NUNZIANTE MAGRONE INTER ALIA Legal e-news
2015/1
Increasing protections for new open-term employees The “Jobs Act” (Italian law December 10, 2014 No. 183) delegated the Government to enact a series of decrees that will result, over the next months, in a rewriting of a significant part of Italian labour law. With regard to some of these decrees, there have been, and in part there are still, only “schemes”, i.e. unofficial drafts, which may be subject to changes and corrections. At the sitting of 20 February 2015, the Council of Ministers approved two of these schemes, changing important provisions of our labour law (including autonomous work contracts, to parental leaves, from apprenticeships to temporary labor supply). These schemes will be reviewed and presumably amended in the next weeks, before being approved; only its final version will enable us to assess its content and scope. At the same sitting of 20 February 2015, the Council of Ministers definitively approved the first two legislative decrees, covering two crucial issues, such as exit flexibility and unemployment benefits. Especially the first decree is essential for Italian employers: it provides for “increasing protections” to employees, hired on an open-term basis (or whose employment becomes an open-term one) after this decree comes into force, most likely as of March 1, 2015. In case of dismissal of these employees, the employer may avoid the risks of a termination lawsuit, offering them a certain number of monthly remuneration, depending on their service seniority. The employee refusing this proposal and filing a lawsuit will obtain - in case of favourable outcome of this case - a higher number of monthly remuneration, still determined according to seniority.
Moreover, the time required to settle termination cases may be lower. There will continue being a negotiation of termination cases in the future, but in shorter timeframes, and within narrow ranges. There will be also other issues, with which we will most likely deal in the next future: 1) open-term employment contracts could become, once again, the most usual kind of
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As a result, the costs commonly arising from dismissals will change: except for extraordinary cases, dismissals will be less expensive in the future, than today; in particular, the dismissal of employees with a low seniority could cost very little.
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employment contract, because the least expensive and/or risky vis-à-vis flexible employment relationships; 2) there may be employees, hired on an open-term basis (or becoming open-term ones during their employment) before and after March 1, 2015, whose dismissals may require different terms, procedural fulfillments, and costs; 3) even among those employees who fall under the scope of these new rules, there will be significant differences of protection, depending on the seniority of each employee; this could significantly affect HR management, increasing the local sensitivity to retention and turnover. Please find below an overview of the new regulations.
Scope of application of the new regulations The new regulations shall apply to hand-workers, clerks and middle managers: -
employed on an open-term basis, after the decree comes into force (presumably after 1 March 2015); or
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employed on a fixed-term basis, or as apprentices, and continuing as an openterm employees after the decree comes into force.
Protections applicable to employees with gradually increasing protections, employed by “bigger” enterprises
The protections applicable to “bigger” employers (meaning those having more than 15 employees at each business unit, branch, office or autonomous department to which the employee is assigned; more than 15 employees at production sites located in the same municipality; and more than 60 in total), historically falling within the scope of Article 18 of the Employees’ Statute, significantly change. Pursuant to the legislative decree, unlawfully dismissed employees are generally entitled to an indemnity only; right to reinstatement remains only in exceptional cases (discriminatory dismissals, invalid dismissal or disciplinary dismissal for a non-existent fact).
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The new regulations set new protections applicable in case of unlawful dismissals, without modifying the legal requirements for a dismissal to be lawful.
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In which cases there is only a right to indemnity 1.
Dismissal on justified grounds or for just cause
Generally, an employee made redundant in the absence of grounded economic reasons; or wrongfully dismissed for poor performance, breach of duties or other personal reasons is entitled only to an indemnity, equivalent to two monthly remuneration per year of service; in any case, this indemnity may not be lower than four monthly remuneration, and may not exceed twenty-four monthly remuneration. These protections apply: to all layoffs for objective reasons, including the case in which the reason grounding the dismissal (the alleged elimination of the job assigned to the employee) is not truthful or anyway proven at court; and to all disciplinary dismissals, including those cases where the concerned employees are responsible for minor breaches, which are not serious enough to justify their dismissal. As an exception, these protections do not apply in the event that the concerned employee is dismissed in relation to facts, which did not take place. 2.
Dismissals not complying with formal or procedural requirements
Employers failing to fulfill formal or procedural obligations (such as the failure to provide the reasons grounding the dismissal in the termination letter; or the failure to comply with mandatory proceeding, prior to a disciplinary dismissal) shall pay an indemnity to the concerned employee, at a rate of one monthly remuneration per year of service. This indemnity may not be lower than two monthly remuneration, and may not exceed twelve monthly remuneration.
In which cases the concerned employee may still claim for reinstatement Null and void dismissals
Whenever a dismissal is deemed as null and void under Italian law (namely, in case of discriminatory dismissals, of oral dismissals, or dismissals of mother workers), the employee will be entitled to reinstatement, and to compensation for damages, amounting to all salaries that the employee would have accrued after termination, and to related social security and welfare contributions.
