In the operative part of judgment 194/2018 issued on 8 November 2018, the Constitutional Court has ruled that art. 3, paragraph 1, of Legislative Decree 23/2015 (governing open-ended employment contracts with increasing protections) is constitutionally unlawful when it links the amount of severance indemnity (for that part not modified by the Dignity Decree) payable to an employee who is dismissed without cause only to that employee’s length of service. According to the Constitutional Court, this method of quantification “implies” that severance indemnity is rigid, having the characteristics of a “standardised, flat rate legal severance payment”. In particular, for the Constitutional Court, the provision in question is contrary to the principles of equality and reasonableness and in conflict with employment laws and protections. The Constitutional Court takes the view that the court must be able to determine the indemnity payable to an employee – within the limits of its own discretionary powers and in accordance with the minimum limit of 6 monthly salaries (previously 4) and the maximum limit of 36 monthly salaries (previously 24) – taking into account not only the employee’s length of service but also on the basis of other criteria which can be “systematically inferred from developments in the restrictive provisions governing dismissals (number of people employed, size of the company’s economic activity, behaviour and situation of the parties)”.
The draft 2019 Budget law was checked and approved by the State General Accounting Office on 31 October 2018 and – following the Chamber of Deputies’ publication of a package of amendments on 12 November 2018 – is now awaiting final approval by the Parliament.
The analysis of the checked and approved draft – the only one available to date – highlights that there will be a number of developments in the field of labour and pensions. In particular:
A more detailed assessment of the most significant developments is provided below.
Developments in the field of labour and pensions
Extension of the “Southern Italy Employment” incentive
According to the draft available, national/regional operational programmes and supplementary operational programmes can include measures – up to a maximum of 500 million euro in 2019 and 2020 in the context of the specific objectives established in each programme and in accordance with European laws on state aid – to encourage businesses in Southern Italy to hire, with open-ended contracts, people under the age of 35 or people of or above the age of 35 who have been unemployed for at least 6 months.
This exemption can be combined with other exemptions or reductions in the financing rates provided for in laws in force, limited to their period of application.
Creation of “Funds for the introduction of a minimum income for citizens and for the reform of the pension system”
In terms of the matters of interest to us, the budget bill provides for the creation of a Fund at the Ministry for Employment and Welfare, called “Fund for the reform of the pension system, to include additional forms of early retirement and measures to encourage businesses to hire young people” (see “Quota 100”), which includes funding amounting to 6,700 million euro for 2019 and 7,000 million euro starting from 2020. This provision will be implemented by means of ad hoc legislative measures.
“Apprenticeship incentives”
According to the tone of the Budget law, the “incentives for apprenticeship contacts to obtain a further education technical qualification, diploma or certificate” – as set out in the so-called “Jobs act active policies” (see Legislative Decree 150/2015) – will be reduced from 15.8 million in 2019 and 22 million in 2020, to 5 million in each of the two years.
It should however be highlighted that the “youth policies fund” will be “increased by 30 million starting from 2019”.
“Bonus for hiring young graduates and post-graduates”
Art. 50 of the Budget law, “Bonus for hiring young graduates and post-graduates”, deserves particular attention.
More specifically, the article in question provides for an incentive, which is in the form of an exoneration from the payment of social security contributions (not INAIL) for a maximum period of 12 months and up to the limit of 8,000 euro for each open-ended employment contract (full or part-time) entered into in 2019 (or transformed from fixed-term into open-term).
The incentive applies to the hiring of:
– graduates who achieve a first-class honours degree between 1 January 2018 and 30 June 2019, within the legal duration of the course, and
– post-graduates who complete their PhD studies before their 34th birthday, within the same reference period.
According to the wording of this specific provision, the incentive does not apply:
– to private-sector employers who have dismissed employees for justified objective reasons in the 12-month period preceding the dates of the new hires, and
– where such employers dismiss an employee for justified objective reasons within 24 months from the date of hiring of the new employee, and the dismissed employee worked in the same business unit, with the same job position as the person hired with the benefit of the incentive in question. In such case, the employer would lose the benefit and be required to repay the amount of the exemption used.
