Payment of the statutory severance pay on dismissal must be made simultaneously with the termination of the employment contract, save for the case of ordinary termination with notice, where payment is made upon expiry of the notice period.
The amount may be paid in full immediately (lump sum) or in instalments in accordance with Article 74 of Law 3863/2010. Specifically, where the severance pay due to termination of the employment contract exceeds two (2) months’ salary, the employer is required to pay, upon dismissal, the part of the severance corresponding to two (2) months’ salary. The remaining amount is paid in bi-monthly instalments, each of which may not be less than two (2) months’ salary, unless the outstanding balance for full discharge of the severance is smaller. The first instalment is paid on the day following the completion of two months from the dismissal.
Where the duration of the employment contract is less than 1 year, the employer must terminate the contract in writing, that is, must serve a written notice of termination, but is not required to pay severance.
Severance pay on dismissal of employees is now mandatorily paid through a payment account, by any means, including the use of electronic payment methods or payment service providers. Breach of this obligation entails sanctions against the employer (Law 4611/2019, Ministerial Decision 26034/695/2019).
Severance pay for salaried employees in case of termination without notice:
Pursuant to the provision of point 2 of Sub-paragraph IA.12 of paragraph IA. of the first article of Law 4093/2012, the amount of severance pay, in the event of termination of the employment contract without notice, is set as follows:
| Length of service with the same employer | Severance amount |
| 1 year completed up to 4 years | 2 months |
| 4 years completed up to 6 years | 3 months |
| 6 years completed up to 8 years | 4 months |
| 8 years completed up to 10 years | 5 months |
| 10 years completed | 6 months |
| 11 years completed | 7 months |
| 12 years completed | 8 months |
| 13 years completed | 9 months |
| 14 years completed | 10 months |
| 15 years completed | 11 months |
| 16 years completed and above | 12 months |
The above severance pay is calculated on the basis of the regular earnings of the last month under full-time employment. Specifically for manual workers (ergatotechnites), and pursuant to the provisions of Article 64 of Law 4808/2021, twenty-two (22) daily wages are deemed to constitute the monthly salary for the purposes of calculating severance, unless they are already paid on a monthly salary basis. In any event, however, an upper limit on earnings is provided (Article 5 of Law 3198/1955) for the calculation of severance, which is calculated as eight times the daily wage of an unskilled worker multiplied by 30.
The total of the salaries comprising the severance pay is increased by 1/6 (corresponding to the proportion of holiday bonuses and leave allowance).
For employees who, on 12-11-2012, the date of publication of Law 4093/2012, had completed seventeen (17) years of service or more with the same employer, in addition to the severance pay provided above, an additional severance is paid whenever they are dismissed, increased by one monthly salary for each additional year of service up to 12 monthly salaries. More specifically, for the calculation of the above severance the following are taken into account:
- the length of service which the employee had completed with the same employer on 12-11-2012, the date of publication of Law 4093/2012, whenever they may be dismissed.
- the regular earnings of the last month, under full-time employment, which do not exceed the amount of two thousand (2,000) euros.
This additional severance pay is set as follows:
| Length of service with the same employer (as at 12-11-12) | Severance amount |
| For 17 completed years | + 1 month’s severance |
| For 18 completed years | + 2 months’ severance |
| For 19 completed years | + 3 months’ severance |
| For 20 completed years | + 4 months’ severance |
| For 21 completed years | + 5 months’ severance |
| For 22 completed years | + 6 months’ severance |
| For 23 completed years | + 7 months’ severance |
| For 24 completed years | + 8 months’ severance |
| For 25 completed years | + 9 months’ severance |
| For 26 completed years | + 10 months’ severance |
| For 27 completed years | + 11 months’ severance |
| For 28 years and above | + 12 months’ severance |
According to Circular No. 26352/839/28-11-2012 of the Ministry of Labour, the additional severance is due only to employees who, on 12-11-2012, the date of publication of Law 4093/2012, had completed 17 years of service or more with the same employer, while the service to be performed with the same employer after 12-11-2012 will not continue to be taken into account for the calculation of their severance. That is, this additional severance will be fixed at the number of salaries it had reached on 12-11-2012, whenever they may be dismissed thereafter, since their subsequent length of service will no longer be taken into account.
Severance pay for manual workers in indefinite-term dependent employment in the event of termination:
The severance owed in the event of termination of the employment contract of manual workers is set out in the following table:
|
LENGTH OF SERVICE |
SEVERANCE |
|
up to 1 year |
0 daily wages |
|
1 year up to 2 years |
7 daily wages |
|
2 years up to 5 years |
15 daily wages |
|
5 years up to 10 years |
30 daily wages |
|
10 years up to 15 years |
60 daily wages |
|
15 years up to 20 years |
100 daily wages |
|
20 years up to 25 years |
120 daily wages |
|
25 years up to 30 years |
145 daily wages |
|
30 years and above |
165 daily wages |
Relevant institutional framework: 1. paragraph 1 of Article 1 of Royal Decree of 16/18 July 1920 “On the extension of Law 2112 to workers, technicians and servants” (Government Gazette 158 A’),
2. Article 1 of Law 3198/1955 “On the amendment and supplementation of the provisions on termination of the employment relationship” (Government Gazette 98 A’).
