Individual employment relations in Italy

Requirements regarding an employment contract

According to applicable legislation, the minimum working age is fixed at 16 years, except for specific forms of apprenticeship, for which it is fixed at 15 years. Written employment contracts are generally not required (except in some cases, such as apprenticeships), but the employer is obliged to inform the worker in writing of their working conditions. To be valid, the employment contract has to be agreed on by both parties. The parties to the employment contract must have legal capacity and the capacity to act.

Dismissal and termination procedures

Given the regulatory stratification and complexity of the dismissal regime in Italy, two schemes for the individual dismissal regime are proposed, based on when workers were hired.

Regime applied to workers hired before 7 March 2015

Notes: * Termination of employment and payment of compensation. ** Regarding disciplinary rules on penalties. *** The conciliation procedure in the case of dismissals for objective reasons in production units with more than 15 employees. n.a., not available.

Regime applied to workers hired after 7 March 2015

Since 2018, the Constitutional Court has repeatedly intervened to censure the reform introduced by Act No. 23/2015 (part of the Jobs Act). It declared as unconstitutional the automatism in the quantification of the indemnity to be paid to an unjustly dismissed employee (where there is no just cause or justified reason for dismissal), rigidly measured only on the seniority of service of the employee unjustly dismissed (Judgment No. 194/2018). Subsequently, the court issued Judgment No. 150/2020 to censure the same regulation, stating that even in the case of unlawful dismissal for formal defects the indemnity cannot be automatically and rigidly measured based only on seniority. More recently, the Constitutional Court intervened on the same legislation, censuring the merely compensatory protection from unlawful dismissal for justified reasons (Judgment Nos. 59/2021 and 125/2022), including in small enterprises (Judgment No. 183/2022).

Following the COVID-19 outbreak in March 2020, several legislative measures suspended individual and collective dismissals for economic reasons. Since August 2020, the ban on dismissals has not been absolute and has not applied, for example, in the case of the cessation of company activities for winding up; insolvency without the continuation of company activities; and the signature of a company agreement by the most representative trade unions at company level, with the aim of stimulating the consensual termination of a contract of employment (in this case, the worker automatically benefits from temporary unemployment schemes). The ‘redundancy freeze’ ended in April 2022.

Parental, maternity and paternity leave

Parental leave (voluntary)

Article 2 of Act No. 151/2001 defines parental leave as the voluntary abstention of a male or female worker for periods in addition to those included in compulsory maternity or paternity leave. The right to abstention applies during the first 12 years of the child’s life. Where both parents take parental leave, the maximum period of abstention from work shared between the two is fixed at 10 months, in accordance with the following rules.

• The working mother is entitled, after her maternity leave (compulsory abstention), to a continuous or fragmented period not exceeding six months.

• The working father is entitled, from the birth of the child, to a continuous or fragmented period not exceeding 6 months, which may be increased to 7 if he abstains from work for a continuous or fragmented period of no less than 3 months; in the latter case, the total period of 10 months shared between the two parents is increased to 11 months.

• Single parents are entitled to a continuous or fragmented period of no more than 11 months.

During the parental leave, the employee’s financial allowance is calculated at 30% of the average global daily wage. In the case of single parents, an indemnified leave of nine months in total is granted. In 2023, the INPS allowance was increased from 30% to 80% of the average daily global remuneration, in accordance with the following criteria: it is (1) split between the parents; (2) received for a maximum duration of one month; and (3) received up to the child’s sixth birthday or the sixth year of the child’s entry into the family, in the case of adoption.

Parental leave should not be confused with compulsory maternity or paternity leave. These are mandatory, whereas parental leave is voluntary.

Compulsory maternity leave

Pursuant to Article 16 of Act No. 151/2001, and subsequent amendments, mothers must abstain from work, subject to exceptions, in the following periods:

• during the two months preceding the expected date of childbirth, except as provided for in Article 20 of Act No. 151/2001 (flexible leave)

• if childbirth occurs after that date, the period between the presumed date and the actual date of childbirth

• during the three months after childbirth, except as provided for in Article 20 of Act No. 151/2001 (flexible leave)

• during the additional days not taken before childbirth, if childbirth occurs earlier than the expected date

Compulsory paternity leave

Pursuant to Article 27-bis of Act No. 151/2001 (introduced through Act No. 105/2022), the father is entitled to 10 days off work. In the case of twin births, he is entitled to 20 days. The working father can request them all together or in instalments, from two months before the birth until five months afterwards. The leave can also be enjoyed by the father during the working mother’s compulsory maternity leave. Compulsory leave is also granted to fathers taking alternative paternity leave (see the following section).