Conclusions
The measures commented above will obviously have different impacts depending on how they are effectively enacted and finalised and whether or not future amendments are made. In fact, the next weeks will be decisive in understanding what their actual effects will be.
In its circular No. 17 of 31 October 2018, the Ministry of Labour has provided the first operational instructions on the application of Decree Law No. 87 of 12 July 2018, now converted into Law No. 96 of 9 August 2018 (“Dignity Decree”)
a) New rules for fixed-term contracts
First of all, the circular has taken a position on the changes made by the Dignity Decree to the rules governing fixed-term contracts pursuant to Legislative Decree 81/2015, with the maximum duration now reduced significantly from 36 months to 24 months.
On this point, the circular clarifies that the parties concerned have the option to freely enter into fixed-term contracts for a maximum duration of 12 months and, after such term, must indicate the specific reasons for the continuation of the contract, specifically:
As clarified in the circular, the calculation of the 12-month period must take into account the overall duration of all of the fixed-term contracts entered into by the employer and the employee, including those already ended and those to be extended prior to expiry. In this regard, the circular provides the following example: “Consider the case of a 10-month contract that is to be extended for a further period of 6 months. In such case, even if the extension period is added before the relationship exceeds the duration of 12 months, it will still be necessary to specify the reasons indicated above, since the overall length of the relationship will exceed such duration, as provided in article 19, paragraph 4, of Legislative Decree 81/2015”.
In any event, as provided in art. 19, paragraph 3, of Legislative Decree 81/2015, the parties will still have the option, once the 12-month limit has been reached, to enter into a new 12-month contract before the competent local Labour Inspectorate. The circular also clarifies, on this point, that the measures provided for in circular No. 13/2008 continue to apply, specifically:
– “verification of the formal completeness and accuracy of the contract’s contents” and
– “authenticity of the worker’s consent to enter into the contract, without this having any certification effect on the actual existence of the preconditions to be met under laws in force”.
According to the circular, the extension implies that the reasons for the fixed-term contract being entered into have not changed, excluding the case where the date needs to be extended within the expiry of the contract. The circular therefore clarifies that:
(i) a fixed-term contract cannot be extended if the reasons have changed, since this would result in a new fixed-term contract, which would be subject to the renewal rules, and
(ii) an extension cannot be considered as such when the new fixed-term contract starts after the expiry of the preceding contract.
A novel aspect compared to the Jobs act is the reduction in the number of possible extensions, from 5 to 4, within the limit of the maximum duration of the contract and regardless of the number of existing contracts, excluding, however, seasonal work contracts.
In any event, the Dignity Decree has not amended the section of art. 19, paragraph 2, of Legislative Decree 81/2015 under which there is the option to derogate from the maximum duration of the fixed-term contract by collective bargaining. Therefore, collective bargaining agreements can continue to have a different duration, even in excess of the new limit of the 24 months. The circular does however clarify that if the provisions of a collective agreement signed before 14 July 2018 provide for a duration of fixed-term contracts of or longer than 36 months, such contact will continue to be effective up to the expiry of the associated collective agreement.
The circular also addresses the matter of the required structure of the contracts. In detail, the reference to art. 19, paragraph 4, of Legislative Decree 81/2015 has been eliminated (requirement for the term of the contract to be specified directly or indirectly in a written document), therefore providing greater clarity in terms of the existence of the foregoing requirement.
No changes to the provision that, in certain cases, the term of the contract can continue to be indirectly linked to the specific reason for which the person was hired, for example, as maternity leave cover when the date of the employee’s return to work is not known in advance, but always within the limit of the maximum duration (24 months).
The circular also deals with the issue of identifying the additional contributions payable by an employer that uses fixed-term contracts. In fact, pursuant to art. 3, paragraph 2, of the Dignity Decree – as amended by the ratifying law – as of 14 July 2018, the additional contribution payable by an employer is 1.4% of the salary subject to social security in contracts that are not open-ended, increased by 0.5% on each renewal of a fixed-term contract, including staff-leasing contracts.
Therefore, the ordinary additional contribution of 1.4% is to be increased by 0.5% at the first renewal and then by a further 0.5% at each successive renewal. This increase does not apply to contract extensions
b) New rules for staff leasing fixed-term contracts
The circular also clarifies a number of aspects linked to staff leasing fixed-term contracts, in light of the amendments introduced in the Dignity Decree.
