Hiring Your First Employee at a Greek Cafe: IKA, Employment Contracts, and Costs

The True Cost of Hiring in Greece

The most common financial planning mistake for Greek cafe owners hiring their first employee: budgeting for the salary and forgetting the additional employer costs that bring the fully-loaded cost 40-45% above gross salary.

Example: you hire a barista at 900 euros gross per month. Your actual monthly cost: 900 (salary) + 225.54 (employer IKA at 25.06%) = 1,125.54 euros per month. Annually: 13,506 euros. Add the 13th month salary (Christmas bonus - equivalent to one full month's gross salary paid in December), the 14th month Easter bonus (half month's salary paid before Easter), and the holiday bonus (half month's salary paid in July for summer leave). Total annual employer cost: approximately 13,506 + 900 (Christmas) + 450 (Easter) + 450 (summer) = 15,306 euros for a 900 euro/month barista, or approximately 1,276 euros per month fully-loaded.

This calculation is not optional - these bonuses are legally mandatory in Greece for all employees under EGSSE (the general collective employment agreement). Failure to pay them is an OAED violation subject to inspection and penalty.

Employment Contract Types

Full-time contract (σύμβαση πλήρους απασχόλησης): 40 hours per week. The standard form for a permanent barista or kitchen employee. Employment for more than 3 months is presumed permanent unless a fixed-term contract is specifically agreed and registered.

Part-time contract (σύμβαση μερικής απασχόλησης): fewer than 40 hours per week. The employer and employee must agree on the specific days and hours worked per week; these cannot be changed unilaterally. Part-time employees have the same IKA contribution obligations proportional to their hours. The minimum 4-hour shift rule: SEPE (the labour inspectorate) considers shifts under 4 hours to be misuse of part-time contracts unless specifically justified.

Fixed-term contracts: valid only for specific, justified temporary needs (seasonal increase, maternity cover, a specific project). Cannot be used as a substitute for permanent employment when the need is ongoing. After two renewals or after 24 months, a fixed-term contract is treated as permanent by Greek labour law.

ERGANI Registration: The First Required Step

Before a new employee begins work - not on the first day, but before - you must register them in the ERGANI system (ergani.gov.gr). ERGANI is the Ministry of Labour's digital platform for all employment notifications. Failure to pre-register an employee before their first shift is an OAED violation with penalties starting at 10,535 euros per unregistered employee.

What to submit via ERGANI: Form E3 (hiring notification) before the first day. Form E4 (annual employee roster) each calendar year. Form E9 and E10 for terminations. Overtime notifications and schedule changes are also submitted via ERGANI in real time (since 2021, schedule changes must be submitted before the shift, not retrospectively).

The barista's AMKA (social security number) and AFM (tax number) are required for registration. If your new hire does not have these, they cannot be legally employed in Greece.

IKA Contributions: What the Employee Pays and What You Pay

IKA-ETAM (now part of EFKA) is the main social insurance fund for private sector employees. Contributions are split between employer and employee. Employer contribution: 25.06% of gross salary (covering main pension, healthcare, unemployment fund, and other programmes). Employee contribution: 15.34% of gross salary (deducted from their salary at source by the employer). Total IKA contribution on a 900 euro salary: 363 euros per month, of which 225.54 comes from you and 137.46 is deducted from the employee's salary.

DYPA (formerly OAED) unemployment fund: included within the above IKA contributions. Employees accumulate entitlement days toward unemployment benefit if they are made redundant. After 1 year of employment, an employee has 100 insured days. After 2 years, 200 days. These days determine eligibility and duration of unemployment benefit - not your financial concern as the employer, but good to understand if an employee asks.

Terminating Employment: What It Costs

Termination with notice (ordinary dismissal) requires statutory notice and redundancy pay. For an employee with less than 1 year of service: 1 month's notice or 2 months' salary in lieu. For 1-4 years: 2 months' notice or 4 months' salary in lieu. For 4-6 years: 3 months' notice or 6 months' salary in lieu. These are minimums under Greek law.

Termination without notice (for serious misconduct): requires specific documented grounds. Undocumented termination for misconduct can be challenged and overturned, resulting in full redundancy pay obligations. Document performance issues in writing and issue a formal warning before considering dismissal for cause.