Constitution and the good usages’. Furthermore, article 5(3) provides that ‘’. According to this article, economic freedom is guaranteed as an individual right. A specific manifestation of this constitutional right is the liberty of every person who trades with the public sector. Of particular importance, though, is the right to contract an employment agreement, to be compensated and paid for one’s labour. If not, such labour is considered “forced labour” which the Greek Constitution as a whole condemns. The abolishment of working agreement terms, but also unpaid labour – such as currently practices by public hospital doctors – offend the aforementioned constitutional provision.

According to article 4  of the Constitution of Greece, ‘Greek citizens shall, without discrimination, contribute towards sharing the burden of public expenditure according to their ability’. Moreover, according to article 25(1), ‘restrictions of any kind that may be imposed upon these rights should respect the principle of proportionality’. Additionally, the article 25(4) states: ‘The State has the right to claim of all citizens to fulfill the duty of social and national solidarity’. Combining these article, one can conclude, first, that in order to fulfill the duty of social and national solidarity, legislators can impose on citizens a sort of surcharge so as to face a specific case of emergency or a state of crisis. This is only valid under the condition, though, that these surcharges are equally shared amongst citizens according to everyone’s potentials and by complying to the principles of appropriateness and usefulness. More specifically, the provisions concerning young employees aged 25 years and below are contrary to both this constitutional principle and directives 2000/43/EC and 2000/78/EC which forbid any kind of discrimination related to age while in employment.

According to article 22(1) of the Greek Constitution, ‘Work constitutes a right and shall enjoy the protection of the State, which shall seek to create conditions of employment for all citizens and shall pursue the moral and material advancement of the rural and urban working population’. Besides, according to the aforesaid article 4(1) of the second part of the European Social Charter, ‘the right of workers to a remuneration such as will give them and their families a decent standard of living’ is legally recognized and respected. One of the most fundamental substances of labour is earning a wage that corresponds to the basic needs of living. Article 22(1) of the Greek constitution demands the state’s constant effort to secure stable working conditions and consistency in wage deposits. The  new labour law violates the constitutional provision because the Greek State not only expands elastic forms of employment but also favours and tolerates failure of the private sector to pay wages and severance. The Greek State constantly reduces wages so that basic needs are not covered anymore. 

Collective bargaining used to consist the major regulating factor of labour relations. Its drastic limitation comes in opposition to article 22(2) and signifies the abolishment of employers’ and employees’ associations’ collective autonomy to contract collective labour agreements. This autonomy is provided not only in article 22(2), but also in the International Labour Convention, in its eighth article 151/1978, its fifth article 154/1981, its fourth article 98/1949 and its eighth article 87/1949. Furthermore, article 28 of the Charter of Fundamental Rights of the EU recognizes the right of trade unions to contract collective labour agreements. Also, the sixth article of the European Social Charter secures the trade unions’ ability to define the rules of collective dispute resolution.

Labour Law Reform and the Crisis

Changes in labour relations in Greece are not a result of the so-called fiscal crisis. Nobody can possibly explain what exactly the Greek state gains from cutting down wages of private sector employees. On the contrary, health insurance funds have a great loss of social security contributions that employers would have paid. Moreover, the measures have not reduced unemployment rates nor have they increased occupation. According to recent Eurostat figures, Greece holds the second highest rate of unemployment in Eurozone following Spain, while unemployment in Greece is closing 30% of the total population.

The changes of labour relations within the private sector are not implemented in the frame of administrative restructuring but as the mean to reduce wages and lead to privatization of public enterprises and social services. Because of the dismissal of public servants, the number of working staff in the public sector is not sufficient so as to cover the citizens’ needs. The Greek State fails to fulfill its obligations towards them.

Thus, it is not surprising that the delineated changes in labour relations neither are met with social acceptance nor is there a constitutional basis for them. From a legal perspective, the New Greek Labour Law is both unconstitutional and infringes international law.