Complete Guide to Payroll Management in Greece

Greece’s economy is the 53rd largest in the world. It attracts new investors and benefits them with a steady and growing economy. Foreign investors find it appealing to set up their business in Greece due to robust and sustainable cleantech policies, easy access to experienced employees, decent logistics and telecommunications infrastructure, etc.

Companies planning to extend their business in Greece should be familiar with local rules and regulations stipulated by the Greek government. The same also assists in managing payroll in Greece and enticing the top talent in the country. Moreover, a company also requires a broad understanding of tax systems, payroll cycle, payroll options, entitlement and termination terms, salary structure, social security contributions, etc.

You should comprehensively understand payroll tax in Greece and labor requirements to establish accurate and compliant payroll. The following guide discusses all the facets of payroll in Greece.

How Is Payroll Calculated in Greece?

The payroll policies and procedures in Greece work on releasing payment and tracking employees’ working hours. To guarantee precise payroll calculation, you must routinely maintain record-keeping. Also, you should consider social security contributions and other applicable deductions by conforming to the payroll rules and regulations in Greece.

Here’s the formula to calculate payroll:

Net Salary = Gross Salary – Gross Deductions

here,

Gross Salary = Basic Salary + All types of Allowances + HRA + Reimbursements + Bonus + Arrears

and

Gross Deductions = Professional Tax + Income Tax + Public Provident Fund + Leave adjustments + Insurance + Loan repayments (if any)

Important Elements of Salary Structure in Greece

The elements discussed here constitute the salary structure in Greece:

Cost to Company (CTC)

The CTC means an annual amount a company owes when hiring an employee. It entails payroll deductions in Greece, additional benefits, employees’ gross and net remuneration, etc.

Gross salary

It represents all aspects that help an employer create an worker salary package. The list of aspects includes social security contributions, health insurance, total income before calculating payroll deductions in Greece, etc.

Net salary

It signifies the amount transferred to an employee’s bank account after calculating all deductions from the gross salary.

Basic salary

It denotes the amount employees receive after the employer computes all additions and payroll deductions in Greece from the annual package. Its amount depends on the employer’s job designation and the sector’s operations.

Allowances

It refers to all the occupational expenditures that employers owe to their employees. It helps employees sustain a work-life balance. The payroll in Greece entitles all employees in the country with several allowances like maternity allowance, paid time off allowance, etc., irrespective of the industry and the company.

How to Set Up a Payroll in Greece

The Greece payroll process flow chart discussed below helps businesses aiming to set up payroll in Greece:

• Step 1: Register a business in Greece with the Trade Register. The step also authorizes first your business name’s validity.
• Step 2: Get an AFM (Arithmos Forologikou Mitroou) from the IRS (Internal Revenue Services).
• Step 3: Register the national tax number, company name, and labor and tax registration.
• Step 4: Get a state or local business ID (if needed).
• Step 5: Mention information about each employee, including their full name, employment commencement or termination date, tax filing number, date of birth, address, and compensation details. It will also include each employee’s job designation, bank details, annual salary, education documents, work certificates from their past employees, a statement on joint spouse taxation, and a personal income tax form. These details help you to calculate all employees’ pay amounts precisely by conforming to payroll policies and procedures in Greece.
• Step 6: Sort your employees into full-time, part-time, and independent contractors.
• Step 7: Get a tax number (from the Eforia tax office) and an AMKA number (from the local KEP office (Kentro Eksipiretisis Politon – Central Services for Citizens)). Usually, it takes five working days.
• Step 8: Fill out the VAT registration form via the public administration website in Greece (AADE). Subsequently, the competent tax office will assign a Greek VAT Number.
• Step 9: Open a bank account with a local Greek bank to disburse payroll-related payments. Before approving the business bank account, you need the court and registration details (including proof of statistical number, health insurance registry, etc.). 
• Step 10: Calculate the employee’s payroll sum and approve your company’s payroll cycle and system.
• Step 11: Compensate each employee via a local entity (which allows you to recruit and pay employees legally) or use services from an Employer of Record (EOR) platform in Greece.

A Step-by-step Process of Payroll Processing in Greece

The three stages of the processing of payroll in Greece are as follows.

1. Pre-payroll stage

The first stage focuses on Greece’s legal requirements to process payroll and payments. The below section discusses its mandatory components:

Business Profile

You must register your business as a legal body. The General Electronic Commercial Registry manages the business registration process and will offer you a unique business number. You should specify this number on all official payroll communications.

Attendance policy

The attendance policy defines the payroll policies and procedures in Greece agreed upon for the employees’ attendance. It assists you in calculating overtime, standard and special attendance, permissions, and more. Thus, this policy aids you with payroll calculation.

Statutory components

It outlines the prevailing and new statutory compensation laws and principles that provide salary and leaves entitlements to employees. It also involves payroll-related statutory reporting and filing to Greek authorities like the Labour Office, Tax Office, statistics offices, social and health insurance companies, etc.

Salary components

It focuses on various factors influencing salary calculation, i.e., leave entitlements, allowances, and deductions.

Payment schedule

This component notifies the employees when they will get their monthly payments. It states the day for disbursing payment to employees. It also states a fixed payment schedule to prevent payment delays. 

Employee details

It is vital to collect personal and professional information about all your employees, including employees’ names, job designations, departments, nationalities, etc. The payroll software must record all these details. Whenever any disputes about payroll arise, these details will serve as evidence and assure that the employees receive timely payments. All these collected details are input into payroll software.

