Greece does not at present have a uniform Social Security System. There are many different social security funds covering various sectors of the population. For example, there are separate funds for the legal profession, teachers, engineers, commercial traders, merchant marine, farmers and employed persons in general. All funds are under the direction of the Ministry of Social Services.

In addition to the basic Social Security Funds, employed persons must also be covered by a supplementary retirement fund. The main funds available to employed persons are the Social Retirement Fund (IKA) and the Employees Supplementary Retirement Fund (TEAM).

All employers are required to register with IKA in each area of their operations and must also register their employees upon the commencement of employment. Their registration with and any contributions payable to TEAM are handled by the IKA offices.

Registration with the Social Security Authorities applies to both Greek nationals and foreign nationals employed in Greece.

FOREIGN EMPLOYEES

Foreign employees may, in certain circumstances, be exempt from registering with the Greek social security system, e.g. foreign nationals temporarily employed in Greece. Such exemptions may be granted for one year and may be renewed annually for a further 2 years. The exemption is dependent on the nature of the work that the expatriate will be doing in Greece which must be of a temporary nature (e.g. employment for the purpose of training local employees, installing new equipment, supervising a re-organisation) or for other special needs.

The exemption is generally not granted where the foreigner, although temporarily assigned to Greece, is employed in a position of a permanent nature.

In case of doubt as to whether the employment is of a temporary nature or if the employment will last less than a year, an exemption is generally granted. If the employment period exceeds one year, then there is an obligation on the employer to register the foreign national with the Social Security Fund unless an extension is obtained. However, such registration will not have a retroactive effect.

Foreign employees of offshore offices established under Law 89/67 are exempt from registering with the Greek Social Security System unless they are residents of countries which are members of the EU or other countries with which Greece has concluded bilateral Social Security Agreements, in which case the provisions of such agreements will apply.

Foreign nationals who are residents of the EU or countries having bilateral Social Security Agreements with Greece may, in certain circumstances, be temporarily exempt from being insured by a Greek social security fund. Generally, the exemption applies where they continue to be insured with and contribute to a fund in their country of origin.

SOCIAL SECURITY CONTRIBUTIONS

The appropriate amount of Social Security contributions must be withheld from the salary of the employee by the employer. The employer must also make separate additional payments in respect of each employee. The total amount of the Social Security contribution is payable monthly by the employer. Penalties for late payments to the Social Security Funds are imposed subject to a maximum of 120%. In addition, there is a penalty of 50% for failing to register the employee, which is increased to 75% if the employer is non-resident. The contributions are based on the employees' monthly salary which, including the statutory bonuses, is payable 14 times per annum.

The maximum monthly salary on which contributions are payable is revised in accordance with the automatic inflation adjustment applicable to minimum wage levels. As of 1 July 1996, the maximum monthly salary was Drs 489 000. The monthly ceiling is not applicable to employees who are insured for the first time with IKA after 1 January 1993. Expatriate employees who were insured abroad prior to that time may apply to be subject to the ceiling if they are from an EU state or a state with which Greece has a bilateral treaty.

As of 1 July 1996 the contributions are at the following rates:

FUND        EMPLOYER     EMPLOYEE      TOTAL

IKA           24.96%      12.90%      37.86%
TEAM           3.00%       3.00%       6.00%
Total         27.96%      15.90%      43.86%

The contributions are increased where employment is of a hazardous or heavy nature or where the employer's enterprise is situated in certain rural areas. As of 12 September 1995 the employer's contribution to IKA is no longer reduced by 1% to 26.96% for foreign nationals.

BENEFITS PROVIDED

The social security system provides benefits on retirement and in the event of death, sickness and unemployment. A system of paying family allowances also exists.

UNEMPLOYMENT

Employees are entitled to unemployment compensation for a period of 5 to 12 months depending on the period for which they were previously employed and during which they contributed to the Social Security Funds and their age. The maximum unemployment compensation varies, depending on the maximum salary on which social security contributions are payable and the number of the dependent family members of the insured employee.

PENSIONS

Pensions payable are dependent on the period over which contributions were paid, the age of the individual and the salary in the two years preceding retirement. An employee is entitled to a full pension when he has made contributions corresponding to 10 500 working days, completed 35 years of employment and is at least 58 years of age. Reduced pensions are payable but in order to qualify, an individual is generally required to have made contributions in respect of 4 050 working days. A retirement pension is usually paid at the age of 65 and over for men and at the age of 60 for women.

SICKNESS

Persons insured by IKA for at least 140 working days are entitled to medical treatment by IKA doctors free of charge and dental treatment at a reduced cost. Medicines prescribed by doctors may generally be obtained free of charge.

In addition to the above, an insured employee is entitled to collect a sickness benefit. The maximum sickness benefit paid by IKA is adjusted regularly based on the maximum monthly remuneration on which Social Security is payable. In case of sickness, the employer is obliged to pay up to a one month's salary to each employee. However the amount payable by the employer is reduced by the relevant amount paid by the Social Insurance Fund.

INDUSTRIAL INJURY

Any employee injured or disabled as a result of and in the course of his employment is entitled to compensation and/or a disability pension for the period of his absence from work, irrespective of the period previously employed. The amount payable by IKA is the same as the one for the sickness benefit.

MATERNITY

A lump sum benefit is payable upon the birth of a child. The benefit is payable to the husband when the mother is not insured. In addition, the insured mother is entitled to a maternity leave of 16 weeks; 56 days preceding the expected date of delivery and 56 days following, in respect of which she will receive a benefit determined in the same manner as for the sickness benefit.

OTHERS

An employee may be eligible for other monetary allowances such as for marriage, for holding a degree from a recognised educational institution, for unhealthy or dangerous work and for seniority

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Marios T. Kyriacou, KPMG Peat Marwick Kyriacou, Athens, Tel: +301 6062100; Fax: +301 6062111 or enter a text search 'KPMG Peat Marwick Kyriacou' and 'Business Monitor'.