Posting of workers for provision of services in Greece
Maria Rigaki of EY discusses EU Directive 2018/957 which impacts the posting of employees and explains why the tax rules need to be aligned.
Presidential Decree 30/2021 (Decree 30/2021), published on 11 May 2021, incorporates in the Greek legal system Directive (EU) 2018/957, the posting of employees for the provision of services.
While posting should be, by its nature, temporary, there is a common view that cases of prolonged postings within the EU are sometimes linked to abusive practices. The new rule observes the relevant EU Directive’s guidelines, thus introducing additional elements, to safeguard that minimum Greek labour standards are met.
Decree 30/2021 maintains the basic rule that it applies to undertakings (home entities) established in a member country of the EU or in a state which has signed the agreement on the European Economic Area (EEA), which, in the context of transnational provision of services, post employees:
On their behalf and under their direction for the purpose of executing a contract concluded between the company that employs the worker and the recipient of services operating in Greece;
In an establishment or in a company of the group of which the company that posts the employee is a member; or
From a temporary employment agency or from a company that hires out employees to an indirect employer that is established or carries out its activities in Greek territory (host entities). Furthermore, the rule stipulating that home entities are required to notify Greek labour authorities about the posting in advance, also remains.
Decree 30/2021 also introduces the concept of ‘long-term posting’, i.e. postings that exceed 12 months. The 12-month posting limit is now extended to 18 months, in case companies submit a reasoned notification to the competent Department of Labour Relations Inspection of the place where the service is provided, before the expiration of the 12-month period, explaining the reasons related to exceeding said period.
It is noted that when a company replaces a posted worker with another posted worker performing the same work in the same place, the duration of the posting is the sum of the duration of the posting periods of those individual workers.
The calculation of the duration of the posting does not take into account periods of time during which the employment relationship is suspended, as in the case of illness.
Decree 30/2021, however, does not specify whether the 12-month period – or, in the event of an 18-month extension – relate to a single posting or if the individual postings of the same employee are accounted for (and, if this is the case, whether the reference period will be the calendar year).
Particularly with a long-term posting, companies posting employees in the territory of Greece are obliged to guarantee, based on the principle of equal treatment, to the application of all working conditions defined by the Greek labour legislation, the current national general collective labour agreements – that define the minimum non-wage working conditions applicable to workers throughout the country, and the wage conditions – to the extent that they bind the recipient of the service, the applicable collective bargaining agreements or arbitral awards. This is in addition to provisions relating to:
The conclusion and termination of the employment contract (including non-compete clauses); and
Supplementary pension schemes.
Posted workers’ remuneration, does not include remuneration granted as a result of posting, provided that the workers are paid to cover expenses actually incurred as a result of this posting, such as travel, housing or living expenses.
The purpose of introducing the concept of long-term posting is to address cases of abuse by using the posting model, in an effort to surpass the rule of observance of the minimum labour standards of host countries (so-called social dumping). This should be viewed along with:
The European Court of Justice (ECJ Case C-17/19) ruling, mandating that A1 certificates issued to document an individual’s affiliation to an EU social security regime have binding effect solely in the area of social security, and not in the area of labour law, and the proper classification of an individual’s employment parameters, and
The Court of Justice (ECJ Case C-359/16) ruling stipulating that the host country may disregard an A1 certificate, formally issued in accordance with the provisions of EU regulations by the competent institution of the home country, if that court finds that the certificate was fraudulently obtained or invoked.
Furthermore, taking into consideration the above it will be very important for the tax rules to be aligned with the labour and social security system since the current situation creates discrepancies between the type of employment and the applicable tax and social security regime.
Upon the entry into force of Decree 30/2021 on May 11 2021, Decree 219/2000, which regulated the issues related to the posting of employees, ceases to be valid, while Presidential Decree 101/2016 on administrative cooperation, continues to apply.
Decree 30/2021 foresees an administrative fine within the range of €300 to €50,000, for any violation of its provisions (depending on the severity), as well as penal liability (imprisonment of at least six months or a payment of a fine) for any employer or director (or representative serving in any other capacity) of companies who fails to comply with it.