The Italian labour market law reform known as the “Jobs Act” is now completed.

The reform has been implemented by several Legislative Decrees coming into force during the period 2015- 2016, based on the guidelines provided by Law no. 183 of December 10, 2014, and is mainly aimed at: (i) improving the flexibility in the management of work relationships, including hiring and dismissal of employees; (ii) introducing economic benefits for a period of three years in connection with new hirings in 2015 and 2016; (iii) reducing bureaucracy and increasing government support in the event of unemployment.

Below is a brief overview of the main features of the Jobs Act, which has significantly reshaped the Italian labour law and results in increased flexibility for employers.

Flexibility in hiring employees

A so called “Code of Contracts” has been introduced, with the aim of reorganizing and rationalizing several types of atypical contracts:

  • The rules on fixed-term contracts and contracts for the supply of temporary personnel have been streamlined.

Fixed term contracts and contracts for the supply of temporary personnel can now be entered into without the need to justify the limited duration, provided that they last a maximum 36 months and fixed-term employees or open-ended supplied personnel account for no more than 20% of the total headcount, unless collective agreements provide for different rules.

Fixed-term contracts entered into to replace (i) absentee employees, (ii) to meet seasonal needs, (iii) with employees over 55, or (iv) for start-up reasons (and certain other specific areas) do not fall within the calculation of the above 20%;

  • Apprenticeships have been made more attractive through specific incentives for employers;
  • Commencing June 25, 2015 any project based freelance relationship (the so called “co.co.pro”, “contratto di collaborazione a progetto”) has been stopped, however, existing contracts can continue until their expiration. Further, from January 1, 2016 personal freelance relationships which are continuous and organized by the employer will be treated as full time subordinated employment relationships;
  • Part-time contracts have been simplified with the aim of improving the opportunities of work for those who need to combine their personal life with their working life.

Flexibility in managing the work relationship

  • It is now possible for employers to unilaterally change an employee’s duties, without changing his/her salary (except where accessory payments associated with the carrying out of the previous function, that, if moved, are lost):
  1. in any case where the new role is at the same contractual level (as defined by the National Collective Bargain Agreement, “CBA”) and category (i.e. executive, quadro, clerk, worker). As a result, employees are no longer entitled to be assigned to an “equivalent job” (i.e. a job where they continue to use the professional skills and competencies they possess at the time of the change);
  2. in cases of restructurings or reorganizations, even the assignment of a job corresponding to one at a lower level of classification (as defined by the CBA), so long as it is within the same category, is permissible.

Further, for the purposes of: i) safeguarding employment; ii) allowing the employee to acquire new professional skills; or iii) improving the employee’s life conditions, an employer and an employee can agree, at specific venues, on the assignment of lower duties entailing a lower category and contractual level, as well as a reduction in salary.

  • It is still:
  1. not permissible to use technology and equipment aimed solely at the control of employees; and
  2. permissible to use technology and equipment which potentially enable the monitoring of employees if it is necessary for organizational, production-related or security needs (this possibility has been introduced by the Jobs Act), provided that the use of technology and equipment is agreed upon with the works council or, where no such agreement exists, is authorized by the Labour Inspectorate.

However, rules on remote controls on the employees’ working activities have been adapted to new technologies used to carry out employment duties as follows:

  1. no agreement or authorization is required for devices which are used by the employer to register the employees’ access and attendance at work, nor for those devices used by employees to carry out their duties (e.g. laptops, tablets, mobile or smartphones), even where the employer is able to remotely control employees;
  2. data and information lawfully collected in compliance with the data protection legislation (i.e. through devices under (a) above, or through other devices agreed with the works council/ authorized by the Inspectorate) can be used for all purposes related to the employment relationship, including disciplinary purposes, provided that employees have been adequately informed on how the controls are implemented in advance.

Flexibility in case of dismissals with a “binary system”

  • The Jobs Act has changed the consequences in the case of unlawful dismissals for employees: (i) hired as of March 7, 2015; (ii) whose fixed-term contract was converted into an open-ended contract after such date; (iii) within companies whose workforce (as a consequence of new hires) crosses the threshold of 15 individuals in the same business unit or municipality (or exceeds 60 individuals in aggregate) after such date.

Dismissal of employees who do not fall within such criteria, including executives, are subject to the previous regulations;

  • According to the Jobs Act:
  1. in the case of unlawful dismissal for economic reasons (including collective dismissals) or justified subjective reasons the sanction is a seniority-based compensation of 2 months’ salary for each year of service, with a minimum of 4 and a maximum of 24 months’ compensation. No reinstatement is provided for, save for the case of a disciplinary dismissal where the grounds for the dismissal are proven to be non existent, in which case, the employer must reinstate the employee and pay compensation equal to the salary due from the date of dismissal up to the date of reinstatement (with a maximum cap of 12 months);
  2. an employee’s right to reinstatement (including the payment of compensation equal to the salary due from the date of dismissal until the date of reinstatement, subject to a minimum of 5 months), only applies in cases of null and void dismissals, e.g. discriminatory dismissals, verbal dismissals, dismissals based on retaliation, dismissals during maternity leave;
  3. dismissals affected by formal irregularities are sanctioned with a lower compensation of 1 month’s salary for each year of service, with a minimum of 2 and a maximum of 12 months;
  4. unlawful dismissals by companies with up to 15 employees are sanctioned with half of any of the above seniority-based compensation; 
  5. a faster settlement procedure has been introduced which allows employers, within 60 days of the dismissal, to offer a dismissed employee, at specific venues, a payment of seniority-based compensation which is exempted from tax and social security contributions, to be paid by cash check, as consideration for any waiver related to the dismissal. Such lump-sum amounts to 1 month’s salary for each year of service, with a minimum of 2 and a maximum of 18 months’ payment (in the case of employers with up to 15 employees the sum is half the amount). Any additional sums paid to obtain the employee’s waiver of other rights related to the employment relationship are subject to normal tax and social security treatment.

Mutual terminations and resignations

It is mandatory that, to be effective, mutual terminations and resignations (including those by executives) must be made through an online process.

Simplification of Social programs in the course of the employment

The reform has simplified, and grouped within a single decree, the rules of social programs which can be used in the course of employment when, due to business difficulties, employers must suspend employment or reduce working hours:

  • Cassa Integrazione Guadagni Ordinaria (“CIGO”) and Cassa Integrazione Guadagni Straordinaria (“CIGS”) can be requested in the case of the suspension/reduction of working activity due to temporary circumstances (CIGO) or to particularly complex and long-lasting circumstances having a significant social impact (CIGS), and provide for the relevant employees to receive a monthly allowance from the National Social Security Institute (“INPS”) in lieu of (part of) the salary;
  • Solidarity Contracts entail the reduction of working hours and salary, with the parallel payment of certain allowances from INPS to partially fill the salary gap.

New bills are yet to come beyond the Jobs Act:

  • new rules on self-employment relationships and agile working are expected to be issued in the next few months;
  • on 5 June 2016, a new law recognising the so-called Same-Sex Civil Union (i.e. those relationships comprising two people of the same sex who establish a civil partnership by way of a declaration in front of a Registry Office official) has entered into force. According to such law, legal and regulatory provisions, CBAs applicable to employees in the case of marriage will apply to the partners of a Civil Union also.