SPECIAL COMMENT ON THE RECENT DEVELOPMENTS IN GREECE
by Dr. Dimitrios Kremalis LL.M*
Recent developments in Greece and their impact on employment The Greek Government’s surprise call last week for a referendum on the recent austerity proposals by its international creditors, followed by the introduction of capital controls and the shuttering of Greece’s banks and stock exchange, has opened a new chapter in the European debt crisis.
But where do we stand now? To prevent capital flights and collapse of Greek banks, the Greek government instituted a short term bank holiday along with capital controls which limit daily cash withdrawals to an amount of 60,00 € and prohibit transactions outside Greece with very few exceptions. Given that the Greek government’s plea for an extension of the emergency loan program has been rejected and Greece has failed to make the 1.6 billion Euro payment to the IMF οn June 30th, the reaching of an agreement between Greece and its creditors is of high urgency, to retain access to EU subsidies and disbursements and return to normal business.
Meanwhile, the impact of the above developments on employment are significant:
Dysfunctionalities in transactions affect payroll payments while the increasing lack of sufficient liquidity impairs everyday business operations. Employers have to consider alternative ways to minimize operational costs, i.e. agreeing with employees to take their annual leave or even unpaid leave, not renewing fixed-term contracts, renegotiating employment agreement terms, even temporary suspending part of their local operations. Meanwhile, with the situation remaining fluid and the outcome of an affirmative or negative result in the referendum of Sunday July 5th being uncertain for the country and its economy, companies will have to increase their flexibility of actions to ensure business sustainability. To this extent it is suggested to implement internal audits to evaluate the possibility of remodeling employment relations and restructurings, as well as financial plans to mitigate the impact of capital controls, i.e. opening and operating foreign bank account(s) would help cash-flow and intercompany money transfers, as local money withdrawal and transfer restrictions wouldn’t apply.
In the unfortunate event of a Grexit, more radical measures should be taken into consideration, as the re-denomination of contracts and the consequent devaluation of the new Greek currency would unavoidably lead employers to rethink their approach to the cost and effectiveness of their businesses in total. Besides mitigating the currency risk (i.e. including relevant clauses in employment agreements, employing local workers vs. expats etc) companies should also evaluate the tax and pensions implications i.e. as regards to the treatment of voluntary/salarial benefits and benefits in kind, modification of insurance schemes etc.
With the private sector suffering an increasing fiscal stress, failing to plan is planning to fail. We at Kremalis share your concerns and stay at your disposal to suggest the appropriate strategy and maneuver you away of pitfalls.
*Partner at KREMALIS | Ius Laboris Greece | Global HR Lawyers
Kyrillou Loukareos street 35 - 114 75 Athens - Greece
VOLUME 36, ISSUE 3 - Spring 2015
ILO Labor Standards and Trade Agreements: A Case for Consistency
Jordi Agustí-Panareda, Franz Christian Ebert, and Desirée Leclercq
Malingerer or Maligned: A Comparative Study of Multiple Chemical Sensitivity Case Law
Odelia R. Bay
How Much Is It Worth? Evidence on Back Pay in Unfair Dismissal Cases in Mexico
Jorge Luis Silva Méndez and Joyce Sadka
"Affirmative Action" or "Positive Action" in the Employment Context: Comparing the Interpretation of "Equality" by the European Court of Justice with That of the South African Constitutional Court
Darcy du Toit
Dream Zones: Anticipating Capitalism and Development in India, by Jamie Cross
reviewed by Jennifer S. Bowles
Sans Papiers: The Social and Economic Lives of Young Undocumented Immigrants, by Alice Bloch, Nando Sigona, and Roger Zetter
reviewed by Maria Lorena Cook
Varieties of Liberalization and The New Politics of Social Solidarity, by Kathleen Thelen
reviewed by Christian Lyhne Ibsen
Continuity Despite Change: The Politics of Labor Regulation in Latin America, by Matthew E. Carnes
reviewed by César F. Rosado Marzán
Adjudicating Employment Rights: A Cross-National Comparison, by Susan Corby and Pete Burgess
reviewed by Elizabeth Shilton