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What does the extended ban on dismissals mean for Italian employers?

Written by
Toffoletto de Luca Tamajo, working in employment law since 1925.
Italy has extended the ban on dismissals associated with its coronavirus support scheme for employers. Under the new rules, it appears probable that employers cannot proceed with dismissals until 31 December 2020, with some exceptions. This article provides details.

The so-called August Decree (Legislative Decree no. 104 of 14 August 2020) has extended the ban on dismissals (which would have expired on 17 August 2020), varying according to the use of the new 18-week wage supplementation fund or, as an alternative, the exemption from paying social security contributions granted to employers that do not intend to request access to the new fund.

As it stands, and subject to a further in-depth analysis and any further clarifications which may be released, the apparent situation from 16 August 2020 is set out below.

Employers that intend to apply for access to the new Covid-19 Wage Supplementation Fund will only be able to proceed with a collective or individual dismissal for a justified objective reason after having benefited from the fund for the full 18 weeks, which can be used from 13 July to 31 December 2020. The 18 new weeks of the Covid Wage Supplementation Fund are divided in two blocks of nine weeks. The first block can also include the weeks of access to the fund under Legislative Decree 18/2020, previously requested for the period starting from 12 July 2020.

Employers that do not intend to request access to the new Wage Supplementation Fund and that have already benefited, from the previous wage supplementation measures (under Legislative Decree 18/2020 and subsequent amendments) in May and June 2020 will be exempt from paying social security contributions for a period equal to double the hours of wage supplementation fund used in May and June 2020. For example, companies that accessed the fund for three weeks during those two months, will be exempted from paying social security contributions for six weeks. This is up to a maximum of four months. In such cases, dismissals (according to an initial interpretation) would be possible at the end of the period of social security contribution exemption. This would vary according to the concrete situation of each company.

It would seem (at the moment and taking a prudent approach) that employers that do not

intend to request access to the new Fund and do not want to, or cannot, benefit from the social security contribution exemption, cannot proceed with a collective or individual dismissal for justified objective reasons until 31 December 2020 (the last date for requesting access for the Fund).

In any event, it is possible to proceed immediately with dismissals, both collective and individual, in three cases:

  • the permanent cessation of a business by liquidation of the company;
  • bankruptcy without temporarily carrying on the business;
  • a company-level collective agreement, signed with the trade unions that are comparatively most representative nationally, which provides for layoffs with incentives, limited to the workers who subscribe to this agreement. In this case, the worker will be granted the involuntary unemployment benefit (‘NASPI’).


The exception to the dismissal ban (which was already provided for) allowing for a change in a service contract with reemployment of the workers employed by the new service contractor also remains in place.

Executives (that is, ‘dirigenti’) remain excluded from the ban on dismissals.

Lea Rossi
Partner - Italy
Toffoletto De Luca Tamajo