Under Art. 2 of the Dignity Decree, the rules applicable to fixed-term contracts have been extended to staff leasing fixed-term contracts, which were previously governed under articles 30 ff. of Legislative Decree 81/2015, exception made solely for the provisions of art. 21, paragraph 2 (breaks between two contracts, or stop and go), art. 23 (maximum number of fixed-term contracts allowed for each employer) and art. 24 (right of precedence).
The circular does however clarify that no limit is set for workers sent on fixed-term assignments by staff leasing companies. In detail, pursuant to art. 31 of Legislative Decree 81/2015, workers can be assigned to client companies on both an open-ended and fixed-term basis without the requirement to indicate a reason or specify the duration limit of the assignment, provided, of course, that the percentage limits set out in the provision above are observed.
The option remains for extension and renewal rules to be established by collective bargaining, as provided in art. 34, paragraph 2, of Legislative Decree 81/2015.
The circular also clarifies that, as a result of the reform, art. 19, paragraph 2, of Legislative Decree 81/2015 applies also to staff leasing fixed-term contracts. Consequently, once the time limit of 24 months has been reached, the employer cannot make use of a staff leasing fixed-term contract for the same worker, to carry out duties of the same level and of the same legal category.
In this case also, the circular clarifies that the calculation of the 24-month period must take into account all the staff leasing fixed-term contracts that have been entered into by the parties, including those preceding the date the reform came into force.
Furthermore, the circular highlights that if the duration of the staff leasing arrangement with a single client company exceeds 12 months or the assignment is renewed, the contract between the staff leasing company and the worker must specify a reason, which must be based on the needs of the client company and not those of the staff leasing company.
The circular also specifies that the obligation to indicate the reasons for using staff leasing fixed-term contracts arises when the same client company had previously entered into a fixed-term contract with the same worker, to carry out duties of the same level and category.
In this case also, clarifications are provided on the maximum number of workers under staff leasing contracts. Indeed, the law ratifying the Dignity Decree sets a limit on the use of workers under fixed-term staff leasing arrangements. The new version of art. 31 provides that, while the maximum percentage (20%) of fixed-term contracts set out in art. 23 continues to apply, a company can employ workers under fixed-term contracts and workers supplied under fixed-term staff leasing arrangements up to a maximum of 30% of the number of employees with open-ended contracts on its payroll.
In this case also, any existing collective agreement that provides for higher percentages shall continue to be effective up to its expiry. The aforesaid percentage limit applies to all new hires with fixed-term contracts or under staff leasing arrangements from 12 August 2018.
c) Transition period
The circular also addresses the issue of the transition period. Art. 1, paragraph 2, of the Dignity Decree had established that the new provisions would apply to fixed-term contracts entered into after the Decree came into force, and to renewals and extensions of contracts in force at the same date. The ministerial circular specifies that, in the ratification of the Decree, the aforementioned paragraph 2 was amended solely in relation to renewals and extensions, providing that, for these, the new rules would apply only after 31 October 2018. The aim is to exclude the renewal and extension of ongoing contracts from the immediate applicability of the new limits until that date.
Consequently, the provisions introduced with the reform became fully applicable on 1 November this year, including the requirement to indicate the conditions in the case of (i) renewals, always, and (ii) extensions, after 12 months.
Last but not least, the circular clarifies that the transition period applies also to staff leasing fixed-term contracts, since the Dignity Decree has in fact extended the rules applicable to fixed-term contracts also to staff leasing fixed-term contracts.
Last October, the Data Protection Authority provided a range of significant clarifications on two of the main requirements – extremely important aspects of accountability – introduced with European Regulation 679/2016 on data protection and privacy (“Regulation”):
(i) the Data Processing Register, in response to the FAQs published on 8 October on the Data Protection Authority’s website, and
(ii) the Data Protection Impact Assessment (“DPIA”), as provided in Measure No. 467 of the Data Protection Authority, issued on 11 October.
Data processing register
According to the Data Protection Authority, the “Register of processing activities” (“Register”) – as provided in article 30 of the Regulation – must contain all key information concerning the processing activities completed by the Controller. The document must be in written or electronic form and is the first document to be promptly made available on request of the Data Protection Authority or during an inspection.
