Measures to increase employer communication, Italy
In January 2007, the 2007 Finance Act (legge finanziaria) introduced some changes in relation to employment provisions. Employers are now obliged to communicate the start of an employment relationship, as well as modifications to an employment contract and dismissals, to the competent authorities. The information collected will enable the government to monitor labour market developments and to evaluate public policies on labour. Indirectly, this new law will also help to fight undeclared work.
In January 2007, Law No. 296/06 – the 2007 Finance Act (legge finanziaria) – introduced some relevant and positive changes in relation to employment provisions. Under this law, employers are obliged to communicate the start of an employment relationship to the competent authorities, as well as when modifying or ceasing an employment relationship.
The then centre-left government under Romano Prodi finalised these legislative changes to guarantee the collection of useful labour market information, in order to monitor regularly labour market developments and to provide further tools for the evaluation of public policies on labour. Indirectly, these legislative changes also help to fight irregular employment.
The regulation targets companies, employers and workers throughout the country. The main actors involved in the implementation of the legal provisions are: entrepreneurs, the Ministry for Labour and Social Security (Ministero del Lavoro e della Previdenza Sociale), the National Social Security Institute (Istituto Nationale Previdenza Sociale, INPS) and the Italian Workers’ Compensation Authority (Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro, Inail).
In terms of employment, the principal objectives of the legislation were to:
- improve compliance with tax regulations;
- curb unfair competition;
- reduce undeclared work;
- improve information gathering on labour market developments.
Law No. 296/06 provides for the following specific measures to curtail undeclared work:
- the extension to all economic sectors of the Durc (Documento Unico di regolarità contributiva) certification scheme, which provides for certification of companies’ ‘regularity’ in terms of the obligatory payment of contributions for social security and occupational accident and illness insurance (Article 1, paragraph 1175);
- the establishment of compliance indexes for particularly ‘sensitive sectors’, such as agriculture, construction and cleaning – this means that a given relation between production volume and working hours has to be respected, otherwise irregularity is likely to be suspected in the working process. Companies are to confirm their respect to those parameters if competing for public contracts. Eventually, compliance indexes are to be established for all sectors of the economy (Article 1, paragraphs 1173 and following);
- employers are obliged to communicate to the public employment service when they intend to hire new people, dismiss any workers or change a workers’ employment contract the day before this event takes place. This rule particularly aims to prevent that workers are only regularised on the day an occupational accident occurs (Article 1, paragraphs 1180 and following);
- data recorded by all relevant institutions – including welfare, employment, tax and company services – will be interchanged and interconnected (Article 1, paragraph 1168);
- structural cuts in tax costs on open-ended employment relationships only (Article 1, paragraphs 266 and following);
- until 30 September 2007, an employment stabilisation policy was favoured, by which every temporary worker whose work relationship had been regularised would be counted as having an open-ended employment relationship. In this case, the employer is entitled to the abovementioned tax reduction, provided that the employee is kept in work for at least 24 months after the stabilisation of the employment relationship and that all relevant contributions are paid for the length of the irregular working period up to a maximum of 60 months. In addition, new companies are granted supporting services, such as training, credit, and accompanying services to fairs and exhibitions. These two measures received very little financial support under the current Finance Act, amounting to €10 million for 2007 and 2008; during the debates on the 2008 Finance Act, the government has discussed how to better implement and improve these provisions.
Main organisation responsible for the implementation of the legislation: Ministry for Labour and Social Security.
Liliana Bàculo and Sara Gaudino