Filenews 1 August 2021 - by Eleftheria Paizanou
Amid the uncertainty in the market, due to the impact of the coronavirus pandemic, businesses are looking for ways to reduce their operating costs. Employers' organisations are bringing back to the table their demand for a reduction in the contribution paid by employers to the Redundancy Fund, due to the large reserve in the Fund, which in 2020 had reached €507.3 million.
The Redundancy Fund is financed exclusively by contributions from employers and, according to those affected, has accumulated an adequate reserve and will be able to meet the requirements that will arise in the future. In particular, employers pay a contribution of 1.2% on the remuneration received by each employee up to a ceiling fixed each year. Employers' organisations have already submitted a request to the Ministers of Finance and Labour to reduce their employer's contribution by 0.6%.
As employers argue, the Fund with its reserve can meet the needs that will arise in the coming years. They also argue that the reduction will act as an important and substantial measure to support businesses. They also point out that it will also have a positive effect on public finances, as the same percentage is paid by the State in its capacity as an employer. In other words, the State will pay less contributions to the Fund.
The Secretary General of the KEVE, Marios Tsiakakis, told "F" that the reduction in the contribution paid by employers will help to strengthen businesses affected by the pandemic. He also said that reducing this levy would reduce the cost of the business payroll. According to the Secretary-General of the KEBE, this will make businesses more competitive and more sustainable.
For his part, OEV Director General Michalis Antoniou said that the reserve created in the Redundancy Fund is huge. As he said, the fund's obligations are lower than the contributions paid, so it is possible to reduce the relevant contribution paid by employers. According to Mr Antoniou, contributions to the Fund up to 1996 were 0.6%, while the Fund's reserve was half a million pounds. 'It is now justified to reduce the contribution paid by employers as it will help to reduce the burden on employment'. He also said that the state would benefit from the reduction.
Redundancies increased last year
However, last year, despite the safeguards put in place by the Ministry of Labour to ban the redundancies of workers from companies participating in government projects due to the effects of the coronavirus pandemic, redundant workers increased. According to data obtained by "F", in 2020 the number of applications submitted for payment by the Surplus Personal Fund was increased by 18.1%, compared to the previous year. In particular, a total of 3,222 workers have come out with redundancy in 2020. The Ministry of Labour had considered a total of 2230 applications, paying a total payment of €20m in 2014. The number of applications pending at 31 December 2020 was 1841. In addition, 2,729 applications were submitted by employees in 2019 and the State paid an amount of €17.5 million. Meanwhile, in 2018 another 2,647 have been surplus to €25.4m. In 2017, 2,260 redundancy applications were approved at a cost of €28.1 million. In 2016, the Ministry of Labour paid €52m for the project. 3,779 employees. In 2015 €49m was given, €99.5m was paid in 2014. and in 2013 an amount of €88.5 million was paid to the Commission. Also, in 2012 an amount of €54.4 million was paid, in 2011 an amount of €30.8 million was paid and in 2010 €27.8 million
At a surplus of 15 mm. in the last 4 years
Analysis of The Ministry of Labour data shows that between 2016 and 2020 14,637 workers have come out with redundancy. In the last ten years the state has paid almost €500m for the project. In particular, it has deposited €493 million into the beneficiaries' bank accounts. Most of the money was paid between 2013-2014, the period of the haircut of deposits and the closure of businesses as a result of the resulting financial crisis. The total amount of money allocated to redundancies in the two years in question had amounted to €188 million. After the normalization of the economy, in the following years until last year, the level of surpluses was at reasonable levels.
At €55,500 maximum amount in 2021
This year, according to relevant data, the maximum amount of redundancy to be paid by the state reaches €55,500. In 2020, the maximum redundancy amount paid was €53.1 million. In 2019 the maximum redundancy paid to some workers was €52,883. Moreover, from 2013 to 2018 the highest amount of redundancy paid was €52,600. At the same time in 2012 the maximum amount of redundancy given was €51,600, in 2011 the largest amount received by a surplus worker was €50,400. Finally in 2010 the maximum amount of redundancy paid was €48,900.
The conditions for redundancy under the legislation
To terminate employment, the maximum amount of payment is calculated as the maximum number of weeks of compensation, which is 75.5 out of the maximum amount of weekly pay taken into account for payment, which is four times the weekly amount of basic insurable earnings.
Under the Social Insurance Act, workers who have been employed for 104 weeks with the same employer before retirement are entitled to payment from the Redundancy Fund. The amount of the payment shall be proportional to the period of continuous employment and shall correspond to three weeks per consecutive year of work. It should be noted that in order to be entitled to apply for compensation from the Surplus Fund, one must do so up to three months after the end of his employment.
It is noted that the legislation covers all private and public sector employees, including apprentices. It also covers shareholders of private companies employed in their company. At the same time, an employer who intends to lay off his employees due to redundancy is obliged to give notice of at least one month to the Minister of Labour, stating the number of employees to be made redundant, the sector or branches of his business affected by the redundancy, names, occupations and family obligations of his affected employees and the reasons for the redundancy. In addition, an employer who has been dismissed by an employee due to redundancy and who, within eight months, rehires staff, gives priority when hiring employees, whom he has dismissed as redundant, but taking into account the needs of his business.
Under the law, an employee is considered surplus when he is dismissed because the employer has ceased or intends to cease to carry out the undertaking in which the employee is employed and because the employer has ceased or intends to cease to conduct an undertaking in the place where the employee is employed.
- A person who is dismissed for matters relating to the operation of the business and relating to:
• modernisation, mechanisation or any other change in production or organisational methods, which reduces the number of employees needed
• change in the products or production methods or in the required specialties of employees
• removing parts
• difficulties in placing products on the market or credit difficulties
• lack of orders or raw materials
• lack of means of production
• limiting the volume of work or business.
