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What global businesses need to know about payroll in Greece
If you’re looking for a place to do business in Europe that delivers real value for your investment, then Greece might just be the place for you. Built on thousands of years of history, Greece is one of the most developed economies in eastern Europe. Standing as a gateway between Europe and the Middle East, and a member state of the European Union, its geographical and political positioning is excellent for a prospective multinational business looking at expanding there.
Greece has had a turbulent couple of decades economically, and it’s never fully recovered from the financial crisis of 2009 which eventually required three bailouts to keep the nation’s finances solvent. While Greece’s GDP is now only around 60% of what it was before then, it has remained relatively stable for much of the last decade, and an economy that’s 77% services means that there are lots of opportunities for incoming enterprises.
Adding to the potential is the relatively low cost base in Greece: of the 27 countries in the Eurozone, it currently has the fifth-lowest average wages, and less than half of the likes of France and Germany. Education quality is good, and so you’ve got a chance to access a talented workforce for a much lower outlay than elsewhere.
One thing to be wary of, however, is that Greek payroll and employment laws are complicated. As you’ll read in this guide, many different conditions apply according to length of service, so it’s vital you’re aware of all your responsibilities before entering the Greek marketplace.
Getting Started
The first steps of registering a business in Greece is to check with the Chamber of Commerce that your chosen name is available, and then to draw up your Memorandum of Association to be notarized. These articles should then be delivered to the National Printing Office so that they can be published in the Greek National Gazette.
With the help of your notary, you’ll be able to register with the Commercial Registry and obtain a VAT number. For a limited liability company – the most common type of entity for major businesses – there is a minimum share capital requirement of €4500 (approx. £3850; $4850). The whole process can be completed relatively quickly, and most of the paperwork can now be done online.
Employment Considerations
Greek employment law was reformed in May 2019. Prior to that, Greek companies could terminate contracts at any time without giving a reason, and many Greek companies took advantage of this to avoid paying severance to employees with less than 12 months of service. However, this loophole has now been closed and employers must now have a valid reason to dismiss employees, whether they pay statutory severance or not.
The standard working week in Greece is 40 hours across five days, with no more than ten hours in any one day. Greek workers can choose to add a further eight hours to this each week, with agreement between both employer and employee. No employee can work more than 48 hours a week (averaged over a four-month period).
Overtime kicks in after employees have worked a normal working day, plus one hour. Overtime attracts a premium of 20% during the day; at night, it’s an extra 25% for the first hour, and 40% for each of the next two hours. There is a limit on overtime of 150 hours per year.
There have been a number of changes to Greek employment law that have taken effect at the start of 2024. For example, the maximum length of a probation period has been reduced from a year to six months; in the case of a fixed-term contract of up to six months, a probation period can be no more than a quarter of the contract’s duration.
No notice period is required in the first year of employment in Greece. After a year, entitlement is one month, rising to two months after three years, three months after six years, and four months after ten years.
Employers are not required to provide written contracts to employees upon hiring, though they are highly encouraged to do so. Using fixed-term contracts for permanent work is prohibited in Greece.
Compensation & Severance
The national minimum wage in Greece was increased in April 2023 to €780 per month (approx. £670, $840). Greek workers are also entitled to bonuses throughout the year which correspond to an extra two months’ salary: a full month for Christmas, half a month for Easter, and half a month for vacation. As of January 2024, new legislation came into effect that increases the statutory minimum wage rate by a further 10% as each milestone of three, six, and nine years of service is reached. This means that anyone with at least nine years’ of service is entitled to at least the statutory minimum plus 30%.
Severance pay varies significantly depending on an employee’s length of service. Starting at two months’ salary after one year of service, it rises to three months after four years, and four months after six years. Employees who resign are not entitled to any severance pay.
Tax & Withholding Requirements
Greece has cut its corporate tax rate twice in the last few years; it now stands at 22% (having been 28% as recently as 2018). This move increases the attractiveness of the country to foreign businesses and investors. The standard VAT rate is 24%, although reduced rates apply in certain cases, and on some of the Greek islands.
As is the case in many countries, personal income is taxed on a progressive scale. Employers are required to deduct taxes from the employee’s paycheck and distribute them to the appropriate tax offices. The first €10,000 of an employee’s annual earnings is taxed at 9%, with further bands of 22%, 28% and 36% introduced for each following €10,000 (approx. £8600; $10,800) band. All earnings above €40,000 (approx. £34,500; $43,000) per year are taxed at the highest rate of 44%.
Greece did have an additional solidarity tax in place, to help the country address some of its economic difficulties, but this was phased out at the end of 2022.
Social security contributions in Greece are as follows:
- Pension fund: 13.33% employer, 6.67% employee
- Health care: 4.3% employer, 2.15% employee
- Health in Benefit: 0.25% employer, 0.4% employee
- Supplementary insurance: 3.25% employer, 3.25% employee
- Unemployment: 1.2% employer, 1.2% employee
- Summer campsite programs: €20 employer
Most of these contributions are applied to monthly salary payments up to a maximum of €7126.94 per month (approx. £6100, $7700).
Holiday and Leave Considerations
Greek paid leave allowance increased according to length of service. For employees that work five-day weeks, the entitlement starts at 20 days in the first year, receiving additional days after certain years of service have been reached. The highest entitlements are 25 days for an employee with at least ten years of service, and 26 days for those with at least 25 years of service. These allowances are increased pro-rata for employees who work six days a week rather than five.
All Greek employees are also entitled to paid leave on the 12 days of public holidays each year; when these holidays fall on Sundays, such as Easter Sunday and Orthodox Whit Sunday, the following Monday is usually served as a public holiday instead.
Maternity leave entitlement is 17 weeks – eight before the birth and nine after it. For the first month, employers cover maternity pay at full salary; after this, the payment is split 50/50 between the employer and the social security authorities. Paid paternity leave entitlement is two weeks, paid by the employer. Any employee with at least a year of service can also apply for a maximum of four months’ unpaid parental leave up until the child turns eight.
Paid sick leave entitlement is variable, depending on length of service, starting at one month a year for employees with between one and four years of service, reaching six months after 15 years of service. New employees can get three days at half-pay, and the following 15 at full pay. Production of a medical certificate is required within the first 48 hours of absence.
There are also other leave entitlements for marriage (five days, paid); bereavement of an immediate family member (two days; paid); and care of a sick dependent family member (six days per year, unpaid).
In Summary
Greece may not be the most stable place in Europe economically, but it’s still a great place to do international business, and in many ways represents great value for money. However, as you’ll have read in this guide, it can be hard to keep on top of all things payroll: rules change frequently, and different conditions apply to different employees depending on the length of service. The skills and support of a global payroll provider can be key in helping you stay compliant and deliver excellent payroll experiences across your Greek workforce.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.