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Managing employees – Differences between their employment agreement and the one applicable to ordinary employees

Iason Skouzos & Partners > Practice Areas  > Labor & Employment  > Managing employees – Differences between their employment agreement and the one applicable to ordinary employees

Managing employees – Differences between their employment agreement and the one applicable to ordinary employees

Managing employees are individuals holding a management, trust or supervision position within a business entity.

According to the legal theory and jurisprudence, managing employees are employees of a large business entity, who have been charged, due to their exceptional qualifications (higher education, high qualifications, special skills, specialization, experience) as well as to the employer’s special trust in them, with general management tasks regarding the whole entity or a significant department thereof and staff supervision tasks, in a way that they decisively influence the entity’s development and clearly distinguish from all other employees who carry out the normal current work. Such distinction is also due to the fact that managing employees often exercise employer’s rights in her/his relations with all business entity’s employees or a substantial number thereof as well, e.g. hiring and dismissal of staff, in relation to whom they are often in the position of employer, and also bear criminal responsibility for complying with provisions introduced in favour of employees. Furthermore, they take great initiative, and in most cases their salary clearly exceeds the minimum limits set by law as well as the remuneration paid to all other employees, in order to compensate their increased efficiency and responsibility.

In other words, the criteria examined in order to acknowledge the condition of a managing employee are the high position in the business entity’s hierarchy, the high grade of initiative and independency granted in decision making, the concentration of responsibilities (managerial or technical) of decisive nature for the operation, organization and development of the entity, the right and extent thereof to affect hiring or dismissal of staff, the high remuneration which clearly exceeds the salary of ordinary staff etc.

While the employment relationship is in general characterized by the legal and personal employee’s dependency on the employer, i.e. the employee receives orders and instructions from the employer in respect of place, time and way of supply of work and the employer supervises and controls them in order to verify compliance therewith, in case of managing employees, who are also related to the employer with an employment agreement, the legal and personal dependency on the employer is much looser. In particular, neither are the aforementioned employer’s instructions and orders in respect of place, time and way of supply of work so binding nor does the employer perform such supervision and control as that performed in respect of all other employees.

Therefore, managing employees do not enjoy the protection status provided for all employees by the basic relevant labour regulations restrictively mentioned hereunder as well, which are considered to be neither compatible with their exceptional condition nor with the fulfillment of the tasks they have undertaken with the relevant employment agreement.

In particular, managing employees do not enjoy the protection status relating to working time limits, weekly rest, severance pay or overtime pay or additional payments for working on Sundays or on public holidays. Furthermore, unless otherwise explicitly agreed between the parties in the relevant employment agreement, managing employees do not enjoy the protection status relating to holiday bonus (i.e. Christmas and Easter bonus) and annual leave as well.
Consequently, managing employees are not entitled to overtime pay, to additional pays for working on Sundays, public holidays or overnight, to compensation for working away from the business premises / their normal place of work, or (unless otherwise explicitly agreed between the parties in the relevant employment agreement), to remuneration, bonus and compensation for an employer’s unreasonable/unjustified refusal to grant annual leave.

In the relevant employment agreements a specific provision is often made in the clause regarding the monthly salary, according to which “due to the fact that the salary clearly exceeds the one provided for by the relevant Collective Labour Agreement, it is hereby agreed that the excess amount shall be paid for any employee claims for overtime pay, additional pays for working overnight, on Sundays or on public holidays, for working away from the business premises / their normal place of work, where necessary, and holiday salary and bonus (i.e. Christmas, Easter and summer bonus).

All above are certainly applicable without prejudice to possible contrary, more favourable for the employees, agreements with the employer, which may also stipulate that the labour provisions pertaining to working time limits, working away from the business premises / the normal place of work, severance pay and holiday bonus etc. shall be stil applicable.

However, other labour provisions (e.g. pertaining to termination of the employment agreement for an indefinite or a definite time period) are still applicable; a different agreement with the employer in connection therewith is not allowed unless it is more favourable for the employee compared to the provision of the law.
According to the jurisprudence, “a managing position, whether the employee has been explicitly named as holder thereof or not, is evidenced based on the objective criteria of bona fide, common experience and logic, the nature and the kind of the relevant services which are viewed as a hole, and the specific relationship between the managing employee and the employer as well as the other employees”. Consequently, the absence of an explicit reference thereto in the relevant employment agreement is not significant.

Finally, it cannot be excluded that the same person is both a managing employee and a member of the management board of the legal entity. The managing employees of a Societe Anonyme may be at the same time members of the board of directors or executive officers or directors or general managers of the company. This is the case where such persons, along with their duties provided for by law or the Statutes, render services under an employment agreement for a fee regularly specified by this agreement. In such case, they depend on the competent bodies of the company (i.e. the employer), i.e. said bodies (the employer) are entitled to perform control and supervision in respect of place, time and way of supply of services to the company and to give binding (for said employees) orders and instructions in respect of the fulfillment of orders in due diligence. The above conditions do not affect the position of said employees as managing employees and differentiate them e.g. from the other members of the board of directors who exercise administrative and managerial powers at their own risk and initiative, are bodies of the company and are subject to the status applicable to the board of directors (and are related to the company either with a mandate relationship or, if receiving a remuneration, with an independent services agreement).