Alternative paternity leave

Pursuant to Article 28 of Act No. 151/2001, the working father has the right to abstain from work for the entire duration of the mother’s compulsory maternity leave, or for the part that would have been due to the working mother in the event of the death or serious illness of the mother, the abandonment of the child by the mother, the child being entrusted exclusively to the father.

Statutory leave arrangements

Sick leave

Sickness constitutes a case of temporary supervening inability to work, which does not entail the termination of the employment contract, but only a suspension of the employee’s obligation to work (as set out in Article 2110 of the Civil Code).

The period of illness during which the employee may not be dismissed (periodo di comporto) is generally regulated by national collective bargaining. NCBAs contain special rules on the period for part-time and fixed-term workers, with the aim of avoiding excessively onerous consequences for the employer.

Pregnancy-related illnesses and occupational illnesses or accidents at work are excluded from the periodo di comporto.

If sick, the employee must inform their employer as soon as possible before the beginning of his/her working day. A doctor must certify the state of illness, submitting the certificate to INPS through an online procedure. INPS makes the certificate available to the employer.

According to Act No. 562/1926, the employee should receive a special indemnity from the INPS, calculated as 50% of basic remuneration from the 4th day to the 20th day of illness. From the 21st day on, the indemnity amounts to 66.66% of basic remuneration. Collective agreements usually establish the integration of the mandatory sick indemnity by employers and ensure the full coverage of pay during sick periods, with some thresholds in terms of annual days of sick leave.

Retirement age

Act No. 201/2011 radically reformed the Italian social security system, allowing for a yearly increase in the retirement age in order to adapt it to the population’s increasing life expectancy.

As part of measures addressing retirement rules and pension benefits, and following a long phase of consultations with trade unions, the 2017 Budget Law introduced three early retirement schemes targeting people aged at least 63 who are no more than three years and seven months away from statutory retirement age: the social advance pension payment (anticipo pensionistico sociale), the advance pension payment (anticipo pensionistico) and the temporary supplementary advance annuity (rendita integrativa temporanea anticipata). Specific categories of disadvantaged people have the opportunity to access the social advance pension payment, which is funded by the state. The advance pension payment can be accessed by other workers upon taking out a 20-year loan intended to pay back the anticipated sum, and a life insurance policy subsidised by the state. Finally, workers enrolled in supplementary private pension schemes have the opportunity to apply for the temporary supplementary advance annuity, an advance pension payment subject to a 15% maximum taxation rate.

The Budget Law also eliminated caps on the value of supplementary pension contributions that can be exempted from income taxation, a measure that is likely to promote the establishment of contractual pension funds as part of collective bargaining agreements.

Another measure was introduced in early 2019 – that is, an anticipated retirement scheme, which will last for three years, for people whose age and years of contribution add to 100 (the ‘quota 100’).

The 2023 Budget Law (Act No. 197/2022) provides for the following innovations.

• Provisions on access to ‘flexible early retirement’ (quota 103): On an experimental basis in 2023, it was possible to obtain the right to early retirement upon reaching a registry age of at least 62 years and a minimum contribution period of 41 years.

• Extension of the social advance pension payment: The right to access the payment provided by INPS (until retirement age is reached) was extended into 2023 for subjects in specific situations who are at least 63 years of age and are not already holders of a basic pension. The allowance is granted to workers who perform physically demanding tasks, civilians whose disabilities comprise 74% or more of their capacity, unemployed people who have exhausted the relevant New Social Insurance for Employment treatment (or equivalent) and caregivers.

• Changes to and the extension of the ‘Women’s Option’ (opzione donna): The possibility of accessing pension treatment was extended into 2023 for female workers who, by 31 December 2022, had accrued a contribution period equal to or greater than 35 years and a registry age of at least 60 years, reduced by 1 year for each child up to a maximum of 2 years, and who belonged to one of the following categories: caregivers, people whose disabilities comprise 74% or more of their capacity and dismissed workers or employees of companies in crisis.