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Calculation of the dismissal compensation

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Calculation of the dismissal compensation

According to the explicit provision of the Law (article 5 L.3198 / 1955), the calculation of the dismissal compensation is done based on the regular salary of the employee during the last month with full-time status.

“Regular salary” is defined as remuneration (legal or contractual) paid regularly and uninterruptedly to employees in exchange for the work they provide. Thus, regular salary includes not only the main salary, but also any other benefit, either in cash or in kind, which is given in addition to the salary during the employment contract, such as e.g. overtime, family allowances, food, housing, etc. However, in order to take these provisions into account, they must be paid by the employer constantly and permanently and not temporarily and as a contractual or legal consideration/exchange for the provision of their work and not in order to serve the operational needs of the employer. Otherwise, i.e. when an employer benefit/provision is granted on an ad hoc basis, despite the fact that it may be of a salaried nature, it cannot be considered as falling within the meaning of regular remuneration and thus cannot extend the basis for calculating the dismissal compensation.

Based on the above and on the case law of Greek courts, the following are included in the regular salary for calculating the amount of compensation:

– the additional remuneration paid for employment on Sundays and exceptional holidays, as well as at night hours, provided that they come from regular and permanent employment.
– the additional remuneration and surcharge for overtime and legal overtime work. If the amount of overtime is fixed for each month, it is added to the regular earnings. If the amount is different for each month, the average overtime of the last two months will be taken into account (Supreme Court 284/2013).
– Holiday Bonus (Christmas and Easter) and leave allowance are also included, as they are considered to be regular earnings.
– the food allowance, when it is granted in exchange for work and not to serve operational needs (Supreme Court 1426/2008).
– the additional remuneration for simple readiness (“απλή ετοιμότητα”) (Supreme Court 1749/2008).
– the provision of group insurance (“ομαδική ασφάλιση”) for the company’s staff (Supreme Court 1082/2010).
– the voluntary additional remuneration (bonuses) for exceptional performance, when paid for a long period of time and results in a non-explicit agreement for its regular payment in the sense of salary (Supreme Court 540/2010).

Οn the contrary, it has been judged by the Greek courts that the following provisions/amounts do not constitute remuneration and thus are not taken into account in order to calculate the dismissal compensation:

– off-site compensation (“αποζημίωση εκτός έδρας”),unless it is paid regularly and independently of travel (Supreme Court 274/2015).
– the provision of the use of a car in order to perform the work, even if the use is permitted for the individual needs of the employee /the same for fuels (Supreme Court 1033/2008, 699/2015).
– the provision of use of mobile phone, if related to the operational needs of the company (Supreme Court 1033/2008).

In conclusion, both theory and case law accept that all other provisions/benefits – in addition to the salary -when provided by the employer on a permanent and uninterrupted basis and always in return for providing the employee’s work , are regular remuneration, and in this case these amounts have the nature of salary and are taken into account for the calculation of the dismissal severance . But, if the above are not cumulatively met, that is, if they are granted permanently and continuously but not in exchange for the work but e.g. in order to serve the operational needs of the company or if they are given in exchange for the work but not on a permanent basis (e..g a one-time paid bonus), then they are not taken into account for the computation of the dismissal compensation.


*  The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.

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