Approfondimenti

ITALIAN EMPLOYMENT LAW IN 2015: WHAT YOU NEED TO KNOW

Una breve analisi delle novità derivanti dalla riforma del diritto del lavoro. The Italian Senate has spoken – labour reform is coming this year. On Tuesday December 3rd, 2014 they voted in favour (166 ‘Yes’ vs 122 ‘No’ + 1 assent) of giving a proxy to the Italian Ministry of Labour to create the laws, […]

Una breve analisi delle novità derivanti dalla riforma del diritto del lavoro.

The Italian Senate has spoken – labour reform is coming this year. On Tuesday December 3rd, 2014 they voted in favour (166 ‘Yes’ vs 122 ‘No’ + 1 assent) of giving a proxy to the Italian Ministry of Labour to create the laws, within a given framework, to implement Matteo Renzi’s long debated Jobs Act. Then on December 15th the Jobs Act was published in the Gazzetta Ufficiale (the official journal of record of the Italian Parliament) and hence officially turning the proxy into law – in fact Law No. 183/2014. Next month it will come into force.
Long debated, we say, as it will significantly impact the holy grail of job protection – the infamous Article 18 of the Italian Worker’s statute. Article 18 currently makes it very difficult for employers in Italy to dismiss workers. Hence, there is a trend to avoid offering workers permanent employment contracts.
To illustrate this one must only think that an estimated 13 million people in Italy – out of a population of 60 million – work in the private sector (this number excludes independent professionals such as lawyers and architects, those working in the agricultural industry, and of course public sector workers). Of these, only about 10.5 million have indefinite full time contracts – leaving around 20% of this workforce in precarious employment and / or part-time salaries. This does not bode well for a stable economy.
So what can we expect to see in 2015?
With this new Jobs Act, the Italian government has been engaged to deliver on all of the following themes:
– A review of the current social welfare system in order to ensure uniform protection and streamline wage regulations taking into account the peculiarities of the various productive sectors in Italy;
– A review of employment services as well as proactive policies in order to ensure the fruition of basic services and to ensure the uniform operation of administrative functions;
– A review of the procedures and obligations for both citizens and businesses in order to simplify and rationalize the constitution and management of labor relations, in addition to hygiene and safety, at work;
– A review of the different types of employment contracts, and also labor relations, in order to strengthen the opportunities for people of all ages to enter the world of work – in addition to looking at ways to rearrange the labor contracts that are currently in force;
– A review of the regulations which govern maternity, in addition to studying the reconciliation of private life and working times in order to ensure adequate support for parental care.
In more detail, one can expect changes to Italian labour regulations on the following fronts.
PERMANENT EMPLOYMENT CONTRACTS
The highlight will certainly be a new template for a standard permanent contract which the government would like to promote as the common form of employment agreement – eventually making it the most convenient type in terms of cost.
Italy is probably the only country in the world with a Labour Code which aggregates close to 50,000 regulations… add on top of this 46 different types of employment contracts, between full time, fixed term, and part time agreements, we see a very complex and cumbersome labour market.
The introduction of a single employment contract model, more importantly for full time roles, would be a true epiphany for the Italian labour market.
As part of the process the Italian government would like to identify and analyze existing forms of employment contracts in order to create a simplified organic model of agreements and working relationships by repealing the governing disciplines that are incompatible – and at the same time overcome the trend of precarious employment.
This last point is a particular sticking point in the Italian labour market. As a way to get around the Italian Worker’s Statute – which makes it quite difficult for employers to dismiss permanent employees – companies have adopted the practice of offering workers fixed term contracts or project collaboration agreements which are constantly renewed – year after year after year. Hence a ‘fixed-term’ employee can actually be working in the same way as permanent employee would – but without the protection of Article 18 of the Italian Workers’ Statute. Previous government administrations have also tried to tackle this issue… so it should be interesting to see the final proposal of Renzi’s government on this front.
The Italian government has also been engaged to create a new kind of permanent contract which will provide job protection to workers (signed up under the new contract) which will increase with the length of their service to the company. In particular:
