Italian Legislative Decree 136/2016 aims to overcome difficulties in preventing and fighting social dumping practices, and inappropriate use of the institution of transnational posting.
A common expression in Italy, the term social dumping describes an employer practice whereby cheaper labour is used than what is usually available at their site of production and/or selling. This generally sees production moved to a low-wage country or area, and/or foreign workers employed with the aim of saving the employer money and potentially increasing his/her profit.
In effect since mid-2016, the Decree introduced a series of administrative tasks which include the obligation, as of 26 December 2016, to provide prior notice of a transnational employee posting under the responsibility of the foreign service provider, for staff working in Italy.
The notice must be provided by 00:00 of the day prior to the start of the posting itself, in compliance with the methods indicated in the Ministerial Decree of 10 August 2016.
*Postings beginning after 22 July 2016 but which ended before 26 January 2017 were exempt from the communication requirement, as have those which began prior to 22 July 2016.
Italy’s transnational employee posting regulations affect companies established in other EU member states which, in the context of the provision of services, post one or more employees to Italy in favour of another company, another business unit or recipient, on the condition that, during the posting period, an employment relationship continues to exist between the posted worker and the posting company.
A posted worker is "a worker who normally works in another EU member state who, for a limited period that is pre-determined or can be pre-determined with reference to a future event that is certain, carries out their work in Italy." There are three possible cases:
- done by a company with registered offices in another EU member state at one of its branches in Italy
- done by a company with registered offices in another EU member state at an Italian company belonging to the same business group (intragroup posting)
in the context of a commercial contract (tender), stipulated with a client with its registered offices or operating headquarters located in Italy.
The decree also applies to temporary employment agencies established in another EU member state, which post workers to user companies with offices or business units in Italy. Authorisation for temporary work in Italy is not required for agencies which hold an equivalent administrative document as foreseen in the legislation of their home country.
Finally, cases of postings carried out by companies established in non-EU countries also fall under the field of application, provided that these cases are not governed by special laws.
Verification of the posting
To ascertain whether the posting company is carrying out activities other than mere personnel management, the supervisory bodies will verify a series of elements such as the locations in which the company has offices, departments or business units, where its administrative staff is employed, where it is registered with the Chamber of Commerce; regulations applicable to contracts signed by the posting company with clients and workers; the number of contracts executed or the amount of annual turnover.
Elements useful for ascertaining whether the worker is effectively posted include, for example: the content, nature and method by which the work activity and payment is carried out; habitual exercising of the activities in the country where the worker is posted; the temporary nature of the work performed; starting date of the posting; planned return to work in the country from which the worker is posted; the taking on of travel, room and board expenses by the posting company and reimbursement methods; any previous periods in which the same activity was carried out by the same or another posted worker; the existence of a certificate relative to applicable social security legislation (Form A1).
What counts is that for the entire posting period, the posted worker provides work, which must necessarily be of a limited duration and carried out in the interest and on behalf of the posting company, which is responsible for all employer obligations, such as liability relative to hiring, associated payments and social security requirements, disciplinary and dismissal processes.
Form A1 is concerned with the social security legislation applied to the posted worker, stating the obligation of the posting company to pay contributions in the member state in which it is established and not in the hosting country. From a social security point of view, the principle of "personality" applies to posted workers which means the contribution regulations of the country of origin apply. Instead the working conditions of posted workers are those foreseen under the norms and collective contracts for regularly employed workers providing similar services in the location in which the posting occurs (principle of "territoriality"). In case of temporary work, employees have the right to economic and regulatory conditions that are, as a whole, no lower than those of employees of the user at the same level.
Cases of false transnational employee postings occur when the posting company and/or receiving company establish "fictitious" postings to elude national regulations relative to working conditions and social security.
False postings may include or coincide with cases of illicit interposition, pursuant to Italian Legislative Decree 276/2003.
Protections for workers and fine structure
If the posting is inauthentic, inspection personnel will consider the worker to be an employee of the receiving company in Italy, with all applicable local institutions and protections in terms of work and social legislation.
An administrative fine applies for non-communication of the start of the relationship, as well as a monetary administrative fine of €50 for each worker employed for every day of employment (Euro min. 5,000 – max. 50,000) per posting and receiving company.
If use of child labour occurs, imprisonment for up to 18 months is foreseen with the originally established fine increased by up to six times.
False posting cannot be classified as ‘under the table’ work and associated fines are excluded.
However, ‘under the table’ use of posted workers may occur in the case in which the use of said workers continues after communication of early termination of the posting is made.
In case of transnational services carried out through sub-contracts, the employer is jointly liable with the contractor and each sub-contractor for wage claims (including severance indemnities - TFR), contributions and insurance premiums which accrue during the period the tender contract is executed.
Joint liability may be activated by the worker no later than two years from the end of the tender contract.
A substantially analogous joint liability structure is also envisaged in case of temporary work, in the case of the transportation of merchandise pursuant to article 83-bis, paragraphs 4-bis to 4-sexies, Italian Decree Law 112/2008. With particular reference to regulations regarding the transport of goods for third parties, the norms foresee that in the case of a sub-carrier, the client or carrier is required to verify, prior to stipulating the contract, that the business they intend to use to execute the service is in compliance relative to salaries, social security and insurance premiums, acquiring at the time the contract is signed a certification issued by the social security entities in the country of origin, dated no more than three months prior, which indicates that the company has paid all due insurance and social security contributions.
A client or carrier who does not carry out this verification is jointly liable with the carrier, as well as any sub-carriers, within a limit of one year after the termination of the transport contract.
Administrative requirements applying to the service provider
The service provider must send the communication relative to the posting and save the following documentation, in hard or digital copy, in Italy for the entire posting period and until two years after its termination:
- pay reports
- reports indicating the start and duration of the daily work day
- documents demonstrating payment of wages
- A1 form
- public registration of the establishment of an employment relationship.
It also must designate a reference person with domicile in Italy, responsible for sending and receiving documents in the name and behalf of the posting company for the entire posting period and up to two years after its termination (if this person is not designated the registered offices of the posting company will be considered as the place where the recipient of the provided services resides and the relevant penalty applies).
It must also designate a person, who may be the reference person, who serves has the legal representative and does not need to be present in the location where the posted work occurs but must be available in case of a reasoned request.
Violation of the requirements is punished as follows:
|Communication of the posting -||€150 - 500 for each worker|
|Maintaining a copy in Italian of the prescribed documents for the period indicated -||€500 - 3,000 also applicable in case the documents exist but not in Italian|
|Designating a reference person -||€2,000 - 6,000|
|Designating a representative -||€2,000 - 6,000|