Severance pay on retirement
Salaried employees who fall under the pension branch of any social insurance organisation, provided they meet the requirements for a full old-age pension, are entitled to retire from or be dismissed by their employer, receiving 40% of the statutory severance pay (for irregular termination) if they have supplementary insurance and 50% if they do not.
For the calculation of the above severance pay, the regular earnings of the last month, prior to the termination of the employment contract, under full-time employment are taken into account, with an upper earnings limit of eight times the daily wage of an unskilled worker multiplied by 30. However, the cap of 2,000 euros for service exceeding 17 years is not taken into account; only the length of service which the employee had completed with the same employer on 12-11-2012, the date of publication of Law 4093/2012, is considered, whenever they may retire or be dismissed on the ground of meeting the requirements for receipt of a full old-age pension.
It is clarified that for manual workers, and pursuant to the provisions of Article 64 of Law 4808/2021, twenty-two (22) daily wages are deemed to constitute the monthly salary for the purposes of calculating severance, unless they are already paid on a monthly salary basis.
Furthermore, pursuant to the provisions of Article 8 of Law 3198/1955, salaried employees who are bound by an indefinite-term employment relationship and have completed 15 years of service with the same employer, or have reached the age limit provided by the relevant social insurance organisation, or, where no such limit exists, the age of 67, may retire from their employment with the consent of their employer, in which case they are entitled to receive 50% of the statutory severance pay. The employer’s consent to the employee’s retirement constitutes a necessary precondition for receipt of the reduced severance.
- See also article Termination of Employment Contract
- See also article Modification of Employment Terms
- See also article Suspension of Work
- See also article Annual Statutory Leave
- See also article Employee Remuneration
- See also article Overwork – Overtime
- See also article Employer Obligations
FREQUENTLY ASKED QUESTIONS ON SEVERANCE PAY ON DISMISSAL
1. How much severance am I entitled to if I am dismissed?
The amount of severance depends on the years of service with the same employer and the regular earnings of the last month under full-time employment. For salaried employees, it starts at 2 monthly salaries (1 to 4 years) and reaches 12 monthly salaries (16 years and above), in the case of termination without notice. The total is increased by 1/6 to reflect the proportion of holiday bonuses and leave allowance. Those who, on 12-11-2012, had completed 17 years or more are entitled to additional severance of up to 12 salaries, with an earnings cap of 2,000 euros. For manual workers, a different table applies, expressed in daily wages. The exact calculation requires examination of the earnings, the job category and the length of prior service.
2. What do I do if my employer fails to pay me the severance?
The employee may file a lawsuit before the Single-Member Court of First Instance under the special procedure for labour disputes, claiming the amount owed together with default interest. Prior to court proceedings, a complaint is lodged with the Labour Inspectorate, which summons the employer to a labour dispute hearing and imposes administrative sanctions. If the termination of the contract was not accompanied by the prescribed severance and the written form, it is considered void, with the consequence that the employee is entitled to default wages until the actual termination of the contract. The choice of the appropriate route depends on the circumstances of each case.
3. Within what time must I act after dismissal?
The deadline is critical and strict. In order to challenge the validity of the termination or the amount of severance as insufficient, the lawsuit must be filed within three (3) months from service of the notice of termination, otherwise the right is extinguished. For claiming the severance as a debt, the claim is subject to a five (5)-year statute of limitations. In parallel, a complaint to the Labour Inspectorate may be made earlier and assists in the gathering of evidence. As the three-month deadline expires quickly, consultation with a lawyer should take place immediately after service of the dismissal notice.
4. What documents do I need in order to pursue my claim?
The written notice of termination of the employment contract, the contract of hire, the notifications of hire and departure from the ERGANI system, as well as the payslips of the last few months are required. Useful items include the social insurance records (e-EFKA) which prove the total prior service with the same employer, earnings certificates, and any evidence of overtime, allowances or bonuses included in regular earnings. If the severance was paid in part, copies of bank transfers are needed, since under Law 4611/2019 payment is mandatorily made through a payment account. The more complete the file, the stronger the claim.
5. What are my chances of winning the case?
The chances are generally high where it is proved either that the severance was not paid or that it was calculated on the basis of earnings lower than the actual ones. Common grounds for invalidity of termination include lack of written form, non-payment or shortfall of severance, failure to register with the ERGANI system, and abusive exercise of the right of termination (e.g. dismissal following a claim for unpaid wages or on grounds of pregnancy). Where the termination is held void, the employee is entitled to default wages, an amount often a multiple of the original severance. The assessment is made after a thorough review of the prior service, the earnings and the circumstances of the dismissal.
6. What is the role of the lawyer in this process?
The lawyer first checks the legality of the termination, calculates the correct severance on the basis of all regular earnings (including overtime, allowances, bonuses) and identifies any deficiencies giving rise to invalidity. They draft an extra-judicial notice, represent the employee before the Labour Inspectorate, and file a timely lawsuit before the Single-Member Court of First Instance within the three-month preclusive deadline. Ziamparas D. & Associates Law Firm has many years of experience in labour disputes, handling cases of dismissal, default wages, abusive termination and the pursuit of unpaid wages, with the aim of achieving maximum financial recovery for the employee.