Yesterday, May 13th, 2014, the Italian House is voted on, and passed, a new Italian Labour Decree, officially referred to as the Decreto Lavoro 34/2014, which will reform some of the regulations currently governing the Italian labour market.
It must be noted that this decree will only become law once it has been published in the Gazzetta Ufficiale – which is the official journal of the Italian governments records. This is expected to occur in the coming day – and most certainly before May 19th.
This new Decreto Lavoro comes on the heels of Matteo Renzi’s “Jobs Act” (Decree Law No. 34) which was just passed on March 20th, 2014. In fact, the Italian Labour Decree actually modifies some of the reforms to the labour market introduced by this ‘Jobs Act’ just under 2 months ago.
How will this new Italian Labour Decree impact business in Italy and the management of the workforce?
There are several areas of Italian labour regulation that the Decreto Lavoro impacts. However the points below we feel are the most pressing that businesses with operatons in Italy, and their Human Resource teams should be aware of.
FIXED TERM EMPLOYMENT CONTRACTS IN ITALY
- The 20% Rule: Any company in Italy will only be able to have 20% of their workforce on fixed terms contracts.
- Exempt from this regulation will be:
- Employers with under 5 staff members;
- Public and private companies operating in the scientific
research field
For businesses that do not currently comply with this new regulation there will be a grace period ending on December 31st, 2014
As of January 1st, 2015 if a company is over the 20% limit then:
- The company will be unable to hire new employees on fixed term contracts. (They will be able to once they are within the legal limits)
- There will be financial sanctions equivalent 20% of the salary for the 1st fixed time worker breaching the threshold, increasing to 50% of the salary for each additional breach. The sanction will be paid for each month of the length of the contract.
(It is important to note here that in the past companies caught with excess fixed term workers would be forced to hire some of them on permanent contracts – the previous Jobs Act labour reform reinforced this. With the new Labour Decree this practice will be abolished in lieu of the financial penalties mentioned above).
The 20% limit number will be calculated from January 1st of the year the Fixed Term contract employees were taken on.
The Renewal of Fixed Term Contracts:
- 8 x becomes 5 x : Fixed Term Contracts can only be extended 5 times within any given 36 month period including any renewals or extensions of contracts.(The Jobs Act of March 20th had originally stipulated that it was possible to extended a fixed term contract 8 times within a 36 month period)
- No Explanation Required: Italian Employers will no longer be required to provide a technical, organizational and productive reasons for hiring staff with fixed term contracts or for renewing or extending them.
- Exemptions: With the new Labour Decree public and private companies operating in the scientific research field will be able to renew Fixed Term Employment Contracts on an indefinite basis – even beyond the 36 month period limit set for all other companies.
- A New Model for Fixed Term Contracts: Currently in Italy there are different types / models of fixed term employment contracts depending on the technical, organization and productive reasons specified in the individual contract. Within the new Labour Decree the Italian government has made provision to look into ways to create a more simplified and unified model for fixed term contracts given that non explanation is no longer be required.
- Maternity Leave: Women on fixed term contracts will be entitled to the same maternity leave rights as permanent female employees. In addition, women on fixed term contracts – who have taken maternity leave in the midst of their contract – will have their maternity leave counted as ‘working months’. This is a very important maneuver as companies looking to hire full time staff must first look at former employees who have worked with them in the previous 12 months. This new regulation will create positive opportunities for new mothers.
APPRENTICESHIP CONTRACTS IN ITALY
- The 20% Rule: Companies in Italy with more than 50 employees cannot have more than 20% of their workforce employed on apprenticeship contracts. (The Jobs Act of March 20th applied the 20% ruled to all companies with more than 30 employees.)
- Written Training Schedules: A written training schedule is a requirement for all Apprenticeship contracts in Italy. However, the information provided does not need to be as detailed as were once required – allowing for general descriptions of training ‘modules’. (Note: The Jobs Act of March 20th had previously revoked this requirement)
- Seasonal Apprenticeships: In regions where there is a high demand for seasonal workers – it will be possible, once the Labour Decree has officially been implemented, for companies in Italy to offer Seasonal Apprenticeships on Fixed Term Employment Contracts with the view to providing more opportunities for those that are balancing education with work experience.
- Regional Training Programs: Within 45 days of the official implementation of the Labour Decree each Region in Italy must share with all employers information on training programs available for apprentices – including information on where and what dates the programs will be held. In addition, each Region must also reach out to appropriate companies and associations to see if there is a way for them to become involved in any of their training initiatives.
The Italian Government is committed to reforming the labour laws in Italy in order to stimulate the growth of the economy on the penninsula.
In fact, within this new Labour Decree there is a requirement for the government to perform a 12 month review of the impact of these new regulations on employment. This will not just be a reflection of unemployment numbers, but more importantly an in-depth demographic study to understand which groups (age, sex, professional qualifications etc) and types of businesses will be most impacted.
These are the first of many more reforms to come. The next earthquake for the Italian labour market is expected to be a new law aimed at simplifying all forms of Italian employment contracts.
Coming soon…
Written by
Sergio Barozzi
LEXELLENT
May 14th, 2014