2. Payroll calculation stage

This stage of the payroll compliance checklist in Greece involves entering the collected data from the above stage into the payroll system. You should track working hours and calculate deductions and taxes. Afterward, you should calculate employees’ net salaries and print payslips to ensure error-free payroll policies and procedures in Greece.

You can calculate and maintain payroll records either paper-based or automatically. Consequently, it assures the timely processing of payments and streamlines the reporting and compliance processes.  

3. Post-payroll stage

Once you’ve set up the payroll processes, the below-discussed components will help you to confirm them.          

Statutory compliance

The payroll administrator should follow statutory compliances during payroll processing. They must consider deductions like social insurance deductions, tax deductions, and more from the employee’s payroll. The employer sends the corresponding amount of these deductions to the respective authorities or government agencies.

Payroll accounting

This component focuses on tracking payments and payroll-based expenses that help you to ensure timely and precise payments. You can use internal payroll accounting (to control expenses) or outsource it to an external auditing service.

Payroll reporting and compliance

You must prepare all statutory reporting and compliance forms to submit to local regulatory authorities. It involves all contributions, compensation, withholdings, and other details inquired about in your compliance and reporting forms.

Payroll Contributions

Depending on the salary, both the employers and employees must contribute to social security in Greece to meet the Greece payroll requirements.

Employer contribution

Employee contribution

Employee payroll contributions include the following payroll tax in Greece.

Employee payroll contributions

Employee Income Tax

Employee Solidarity Tax

Payroll Cycle

In Greece, employees are usually paid monthly on or before the last working day.

Greece Payroll Options for Companies

Depending on their requirements and budget, employers can choose from various options to process the payroll in Greece. The below section discusses the HR payroll in Greece options.

• Internal payroll: Larger companies with long-term contracts with Greece can operate internal payroll. This option of the Greece payroll guide states that the company must hire a proficient workforce to set up payroll.
• Remote payroll: It emphasizes using remote payroll with your company, which transfers payments to employees. Although an economical option, the company must know different labor laws in Greece.
• A Greece payroll processing company: You can use this option of the Greece payroll guide if you have thoroughly researched the market. It focuses on using services from an authentic payroll processing company that is well-informed with payroll rules and regulations in Greece and setting up payroll.
• Greece payroll outsourcing: It helps you to easily, cost-effectively, and flexibly administer payroll in Greece. It guarantees that the payroll processes follow the Greece payroll requirements. Moreover, it oversees all elements of the Greece payroll process, eliminates all associated challenges, and keeps you focused on the company’s development. Companies can use services from a global PEO service provider like Multiplier. 

Entitlement and Termination Terms

Entitlement terms in Greece

Employees get the following benefits according to payroll rules and regulations in Greece.

Paid time off

• The employees are entitled to paid annual leave of 20-26 days (based on their work experience).
• The following table represents the number of paid leaves offered to employees based on their employment duration. 

Sick leave

• To be eligible for sick leave compensation, the employees must present a professional medical certificate within 48 hours of sickness.
• The below table shows the number of sick leaves that employees are entitled to depending on their employment duration.

Maternity leave

• Pregnant employees in Greece are entitled to maternity leave of 17 weeks. 
• The maternity leave is observed 8 weeks before the due date and 9 weeks after the child’s birth.
• The employer funds the initial month of maternity leave at 100% of the employee’s standard salary rate.
• From the second month, e-EFKA and the employer fund the maternity compensation at 50.00% of each employee’s standard salary rate. 
• Non-insured pregnant employees are entitled to a standard maternity benefit of 220.10 EUR.

Paternity Leave

• The employees in Greece are entitled to 2 days of paid paternity leave.

Parental Leave

• Parental leave is entitled to any parent who has completed at least one year of employment.
• Its compensation equates to four months (constantly or intermittently, as contracted with the employer) until the child’s age of 8 years.

Public holidays

• Employees in Greece get 14 public holidays per year.

Severance pay

• The severance pay in Greece depends on the employment term with the particular company.
• It ranges from 0-6 months of wages. 
• The pay gets doubled if the employer doesn’t provide the necessary notice.

Termination terms in Greece

• The employee termination process in Greece depends on the employment agreement, collective agreement, the type of contract, and the reason for termination. 
• To terminate an employee based on an indefinite contract, the employer should register their employees with the Unified Social Security Fund (EFKA). An employer should provide written notice of the termination.
• Collective agreements may cover provisions on the notice periods.
• The notice period for an employee depends on the duration of employment as mentioned below:

Greece Payroll Processing Company

Foreign investors should exhaustively understand local tax, employment, and compensation requirements and report to make sure the payroll in Greece is timely, accurate, and compliant. They should also be familiar with the Greece Labor and local employment laws before setting up payroll in Greece. You can collaborate with a global PEO company like Multiplier to obtain the maximum benefits of payroll rules and regulations in Greece.

How Multiplier Can Help with Global Payroll

The payroll management in Greece administers all payroll-related aspects, from payroll processing to employees’ entitlement and termination terms. Owing to the time-consuming payroll process, businesses may not autonomously follow the payroll rules and regulations in Greece. You can utilize the service from a global PEO platform like Multiplier to dismiss these concerns and execute the Greece payroll process.

Multiplier is renowned for providing EOR solutions to global firms in 150+ nations. Our talented staff oversees Greece payroll process, employer and employee contributions, employee onboarding, payroll tax in Greece, and other associated tasks. Besides, our SaaS-based PEO services guarantee that payroll processing is completed efficiently in the country. We offer one-click payroll for global teams with payments made in local currency.