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Italy: significant employment law changes

  • United Kingdom
  • Employment law - HR E-Brief

23-07-2018

With effect from July 14, 2018, the “Decreto Dignità” (i.e. literally “Dignity Decree”) amends existing employment legislation . Among other things it changes three specific employment matters: fixed-term and staff-leasing (also known as temporary agency) contracts regulated by fixed term employment legislation (Legislative Decree no. 81/2015) as well as employee compensation, or indemnities, in cases of unjustified dismissal (Legislative Decree no. 23/2015). The changes are aimed at making fixed-term and staff-leasing contracts less attractive to employers and to increase dismissal protection, as follows:

Fixed-term employment contracts

The maximum duration of a fixed-term employment contract is now 24 months (instead of 36). In addition, no more than four (instead of five) renewals of the fixed-term employment contracts are allowed.

If the first contract is for less than 12 months, there is no requirement to specify the “reasons” justifying its fixed term nature (the same applies where the contract is extended and the total period does not exceed 12 months).

However, reasons are mandatory in case of renewals, or in case of the first contract lasting, for longer than 12 months.

In such cases, the fixed-term employment contract must be justified by one of the following reasons:

(i)      temporary and objective reasons, not related to the ordinary activity of the employer
(ii)     the need to replace temporarily absent employees
(iii)    reasons related to temporary increases in ordinary activities which are significant and unpredictable.

The reasons must be detailed in writing in the employment contract.

The deadline to challenge an unlawful fixed-term employment contract has also been increased to 180 days (instead of 120) as from the termination of the contract.

Social security contributions paid by the employer upon each renewal of a fixed-term employment contract (and staff-leasing contract) have been increased by an additional 0.5 per cent of the salary.

These changes apply to: fixed-term employment contracts executed on or after 14th July 2018; and renewals and extensions on or after 14th July 2018 of existing fixed-term employment contracts.

Staff-leasing (employment agency) contracts

As a result of further changes in the Decree, the rules applying to fixed-term contracts apply also to staff-leasing contracts, including the above changes. There are, however, some exceptions: the rule that an employer cannot hire fixed-term employees exceeding 20% of his/her overall workforce employed at January 1 of the year of appointment does not apply. Similarly, the rule that fixed-term employees who have worked for more than six months for the same employer are given priority in the case of permanent hiring by the employer in the twelve following months does not apply to staff-leasing contracts.

Indemnities in case of unjustified dismissal

Indemnities, or compensation, due to an employee whose dismissal takes place without just cause, justified objective reason or justified subjective reason have changed. For companies with more than 15 employees, and only for those dismissals that took place after July 14 2018, employees are entitled to compensation for damages of 2 months’ salary per year of service, with a minimum of six (instead of four) and a maximum of 36 (instead of 24).

 

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