Government investment into state pension

The State Balance Sheet Bill 2017 provides a state-funded investment of EUR 7 billion over three years for the pension system, introducing and raising the 14th monthly instalment and providing an opportunity to retire earlier.

Government proposals to reduce taxation, increase productivity and encourage public sector employment

There are measures in the pipeline to reduce tax and social security contributions, introduce productivity bonuses, and invest EUR 1.9 billion for public sector employment.

Consideration of extension of employer-friendly reduction on social security costs

It is currently under discussion whether to extend the social security contribution bonus for new hires made in 2017.


Changes to social security contributions

As of January 2016, employers are entitled to a reduction of 40% of the social security contributions for new employees if the following conditions are met:

  • The new employee is hired on an open-ended employment contract;
  • The new employee is hired between January 2016 and December 2016;
  • The new employee was not hired elsewhere on a permanent contract in the six months prior to the new hiring.

Although the amount of the exemption was reduced compared to 2015, it still represents an incentive for employers who can save up to €3,250 per year per employee.

Further the conventional salary for Italian employees working abroad is now to be taken into consideration for the payment of social security contributions.

Key employment documents to be filed electronically

As of 12 March 2016, resignations, mutual terminations and their revocations shall be filed through data transmission by the employees on the government website.

This new procedure is intended to avoid bogus resignations, be undertaken by the employees at the beginning of the employment and utilized by the employers at their own discretion.

Various legislative changes

  • New specific criteria to be applied in calculating the bonus granted to employees based on company results, for which a reduced rate of taxation (10% for amounts not exceeding EUR 2,000) will apply. Similar criteria and reduced tax rates will apply in relation to employees’ participation in company profits.
  • New rules came into force which provide for more favourable part-time employment contracts for employees close to retirement.
  • An agreement was signed by the major unions in Italy resulting in the so-called “social clause” in service contracts signed in the call centre industry with the result that employees will continue working for the same client for a six month period where there is a change in the contracting party.
  • New obligations on companies to provide certain documents in relation to international secondments in Italy, with a view to identifying bogus international secondments.
  • In September, the government made several changes to the Jobs Act, amending provisions related to the use of vouchers, mandatory hiring of disabled employees and solidarity contracts.

With thanks to Sharon Reilly of Uniolex – Stucchi & Partners – Avvocati for her invaluable collaboration on this update.