Written by Kostas Katikos
Three levels of contracts open the three years from 1/1/2024 and bring increases of up to €1,092 in wages for hundreds of thousands of private sector workers.
The increases will be multi-speed and proportional to whether the employees received the “frozen” seniority bonus on 2/14/2012 or not, subject to a memorandum. This clause stipulates the suspension of payment of pre-service benefits until the unemployment rate drops to less than 10%. The government lifted the ban and issued a three-year re-employment law effective 1/1/2024, with an unemployment rate slightly above 10%.
Reversing the freeze means workers will resume benefits that were suspended in February 2012 along with the length of service they had enjoyed until then. Their previous period of service for the years 2012-2023 will not be counted, and their salaries will not increase.
With the unwinding of the three-year freeze, the landscape in private sector salaries changes until 2027, as each year employees will complete the required seniority which will also lead to an increase. For example, an employee who has 5 years and 6 months of service until 2012 already has three years and in June 2024 completes the second. An employee who has one year of work until 2012 completes three years in 2025 and so on.
Unemployment will also play a role in the new system, and if it is above 10% in 2027, increases will be frozen again.
But how will employees know if they are entitled to a pay increase and what must business accountants do to be compliant with the letter of the law? The answer comes through the contracts themselves that employees enter into. As reported by the relevant officials of the Ministry of Labor in K, on 1/1/2024, every company will have to see under what contract it employs its workers, and thus find out whether they are entitled to three years or not.
Monitoring will be carried out at three levels of contracts: collective labor agreements, such as sectoral or operational contracts, individual contracts and contracts where the legal minimum wage is 780 euros.
The employee who is subject to an establishment contract stipulating a seniority bonus and did not receive it because it was frozen in 2012 will recover it based on what his contract stipulates as of 1/1/2024. The same applies to employees who have a sectoral contract, provided that it is valid and has not expired.
An employee who until 2012 received a seniority allowance under a sectoral contract, which expired in the following years, and is currently paid on the basis of the minimum wage, will, as of 1/1/2024, receive the allowance corresponding to the minimum wage on the basis of the length of service until 2012.
An employee who in 2024 finds himself being paid under an individual contract will only get a seniority increase if his earnings are less than he would have been if he had earned basic salary for three years.
The freeze will be unfrozen on the basis of previous service until 2012, but also on the basis of the contract signed by the employee on 1/1/204 as follows:
1. The seniority of each employee who was appointed before 2/14/2012. This seniority was formed on 2/14/2012, when its completion was suspended, and its completion will continue after 1/1/2024. If the contract stipulates three years, two years, or five years, and it is frozen, it will be automatically unfrozen on 1/1/2024.
2. Completion of seniority for each employee appointed after 2/14/2012 begins after 1/1/2024. For these workers, the first three years will be completed in 2027.
3. With regard to the increase due to seniority for employees who receive the legal minimum salary or daily wage, seniority is recognized as the period of a subordinate contract or work relationship spent with any employer and in any specialty before 2/14/2012 and after on 1/2024/ 1. For those who receive the minimum wage and a dependent employment contract, the increase due for previous service is set at 10% for every three years and a total of 30% for previous service of 9 years or more (3 three years). For those who receive salaries, the increase in daily wages is 5% for every three years. A total of 30% for a period of 18 years (6 periods of three years each).
Employees earning the minimum wage who complete three years in 2024 will benefit from an annual increase of up to 1,092 euros.
Employees who will complete three years in 2025, 2026 and 2027 will receive up to 3,794 euros per year, as the three-year increases on a minimum wage higher than the current minimum will be “cut” due to the increases that will be given in the following years.
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