The Budget Law for 2019 (Law No. 145/2018), which entered into force on 1 January 2019, introduced many new provisions affecting different areas of Italian employment law. The main points are set out below.
Support for parents
If employers decide to enter into smart working agreements with employees, priority must be given to parents of disabled children and mothers within the three years following their maternity leave.
Pregnant employees are now allowed to stay at work until the ninth month of pregnancy with the prior authorisation of their gynaecologist and the competent doctor. This means they can take all of their mandatory maternity leave of five months in full after the birth. Before this legislative change, pregnant employees had to refrain from working two months before the birth (or at least one month before the birth, if authorised).
Mandatory paid paternity leave is now extended from the previous four days to five days: it can be taken during the first five months following the child’s birth.
The bonus already provided to employees for enrolling children in nursery has been increased to EUR 1500 for 2019.
Given increased pension requirements, from January 2019 for both the old-age pension and the pension linked to length of service, the Budget Law provides for a Fund with a specific budget in order to introduce additional scope for accessing early retirement. Further decrees and/or laws will provide for specific measures within the framework of this budget.
The fight against irregular employment
Sanctions for breach of social security legislation are increased as follows:
Social security contribution exemptions for talent retention
A new exemption from social security contributions has been introduced, for a maximum period of 12 months, up to EUR 8,000 for each newly hired employee from 1 January 2019.
The exemption also applies when the employee is under 34 years old and has a PhD, obtained between 1 January 2018 and 30 June 2019. The provision also applies where a fixed-term contract is changed to an open-ended one.
The law imposes further conditions on the employer. The employer is eligible for the exemption only if it has not dismissed any employee in the same business unit on redundancy grounds or in a collective dismissal in the twelve months before the hiring. The exemption is revoked if the employer dismisses employees who were employed in the same business unit and in the same job as the newly hired person.
Social ‘shock absorbers’ for companies facing complex economic crisis
A specific social ‘shock absorber’ (the State-funded resources to financially assist companies when they need to stand down employees while undergoing corporate restructure or during a period of economic difficulties) for a maximum period of 12 months has been established for those employees who have exhausted the regular social shock absorber and who are not entitled to unemployment allowance (known as ‘NASpI’).
Litigation trends for 2019
In 2019 a material increase in litigation is expected as a consequence of the so-called Dignity Law Decree (n. 87/2018 converted into law by Law n. 96/2018), which changed the regulation of fixed-term contracts and the Italian Constitutional Court (decision n. 194/2018 of 9 November 2018) that declared the ‘Jobs Act’ reform partially unconstitutional.
The newly elected Italian Government has significantly backtracked with respect to the fixed-term contracts, the flexibility of which had increased over recent years.
In particular, the Government reintroduced the requirement for grounds to extend a fixed-term contract after the first 12 months (please note that the maximum length of a fixed-term contract is now 24 months).
The grounds are:
These grounds are very restrictive and it will be hard for employers to comply. This could lead to a material increase in the number of claims based on misuse of these grounds.
The Constitutional Court decision affected the mechanism of calculation of compensation for unfair dismissal defined in the so-called Jobs Act, which it deemed to violate the principle of equality and reasonableness since it is based only on length of service.
The Constitutional Court has again entrusted every judge with the task of identifying the appropriate level of compensation for unfair dismissal in each case. This can be between the minimum of six and a maximum of 36-months’ salary, as recently increased by the Dignity Decree, and judges must calculate without a set formula, just taking into account ‘relevant parameters’ such as the number of employees, the level of economic activity and the behaviour and respective circumstances of the parties.
This situation may lead to various consequences: on the one hand, employees are discouraged from settling cases and will instead be encouraged to file a claim after dismissal to try to obtain the maximum level of compensation available for unlawful dismissals. On the other hand, without predetermined parameters, judges can use their discretion to decide what level of compensation to grant, with the risk of very different approaches between courts and individual judges.
2019 it is also expected to be a year of evolving litigation on gig economy issues.
With regard to the contractual status of so-called ‘riders’ (employees or independent contractors), the first two decisions from the Turin and Milan courts in 2018 declared riders were self-employed, stressing the lack of obligation on them to provide services.
However, in January 2019, the Turin Court of Appeal overruled certain parts of the employment tribunal’s Foodora judgment issued in April (see here /insights/italy-tribunals-reasoning-on-why-food-delivery-riders-are-not-employees-published). Although the riders continue to be recognised as self-employed workers, the Court ruled that riders are entitled to compensation for the work actually carried out based on collective agreements as well. The reasons for the decision and its practical implications will become clear in the near future.