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The Art of Dispute: Key case law and recent developments in dispute resolution
Our newsletter provides practical advice and a concise analysis of key case law and recent developments in dispute resolution.
Italy | Publication | May 2023
On May 5, 2023, an important new piece of legislation, the “Employment Decree 2023” (Law Decree 48/2023) ( the “Decree”) came into force in Italy. The Decree includes urgent measures for social inclusion and access to work.
Below is a summary of the Decree’s most relevant provisions.
The Decree makes substantial changes to the laws regarding fixed-term contracts, set out in Article 19 of Legislative Decree 81/2015.
Fixed-term contracts had been reformed in 2018 by the so-called “Dignity Decree”, which required that a fixed-term contract could have a duration of more than 12 months (and a maximum of 24 months) if one of the following conditions was satisfied: (i) there was a temporary and objective need of the business, unrelated to ordinary activity, or a need to replace other workers; (ii) a requirement related to temporary, significant and unforeseen increases in ordinary activity; (iii) specific needs provided for by a collective agreement (this last provision was introduced in July 2021).
Under the Decree, although it is still possible to enter into a fixed term contract for a duration of less than 12 months without any justification, the reasons set out in points (i) and (ii) above are abolished, with the exception of a requirement to replace a worker. This now gives priority to any requirement determined by collective bargaining.
This means that a fixed-term contract may last more than 12 months, but in no case more than 24 months, only in the following cases:
a) it is provided for by national, territorial or company collective agreements;
b) there is a requirement to replace other workers.
In the absence of being able to rely on the provision set out in (a), and only until 30 April 2024, the parties may establish reasons of a technical, organizational or production nature. However, in view of the high complexity of the matter, we recommend seeking legal advice before formulating such a reason.
It is also important to note that providing one of the reasons above is also required where the parties are seeking (i) the renewal of the fixed-term contract (except for "seasonal" activities), (ii) an extension beyond 12 months and (iii) the contract is stipulated at the Competent Labor Office pursuant to Article 19(3) of Legislative Decree 81/2015.
The Decree introduces a simplification to the employer's disclosure obligations that must be given at the time of employment. These had been considerably increased last year with the adoption of the Transparency Decree (Legislative Decree 104/2022).
The Decree provides that the obligation to provide information referred to in Article 1, paragraph 1(h), (i), (l), (m), (n), (o), (p) of Legislative Decree 152/1997 (i.e., the information concerning the probationary period, training, holidays and paid leaves, notice of termination, remuneration, and working hours) can be fulfilled by referring the employee to the relevant legislation or the relevant collective agreement, including company-level agreements.
However, the employer is still required to hand over, or make available to the employee, including by means of publication on the company website, the national, territorial and company collective agreements, as well as any company regulations applicable to the employment relationship.
Finally, with regard to the use of automated systems, it is specified that the disclosure obligations apply only in relation to fully automated systems and provided that they are not protected by industrial or commercial secrecy.
The Decree also makes important changes to the Consolidated Act on Health and Safety at Work (Legislative Decree 81/2008), providing for the following measures:
Only in respect of the 2023 tax year, the tax exemption limit for so-called “company welfare” measures is raised from EUR 258.36 to EUR 3,000, but only to employees with dependent children. For these workers, the same exemption also applies with respect to sums paid or reimbursed for the payment of household utilities (water, gas and electricity). The employer who intends to implement this provision is required to give prior notice to the Unitary Trade Union Representatives (“Rappresentanze Sindacali Unitarie”), where present.
In addition, for the pay periods from 1 July 2023 to 31 December 2023, the exemption on the employee's quota of IVS social security contributions is increased by 4%, with no further effect on the additional 13th month payment.
E.1 Hiring of workers entitled to the Inclusion Allowance (Art. 10 of the Decree)
The Decree introduced a new policy measure, called the “Inclusion Allowance” (“Assegno di Inclusione”), which will come into force on 1 January 2024.
Private employers who hire beneficiaries of the Allowance above are granted a contribution exemption equal to:
E.2 Young people under 30 (Art. 27 of the Decree)
Private employers who apply for it, are granted an incentive, for a period of 12 months, at the rate of 60% of the gross monthly remuneration taxable for social security purposes, for new hirings, of young people, from 1 June to 31 December 2023 if the following conditions are all satisfied (i) that, on the date of recruitment, they are under 30 years of age; (ii) that such persons are not working and are not in education or training ("NEET"); and (iii) that they are registered with the National Operational Programme Youth Employment Initiative.
F.1 Group Expansion Contracts (“Contratti di espansione di Gruppo”)
The Decree provides that, until 31 December 2023, for Group Expansion Contracts entered into by 31 December 2022 and not yet completed, the possibility - through an agreement to be entered into at ministerial level - of rescheduling the terminations of the employment relationship with the right to pension, within a timeframe of 12 months following the original termination of the Expansion Contract. The Expansion Contract is a measure introduced by the Italian Government to support companies investing in reorganization and reindustrialization programs and entailing early termination for retirement of the employment contracts and working hours reductions.
F.2 Wage Fund (“Cassa Integrazione Guadagni”) for Exceptional Company Crisis and Reorganization
For companies that have had to deal with situations of persistent corporate crisis and reorganization and have not been able to fully implement, during 2022, the reorganization and restructuring plans originally envisaged due to prolonged unavailability of the company premises, for reasons not attributable to the employer, the Decree provides, at the request of the company, even if it is in a state of liquidation, that the Ministry of Labor may authorize, on an exceptional basis, a further period of wage fund until 31 December 2023. This will be applied on an exceptional basis and will be in order to safeguard the level of employment and the wealth of skills acquired by employees. The extension may be granted without the need for trade union consultations and, in any case, within the expenditure limit set by law.
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