The Data Protection Authority has extended the pool of subjects that are required to keep the Register, so as to include all businesses that process personal data on a non-occasional basis (regardless of the number of people employed), commercial or craft establishments with at least one employee, self-employed professionals, associations and foundations and, lastly, condominiums, where “special categories” of data are processed.
The Data Protection Authority has pointed out that the Register must contain the required level of “minimum information”, specifically:
– the purpose of each processing operation. In this regard, the recommendation is to also indicate the legal basis for processing, in addition to specifying the purpose for each type of processing (processing of employee data to manage the employment relationship; processing of supplier contact details when managing orders). The following recommendations are also made, again in reference to the legal basis: where “special categories of data” are processed, indicate one of the conditions set out in art. 9, par. 2 of the Regulation; where data relating to criminal convictions and offences are processed, indicate the specific provisions (national or EU) under which the processing is allowed pursuant to article 10 of the Regulation;
– the categories of data subjects (e.g. customers, suppliers and employees) and the categories of personal data (e.g. personal details, medical information, biometric data);
– the categories of recipients to whom the data are disclosed (other controllers to whom the data are disclosed, including their category, for example, to social security institutions to fulfil payment obligations). The Data Protection Authority also advises that it would be appropriate to indicate any other persons to whom – as processors or sub-processors – the data are disclosed (e.g. to payroll processing companies). This is to ensure that the Controller has knowledge of the number and type of entities to whom data processing operations are assigned;
– any transfer of data to third countries, indicating the Countries/the Third Parties to which the data are transferred and the safeguards applied in accordance with the Regulation;
– the period for which the personal data are stored (e.g. in the case of employment relationships, the data must be stored for 10 years from the date they were last recorded) and, lastly,
– a general description of the (technical and organisational) security measures put in place for each processing operation, including the possibility to reference external documents of a generic nature (e.g. internal procedures) to allow a more comprehensive assessment.
The Data Protection Authority has reiterated that the Register must be updated on an ongoing basis so that its contents reflect the actual situation of the processing operations carried out. In essence, any changes must be immediately recorded in the Register and explained.
The Processor is also required to keep a Register of the processing operations. The Data Protection Authority has clarified that the keeping of such Register must comply with the following:
– if the Processor is acting on behalf of customers who are separate and autonomous controllers (e.g. software house company), the information set out in article 30(2) of the Regulation must be recorded in the Register in reference to each of the aforesaid controllers. In this case, the Processor will divide the Register into the same number of sections as the number of autonomous controllers on behalf of which he/she is acting or, alternatively, a reference can be added, for example, to a customer (controller) information card or database containing a description of the services supplied to them. The customer information cards should in any event contain the information required under article 30(2) of the Regulation;
– having regard to the “record of all categories of processing activities carried out”, a reference can be made to the contents of the contract of appointment as processor, which, pursuant to article 28 of the Regulation, should set out, in particular, the nature and purpose of the processing, the type of personal data and categories of data subjects and the duration of the processing;
– likewise, in the case of sub-processors, the Register of the processing operations carried out by them can specifically reference the contents of the contact entered into between the sub-processor and the Processor pursuant to article 28 of the Regulation.
Data protection impact assessment
Measure No. 467 of the Data Protection Authority provides a list of 12 types of processing activities in relation to which a Data Protection Impact Assessment (DPIA) must be carried out. Such requirements are therefore in addition to the provisions contained in article 35 of the Regulation and in the guidelines issued by the WP29 (now European Data Protection Board), as provided in 2017.
The DPIA is a particularly delicate operation in terms of “privacy compliance”, since it requires the Controller to carefully assess and consider the related technical and organisational measures, which must be able to prevent risks to the rights and freedoms of the natural persons concerned.
In addition to the three examples given in article 35 of the Regulation – profiling, systematic monitoring of a publicly accessible area on a large scale and processing on a large scale of special categories of data (formerly, “sensitive data”) – there are nine other cases, as listed in the WP29 guidelines, for which the DPIA is mandatory. The Italian Data Protection Authority has provided further clarifications in this respect.