i. if an employee is dismissed for economic reasons they will not be allowed to ask for their old job back – but instead will be paid a compensation based on their length of service (increasing year after year) up to a maximum that will be established by the government;
ii. it will be possible for employees subject to unfair dismissals, and in some cases of unfair disciplinary dismissals, to ask for the reinstatement in their place of work.
RESIGNATIONS & CONSENSUAL TERMINATION OF THE EMPLOYMENT RELATIONSHIP
The Italian government has been engaged to simplify the procedure for the validation of resignations and the consensual termination of the employment relationship.
Here again we find a sensitive issue being addressed, as some companies, in order to get around the protections built into the current Italian Workers’ Statute, have required new employees to sign (but not date) their resignation letters at the same time they signed their initial employment contracts. In this way, companies, who have engaged in this practice, can technically make their employees ‘resign’ at any time by simply dating the resignation letter in their possession.
This is why it is necessary for the Italian government to make a regulation regarding the validation of employee resignations – whether consensual or not.
REORGANISATIONS & RESTRUCTURINGS
Then there are those situations where employers and employees do not usually see eye to eye – such as when reorganizations and restructurings are required.
Here the Jobs Act has requested that a revision be made to the regulations governing reorganizations, restructurings and company conversions in order to reconcile the interest of an organization to make a profit with the interest of the workers to have a secure job.
An instrument which is often successfully used to provide job security, while at the same time alleviating some economic burdens from the company, is through the use of a Solidarity Contract. With the use of this instrument employees usually agree to an across the board cut in working times, sacrificing a small part of their wages, to limit overall job cuts. The current Job Acts also requests law makers to review the functioning of Solidarity Contracts in the Italian workplace.
And for those uncertain times when economic pressures mount – where a company is not sure whether to lay off its workforce or not – the Jobs Act would like to see the reduction of bureaucracy with the introduction of a standardized mechanism for offering income assistance to employers through the government run cassa integrazione guadagni schemes.
PRIVACY
Seeing the speedy progress of technology and its capabilities in the past few years, and quite possibly also weeks and months, the Italian government has requested a review of the controls that employers can implement. They have asked that the new regulations should seek to balance the need of businesses to protect their physical and intellectual assets with a worker’s right to privacy and dignity.
INSPECTIONS
With the current economic uncertainty some businesses may be tempted to cut corners not only in terms of the health, safety, and security of their workers – but also in terms of hiring workers ‘under the table’ to avoid paying high social contributions and tax for employees.
In order to ensure a level playing field for all, and more importantly to ensure companies are complying with health and safety regulations, the law makers have been engaged to seek a rationalization and simplification of corporate inspections.
MINIMUM WAGE
The Jobs Act has introduced, possibly on an experimental basis, the potential for a new minimum wage for all workers who are not covered by a National Collective Labour Agreement – which in Italy is referred to as CCNL – Contratto Collettivo Nazionale di Lavoro.
TRAINING
Getting people back to work won’t just happen through job creation alone. There will also be a need to promote active job searches through personalized vocational training and educational courses.
This is why the Jobs Act would like to see the realization of instruments which favor training students through programs which alternate time spent at school with time spent in real life working environments.
UNEMPLOYMENT BENEFITS
Italy recently reported its worst unemployment figures since 1977 – registered, according to Eurostat, at 13.2% in October 2014 (Youth Unemployment at 43.3%). The latest figures for December 2014 indicate a slowly improving trend with 12.9% unemployment (Youth Unemployment at 42%).
This is an issue that has not escaped the current government who have included, as part of the Jobs Act, the quest to streamline recruitment incentives not just for permanent employees but also for the self-employed.
In fact, another epiphany for the Italian labour market could be the ability for self-employed professionals to request unemployment benefits, if the need arises, through the extension of ASpI – Assicurazione Sociale per l’Impiego (or in English ‘Social Insurance for Workers’).
The question remains – is this all a labour market liberation dream ….or will it become a reality?
We certainly hope – in the interest of modernizing the Italian labour market – the later will be true.