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NUNZIANTE MAGRONE INTER ALIA Legal e-news
2015/1
Any amounts earned by the employee after dismissal shall be deducted from this compensation for damages, provided that under no circumstances may it be lower less than 5 monthly remuneration. Within certain timeframes, the employee may opt for an indemnity equal to 15 monthly remuneration, in lieu of reinstatement. In this case, in addition to this indemnity, the employee is entitled to salaries accrued from the date of dismissal until the date of termination of this option. 2.
Disciplinary dismissal based on inexistent facts
An employee, dismissed based on untrue accusations, is entitled to reinstatement and to a compensation for damages, like the one in paragraph 1. above. This compensation may be reduced by any amounts, which the employee earned, or could have earned if he had (received and) refused another suitable job offer, further to dismissal. This compensation, in any case, may not exceed twelve monthly remuneration. The employer shall also pay the social security and welfare contributions due for the entire period between the dismissal and reinstatement (or the option). Also in this case the employee may request a compensation equal to 15 monthly remuneration, in lieu of reinstatement. 3.
Dismissal based on a “mental or physical disability” of the employee
Employees dismissed, because of their “mental or physical disability” may claim for reinstatement and the other protections mentioned above, if this reason proves unable to justify their termination.
Which protections are granted in case of collective layoffs Employees, who are unlawfully involved in a collective layoff, may claim for reinstatement only if they are dismissed orally (i.e., without receiving any written termination letter. In all other cases (including the dismissal of an employee that is made
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E.g., the dismissal of employees wrongfully considered unfit to perform their duties, as well as the dismissal of employees who lost part of their health and capacities, due to a breach of health and safety rules by the employer, lay within the scope of these protections.
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NUNZIANTE MAGRONE INTER ALIA Legal e-news
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redundant, in breach of statutory or contractual selection criteria) will only be entitled to the above-mentioned indemnities. Tax and social security benefits applicable in case of settlements The legislative decree provides that the employer may offer to the concerned employee, in the sixty days following notice of termination, an amount equal to one monthly remuneration per year of service and up to a maximum of eighteen monthly remuneration. In case of acceptance (which must be reflected in a settlement agreement, executed before an official settlement committee, or the relevant trade union representatives), the amount paid to the concerned employee shall be subject neither to income taxation, nor to social security contributions. The employer may obviously offer higher amounts, amongst other to settle “other pending issues”; these additional amounts shall be subject to taxation and social contributions, where applicable, pursuant to general tax law provisions.
What happens to small enterprises New regulations also apply to “small” employers (i.e. those having less than 15 employees in each business unit, branch, office or autonomous department to which the employee is assigned; less than 15 employees at production sites located in the same municipality; and overall, less than 60 employees). In case of unlawful dismissal, employees of these employers will be entitled to increasing protections, depending on their respective seniority of service. The initial amount of the indemnity shall be equal to two monthly remuneration, and shall gradually increase by a monthly remuneration per year up to a maximum of six monthly remuneration.
Significant news for non-profit organizations As per employees “of non-entrepreneur employers who perform non-profit political, trade-union, cultural, education or religious or cult activities”, so far excluded from the scope of the Employees’ Statute, the regulations set by the legislative decree will apply in its entirety.
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Employers may offer tax-free indemnities to these employees, in the sixty days following dismissal, at a rate of one monthly remuneration per year of service, up to a maximum of six monthly remuneration.
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NUNZIANTE MAGRONE INTER ALIA Legal e-news
2015/1
For further information: Loredana Rondelli – Rome office (l.rondelli@nmlex.it) Giuseppe Cucurachi – Milan Office (g.cucurachi@nmlex.it) Francesco Abbozzo Franzi – Milan Office (f.abbozzo@nmlex.it)
The information contained in this issue is of a general nature and is not exhaustive; before taking any action based on the same you should request the assistance of a consultant. ROME Piazza di Pietra, 26 00186 – Roma (Italia) Tel. +39 06 695181 Fax +39 06 69518333 MILAN Foro Buonaparte, 70 20121 – Milano (Italia) Tel. +39 02 6575181 Fax +39 02 6570013 BOLOGNA Via d'Azeglio 44 40123 – Bologna (Italia) Tel. +39 051 330502 Fax +39 051 6447906 ISTANBUL* Cumhuriyet Cad. No:147 (Eski No:243) Kat:7 Harbiye – Istanbul (Turchia) Tel. +90. 212 219 16 30 Fax +90. 212 219 16 32 TIRANA* Mustafa Matohiti Street Tirana (Albania) Building No. 7/2, Suite 1/3 Tel/Fax: +355 4 2241479
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