Major changes to employment laws, including dismissal

Parliamentary decree no. 183/2014 (the so-called “Jobs Act”) came into force on the 16th December, 2014 and, as enabling legislation, looks set to introduce a number of changes to employment laws in due course.

The Act aims to restrict awards from a redundancy fund in the event of business closure. In future, applicable cases will be subject to simplified bureaucratic procedures and redundancy fund payments will only be granted if there is no alternative to closure, such as by a reduction in working hours.

The Jobs Act also aims to end obsolete employment contracts and to simplify procedures for setting up and managing employment relationships. In addition, in case of company reorganisation and restructuring, the Act proposes to allow employers to make unilateral modifications to employee duties. This is despite Article no. 2103 of Civil Code which otherwise prohibits employers from unilaterally effecting contractual changes which are to an employee’s detriment.

The above mentioned decree also provides new unemployment benefits and new provisions regarding unlawful dismissal.

Separately, pursuant to decree 184/2014, the Council of Ministers has adopted two legislative decrees which are pending approval by parliamentary committees – their non-binding opinions being due within a month.

The first of these two legislative decrees will, if approved, change employee protection against redundancy dismissal in circumstance where the company is alleging economic grounds. The right of reinstatement in such circumstances is to be removed and new provision will be introduced for the calculation of compensation where this is due. Compensation will be calculated according to length of service and based upon 2 months’ salary per year of service (subject to a minimum of 4 months’ salary and a maximum of 24 months’ salary). This decree modifies also the provision regarding misconduct dismissals. Reinstatement will only be granted in such circumstances if the employee is found not to have been guilty of the misconduct, as alleged. In all other cases, reinstatement will not be available but the employee may claim compensation calculated according to length of service.

These new provisions, once implemented, will apply to employees working within organisations employing 15 or more where this level of employment will be achieved as consequence of new recruitment. For smaller organisations the provisions will apply only to new, permanent recruits.

The second legislative decree under decree 184/2014 concerns changes to unemployment benefits. A new unemployment benefit is to be created (the so-called “Naspi”), replacing previous provision. The “Naspi” will be available to all unemployed workers, with the exception of public workers. This second decree will also establish an unemployment benefit for project-based workers who do not otherwise qualify as employees.