European Court calls for labor law change

European Court calls for labor law change

The European Court of Justice (ECJ) issued a verdict on Wednesday on the case of Greek cement producer AGET Iraklis that indirectly called for a change in the law on group layoffs in Greece.

After the Labor Ministry banned the company from laying off 236 employees at its plant in Halkida, central Greece, in 2013, it took its case to the country’s highest administrative court. The Council of State requested the opinion of the ECJ, whose decision yesterday accepted that Greek legislation can set limits on group dismissals, but only under very strict conditions that the country has not met.

Legal sources view the decision as balanced, or in some cases ambiguous, as it comes during a crucial phase in the negotiations between the Greek government and the country’s creditors, with the issue of mass layoffs at the top of the talks agenda. The country’s creditors are pressing for the ceiling on group dismissals to be raised from 5 percent of staff to 10 percent, and for the abolition of the ministerial approval process.

The ECJ made no reference to the issue of the ceiling, but on the matter of ministerial approval it accepted the right of the Greek government to intervene, and even ban group layoffs, but it also set certain conditions. It further considers the conditions included in the Greek legislation to be too vague, saying that they need to change.

The European court was initially asked to examine whether Greek legislation was in compliance with that of the European directive on the matter, and the ECJ ruled there was no conflict between EU law and the power the Greek Labor Ministry retains even to forbid group layoffs following a reasoned decision. However, the court added, this requires the condition that this power does not allow the government to rule out all group layoffs.

In the case of AGET Iraklis, which argued the Greek authorities were systematically opposed to all group layoff plans they were notified of, the European court referred the matter back to Greek justice without examining it. However, the ECJ identified a restriction in Greek law on the free movement of capital and the freedom of establishment.

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