Italy: New voucher-based work scheme provokes debate

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Italy’s parliament has introduced new voucher-based work schemes for occasional work. The regulations cap the amount that can be earned or paid in this way, and companies with more than five permanent employees may not use vouchers. However, there are few other limits on voucher-based work and the social partners have been critical.

Background

On 15 June 2017, the parliament approved new provisions governing voucher-based work to cover occasional working activities. This appears to be a turning point in the long-standing debate on the regulation and use of voucher-based work.

Legal provisions on vouchers were first introduced in 2003 (PDF). Since then, they have gradually been relaxed, boosting their use – especially from 2012 onwards. For all forms of use – except in the agricultural sector – restrictions remained in place only in terms of caps on maximum annual income paid through vouchers: €2,000 per individual worker from a single client company, and €5,000 for each worker in total. This was increased to €7,000 by the Jobs Act in March 2015.

 

Until 2016 it had been possible to notify the National Institute of Social Security (INPS), the body which administered the use of vouchers, of a 30-day period during which, at some point, a single working activity would be performed. This raised strong concerns about the possible misuse of vouchers to hide undeclared work. This loophole was eventually addressed in September 2016, when new legislation was introduced that obliged clients to notify the INPS of the exact day and time when the proposed voucher-based working activity would begin and end.

The largest union confederation, the Italian General Confederation of Labour (CGIL), has for some time campaigned for the revision of labour legislation. CGIL proposes reducing the scope of flexible contracts and limiting the use of vouchers to work carried out by students, the unemployed and retirees for domestic work or organisation of specific events. CGIL also wants low caps set on maximum permitted earnings from voucher-based work.

To help speed up the discussion of these proposals in parliament, CGIL also promoted three referendums. One, proposing the repeal of voucher-based work, was scheduled for 28 May 2017 but was cancelled in April 2017 after the government did repeal the legislation April 2017. On 17 March 2017,  the government announced it was willing to discuss new legislation with social partners and parliament to cover occasional work, rather than putting the issue to a referendum.

Nevertheless, a few days after this announcement, as part of the parliamentary discussion on a bill to amend the 2017 Budget Law, the Democratic Party (PD) tabled provisions on voucher-based employment. These were eventually approved on 15 June 2017.

The new voucher-based schemes

The new legislation introduce two types of voucher-based scheme. One is tailored to private individuals who wish to use vouchers to pay workers who provide domestic and care services, and the other is tailored to 'other clients' such as self-employed workers, professionals, entrepreneurs, associations and NGOs, and public administrations. This second scheme sets out special provisions for clients in the public administration and agriculture sectors.

Limits on the use of vouchers

The new provisions introduce some restrictions on work activities, categories of workers, and the overall use of vouchers.

Individuals can use vouchers to pay the usual activities performed for families – such as domestic chores, care activities and private lessons.

Other private sector clients can use vouchers, provided they meet the following criteria:

  • are not a construction or extractive company
  • do not use vouchers as part of subcontracting agreements
  • have no more than five permanent employees

Stricter conditions apply to the use of vouchers by public administrations. They may only use this type of employment in specific circumstances, including:

  • projects that target people in need
  • emergency activities in response to natural and environmental disasters
  • solidarity activities
  • the organisation of social, cultural, sports, or charitable events

Vouchers can be used to pay all categories of workers unless the client has (or has had in the recent past) an employment relationship with the worker concerned. Only agricultural firms are bound to specific categories of workers. These include students, retirees, unemployed people, and beneficiaries of income support.

Income thresholds have also been set. The €5,000 cap on annual income earned through vouchers by a single worker has been reintroduced, as has the cap on the total wage that can be paid by a client,  to a single worker, now set at €2,500 and applying to all categories of clients.

Finally, clients too  are now subject to a maximum threshold in the use of vouchers, set at €5,000 of pay per year.

Workers’ rights and pay

As was previously the case, voucher-based workers are insured against accidents at work and their social security contributions are paid for pensions purposes only. Voucher-based workers have basic legal rights to breaks and daily and weekly rest periods.

Their minimum hourly pay entitlement varies. Individual clients must pay at least €8 per hour, plus a further €2 to cover pension contributions, insurance against accidents at work, and administrative costs for INPS service management. Other clients must pay at least €36 per day and €9 per hour. This adds up to €3 per hourly contribution and a 1% levy to fund administrative costs. 

For agricultural firms, the INPS has set the minimum pay in line with collective bargaining provisions. Minimum pay for voucher-paid work ranges from €6.56 to €9.65 an hour, depending on the task and provided that the client pays for at least four hours of work.

Payments to voucher-based workers are not subject to individual income tax. Voucher-based wages are paid by the INPS no later than the 15th day of the month following the month in which the work was done.

Social partner reactions

The Italian Confederation of Workers’ Unions (CISL) and the Union of Italian Workers (UIL) consider the developments concerning vouchers unreasonable. These two union federations, while sharing CGIL’s concerns about the possible abuse of vouchers, did not support CGIL’s legislative and referendum strategy. Instead, CISL and UIL wanted targeted revisions to be discussed with social partners, with the aim of allowing the use of vouchers solely in exceptional and occasional circumstances. The Secretary General of CISL also called for voucher-based work to be directly regulated through collective bargaining.

Many employers’ organisations had earlier voiced their concerns when the government first repealed the legislation covering voucher-based work, fearing it risked triggering a rise in undeclared work. Employers’ organisations representing agricultural firms and small and medium-sized enterprises (SMEs) were particularly concerned. SMEs saw the new provisions as necessary to allow businesses to manage peaks in production, especially in tourism-related activities; however, they protested at the ban on voucher use by companies with more than five permanent employees.

After the first approval of the new provisions at the Deputy Chamber Budget Committee on 27 May 2017, CGIL started an online petition criticising the voucher-based work regime, particularly the few conditions limiting the use of vouchers and the loose rules on communication of work activities. The laxity of these rules leaves clients the possibility of avoiding notifying the INPS of working activities and hence denying the payment itself.  Moreover, the union said it viewed the reintroduction of vouchers following the cancellation of the referendum as unconstitutional. The government has rejected this accusation, saying that since the new regulations fully prevent the risk of abuse, they address the main argument behind the referendum proposal.

The Constitutional Court and the Supreme Court could be called to rule on the dispute, as CGIL has declared its intention to file a recourse soon. 

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