Following the recent release of the first two Jobs Act decrees, which will bring major reform to the framework of Italian Employment Law, on December 30, 2014, the new collective bargaining agreement (the “New CBA”) for executives working for companies in the manufacturing sector (“Manufacturing Executives”) was signed. The New CBA is effective until December 31, 2018.
Following are highlights of the major changes introduced by the New CBA.
New minimum annual remuneration
The New CBA sets the minimum annual remuneration for Manufacturing Executives hired or promoted on or after January 1, 2015, at €66,000. As compared to the former CBA, this is €3,000 more for executives with less than six years seniority and €14,000 less than for executives with more than six years seniority.
Mandatory variable remuneration plans
Under the terms of the New CBA, for each Manufacturing Executive whose annual salary is equal to the minimum indicated in Point 1, the employer/company must adopt a variable remuneration plan. Moreover, before making any changes in said plan, the company must inform the employee’s union representatives.
Protection from unjustified dismissal for executives up to the age of 67
The New CBA protects Manufacturing Executives from unjustified dismissals up to the time they reach 67 years of age. It provides that these executives cannot be fired unless the employer/company has a legitimate reason or reasons for the dismissal and these reasons are stated in the dismissal letter. If the reasons are not stated in the dismissal letter or if they are stated but are not legitimate, then the executive has the right to monetary compensation. The former CBA provided similar protection to executives up to the age of 65 for males and 60 for females.
Reduced compensation for unjustified dismissals
The main change introduced by the New CBA regards compensation for unjustified dismissals, which is less than under the former CBA. The New CBA provides that in the event that a Court or an Arbitration Council ascertains that the dismissal of a Manufacturing Executive is not justified by legitimate reasons, the amount of the compensation to that employee is established according to his or her seniority, as indicated in the table below:
Click here to view table.
Another important change introduced by the New CBA regards the notice period prior to dismissal. The former CBA established a notice period equal to 8 months for a Manufacturing Executive having up to 2 years seniority; under the old regime, this period increased by one-half a month for every additional year of seniority of the employee, up to a maximum of 12 months. Instead, the New CBA establishes the following notice period requirements:Notice period prior to dismissal
- 6 months for up to 6 years of seniority
- 8 months for up to 10 years of seniority
- 10 months for up to 15 years of seniority
- 12 months for more than 15 years of seniority.
New unemployment benefit starting in 2016
In 2016 new rules will come into force regarding unemployment indemnity, a special benefit available exclusively to any Manufacturing Executive who is dismissed from his or her job before reaching retirement age. This benefit is payable to the Manufacturing Executive for 12 months following the date of dismissal and is in addition to whatever other unemployment benefit the Manufacturing Executive may receive under Italian law. The benefit is funded in part by mandatory annual contributions of employers/companies operating in the manufacturing sector and in part by employees in this sector. Under the new rules, the amount of the mandatory annual contribution of the employers/companies has increased.
In addition to the New CBA, EU Directive n.59 of July 20th 1998 was recently adopted into the Italian legislative framework. As a consequence, Manufacturing Executives (as well as executives in other industrial sectors) now enjoy special protections provided by Italian law for unlawful “collective dismissals” (the dismissal by a company having at least 15 employees of five or more employees in a 120 day period).