Italy: Mixed reaction to Jobs Act
A new law has been passed in Italy to help give atypical workers more job security. It comes after mounting criticism about the polarisation of the labour market, between the security enjoyed by workers who are employed on indefinite contracts and the vulnerability of those who are not. It will apply to those who started work on or after 7 March 2015.
The new law is part of a range of measures brought in by the government after Parliament voted in December 2014 to reform the system of social security benefits, job services, and active policies, to reorganise the rules on employment relationships and inspections, and to protect and reconcile work–life balance requirements.
The aim of the Jobs Act is to:
- support people looking for jobs;
- reduce the number of types of employment contracts;
- make employment rules simpler.
It means that indefinite employment contracts will again be the most common form of employment relationships, characterised by:
- different remedies for dismissals without good reason;
- new, voluntary conciliation processes with simplified procedural rules.
The new regulations
Employees hired after the introduction of the new regulations on 7 March, 2015 will be affected, as will:
- employees belonging to companies whose workforce – as a consequence of new hiring – exceeds 15 people in the same business unit or municipality (or exceeds 60 people in total);
- employees on fixed-term contracts converted into indefinite contracts after the new regulations become effective;
- employees on apprenticeship contracts converted into indefinite contracts after the new regulations become effective.
Previous regulations continue to cover workers already employed on indefinite contracts. (In particular, these regulations are Article 18 of Law 20 May 1970, No. 300; and Article 8 of Law 15 July 1966, No. 604.)
Labour reforms in 2012 cut the use of reinstatement as a remedy for those workers who had been unlawfully dismissed. The new law goes further, with only financial compensation now possible for this kind of dismissal. Forced reinstatement will be possible only if a worker has been dismissed for discriminatory or retaliatory reasons.
An employer no longer has to reinstate an employee in the case of dismissal without grounds for economic reasons. Compensation is to be made on the basis of two months’ salary per year of service (with a minimum of four months pay and a maximum of 24).
The same rule applies in cases of dismissal without grounds because of the employee's conduct, unless the facts causing the dismissal are proven non-existent. In this case, workers are to be reinstated and paid the salary due to them from the date of their dismissal until their reinstatement up to a maximum of 12 months' wages, plus social security contributions.
Reinstatement remains the rule only in serious cases of unlawful dismissal, including verbal dismissals, dismissals based on discrimination or retaliation, and dismissal during maternity leave. Workers to whom this applies will also get compensation equal to either a minimum of five months' salary or the salary due from the date of dismissal until the reinstatement, whichever is the greater. However, employers can also choose to accept compensation equal to 15 months’ salary instead of reinstatement.
In the case of dismissals affected by formal irregularities, compensation is a minimum of two months' salary and a maximum of 12, calculated on the basis of one month’s salary per year of service.
Workers involved in collective dismissals in breach of the mandatory procedure and/or the selection criteria are entitled to compensation of a minimum of four months' pay and a maximum of 24 calculated on the basis of two months’ salary per year of service.
Social partners’ views
Employer organisations have welcomed the increased flexibility for indefinite contracts, and the fixed penalties for unlawful dismissals which had previously been at the discretion of the courts. They expect that these elements will improve the business climate and make the country more attractive for foreign investors.
However, the Italian General Confederation of Work (CGIL) and the Union of Italian Workers (UIL) have organised demonstrations in protest at the act. They have complained about the lack of dialogue, and have questioned whether the simplification of dismissals is the right tool to increase employment.
The metalworkers' union, FIOM-CGIL, called for a referendum to abolish the Jobs Act.
However, the Italian Confederation of Workers’ Unions (CISL), while criticising the downgrading of protection against collective dismissals, says the new measures on individual employment relationships are likely to reduce atypical contracts in favour of permanent jobs.
The new individual employment contract could foster a worker’s occupational integration and, as its use increases, also increase labour protection.
However, the binary effect between ‘old’ and ‘new’ employees will create confusion, definitely not helping the process of simplification of Italy’s labour system, already regarded as particularly chaotic. The ‘binary effect’ may be particularly troubling in collective dismissals, with the ‘old’ and ‘new’ employees facing radically different outcomes depending on when they were hired.
For a complete overview of the Jobs Act reform, please see our articles addressing: the reform of unemployment benefits and of temporary unemployment benefits, the reshaping of employment relationships, the rationalisation of inspection activities, the reorganisation of active labour market policies, the new rules on job tasks, measures targeting economically dependent self-employed work.