Italy: Latest working life developments Q3 2018

New provisions for temporary employment, changes to the compensation rules in the event of unlawful dismissal and a collective agreement on the acquisition of the ILVA steel plants are the main topics of interest in this article. This country update reports on the latest developments in working life in Italy in the third quarter of 2018.

‘Dignity decree’ reshapes temporary employment

In early August, decree law no. 87 (otherwise known as the ‘dignity decree’) on ‘urgent measures for the dignity of workers and enterprises’ was passed by parliament. This was the first act of the Conte government in the field of labour policy, and was promoted and supported by Luigi Di Maio, Deputy Prime Minister, Minister of Economic Development, and Minister of Labour and Social Policies.

The decree included a number of diverse provisions, such as a ban on betting advertisements, but the focus was on measures relating to non-standard work.

  • The maximum duration of fixed-term contracts has been reduced from 36 to 24 months and the maximum number of extensions from five to four.
  • Renewals and contracts exceeding 12 months in duration, including extensions, have to specify the reasons for using a temporary contract.
  • Each renewal of a fixed-term contract means a 0.5% increase in social contributions.
  • The same rules on duration, motivation and excess contributions established for fixed-term contracts apply to the use of temporary agency workers (while temporary work agencies are exempt).
  • The collective number of fixed-term and temporary agency workers cannot exceed 30% of the number of permanent employees, unless otherwise stated in a collective agreement.
  • Contrary to the provisions on fixed-term and temporary agency work employment, the use of vouchers for casual work has been extended.

Reactions from social partners were mixed. Employer organisations criticised the new measures mainly because the stricter provisions on temporary employment are believed to have a negative impact on the labour market and contribute to a reduction in employment. Trade unions welcomed some of the new provisions, especially those limiting the use of temporary employment, but criticised the extension of the use of vouchers. The Italian General Confederation of Labour (CGIL), which sponsored a referendum to repeal the previous voucher legislation, found the decree contradictory and insufficient. Both employer organisations and trade unions urged the government to focus on fostering investment and innovation to sustain growth and create employment.

New compensation rules for unlawful dismissal

The dignity decree also included a provision to increase the minimum compensation in the case of unlawful individual dismissal, building on a fixed mechanism for calculating compensation that was introduced in the Jobs Act of 2015. The original calculation was based on two monthly salaries for each year of employment, with a minimum of 4 and a maximum of 24 monthly payments. The dignity decree raised the minimum to 6 and the maximum to 36 monthly payments, leaving the automatic mechanism unchanged.

However, the Constitutional Court of Italy declared this provision unconstitutional on 26 September. The court claimed that the provision linked severance pay to length of employment and therefore violated the principles of reasonability and equality, and thwarted the rights and protections of workers, as established by the Italian Constitution.

Since the ruling, compensation for unlawful dismissal will be determined by the Court. A number of observers feel that this decision fundamentally weakens the framework introduced by the Jobs Act, which was also intended to eliminate uncertainty in relation to firing costs.

Takeover of ILVA steel plants finalised

On 6 September, the negotiations over the acquisition of the ILVA steel manufacturing plants ended with a collective agreement signed at the Ministry of Economic Development. The ILVA plants employ some 14,000 people across 15 sites, and produced 5.8 million tonnes of steel in 2016.

ILVA has been at the centre of a long-running case involving severe pollution and breaches of environmental legislation at its Taranto plant, which is the largest steel plant in Europe. The company has been under external administration since 2013 and a call for bids was issued for its acquisition in January 2016. In June 2017, the bid presented by Am Investco Italy, a joint venture between the ArcelorMIttal Group (85%) and the Italian Marcegaglia Group (15%), was selected.

Since then, negotiations with trade unions over the company’s reorganisation plan have been underway. The agreement envisages that Am Investco Italy will recruit 10,700 workers on permanent contracts, while providing economic incentives for voluntary resignation. The company has committed to investing €1.25 billion in the production facilities and €1.15 billion in environmental measures.

Minister of Economic Development Luigi Di Maio presented the deal as ‘the best result in the worst situation’ and underlined the results in terms of employment levels and environmental measures.[1] The trade unions expressed their satisfaction with the deal, which preserves employment and responds to the environmental concerns of the local population. The deal was approved by 93% of workers in a referendum held at all the ILVA plants between 10 and 13 September.

Commentary

Alongside the preparation of the Stability Law (the Budget Law) for 2019, the Minister of Labour and Social Policies initiated a dialogue with trade unions on social shock absorbers. Since many social policy issues are currently on the government’s agenda, this may lead to some form of social dialogue.

Additionally, the process that will lead to CGIL’s 18th Congress has entered its final phase. The Congress will be held in Bari on 22–25 January 2019 and will see Susanna Camusso step down from the leadership of the confederation.

 

[1] ANSAen Politics, Deal reached for ILVA , 6 September.

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