In detail, the Data Protection Authority requires that a DPIA is carried out in advance for the following categories of processing:
– evaluation-type processing, scoring on a large scale and profiling;
– Automated-decision making with legal or similar significant effect for the data subjects (e.g. screening customers of a bank using information obtained from a central credit register);
– processing that enables the systematic use of data for observation and monitoring purposes (e.g. online or using apps);
– processing on a large scale of strictly personal data (e.g. emails) or which have impacts on fundamental rights (location, which if collected may affect freedom of movement);
– processing in the context of employment relationships, using technological means (e.g. video surveillance or geolocalisation) that enable the remote monitoring of an employee’s activity;
– processing that involves vulnerable data subjects (minors, people with disabilities, etc.);
– processing with innovative technologies (IoT or AI);
– processing that involves the exchange of data between several controllers, on a large scale;
– processing by means of interconnection or similar methods (e.g. mobile payments);
– processing of “special categories” of data or, in any event, concerning criminal convictions;
– systematic processing of biometric data and, lastly, genetic data.
From a “comparative” perspective, compared to the French Data Protection Authority (CNIL), the Italian Authority does not make specific reference to processing in relation to “whistleblowing systems”.
It should be noted, however, that the list of the 12 types of processing – due to be published on the Italian Official Journal – is not an exhaustive list: while the DPIA is required when at least one of the 9 cases listed in the WP29 guidelines is present, it can (and should) be also carried out whenever deemed necessary by the Controller.
American Express and Rai Way (joint second place) were runners up in the listed companies category of the award promoted by the De Luca & Partners law firm with FCA. In the unlisted companies category, after Beltrame, Farco Group came second while Bricoman Italia ranked third.
The award, in its first edition, aims to assess the best practices in the world of work and in human resources management showcasing excellence that gives real momentum to a company, by promoting competitiveness and productivity, while at the same time fostering social cohesion, conflict resolution and, more generally, the well-being both of people and of the national economy. The names of the finalists were selected by an independent jury composed of experts in human resources, sustainability and CSR and leading economists in the field.
Fiat Chrysler Automobiles won first prize with its “FCA Learning City” project, a revolutionary interactive training platform for 50,000 employees in 13 languages that uses technology to foster personal responsibility, leadership and performance. In the listed companies category together with FCA, American Express came joint second placewith its “Agile Working Project”, an initiative that introduces agile working in an innovative manner also in the call center world, making it an integral part of the company organizational culture, and Rai Way with its “HR-Value Solutions”, a project that through a dialogue with trade unions was able to create new cross-cutting professionals and adopt innovative rewards and welfare formulas.
AFV Beltrame Group, which has been operating in the steel sector for more than a century, ranked first in the category of unlisted companies thanks to its innovative and extraordinary agreement with trade unions that allowed the redistribution of the value created by the company in 2017 to the workers of its three plants in Italy, involved in the social shock absorbers that were necessary to relaunch the company after a period of economic difficulty. Farco Group, a company operating in the corporate security and workplace safety services and systems rankedsecond in the category, with a complex corporate welfare program that has as its focus the individual and the promotion of occupational well-being. Bricoman Italia, the wholesale and retail distributor of professional technical products for construction and renovation, ranked third, thanks to a system of sharing knowledge, responsibility and profit with its employees, which strengthens the combination of company/individual well-being to foster competitiveness and productivity.
The winners were announced during the closing event held yesterday evening, during which the representatives of the finalist companies had the opportunity to present their projects to an audience of over one hundred professionals in the sector, and to discuss best practices and innovation in human resources management. The event, hosted by Andrea Cabrini, Director of ClassCNBC, opened with a keynote speech titled “From HR to HR2″by Ivan Ortenzi, Bip Chief Innovation Evangelist.
“An increasing number of companies wish to invest in human resources through practices and policies that enhance fairness, development and the well-being of employees,” says Vittorio De Luca, Managing Partner of De Luca & Partners law firm. “From the FCA project, which radically changes the governance model on training, to the Beltrame project, which demonstrates how it is possible to manage industrial relationships with transparency and responsibility from all stakeholders, all the way to the initiatives of the other four finalists, there is an increase in the awareness of the need to adopt work systems and HR processes to meet the needs and personal and professional expectations of employees. As the creators and promoters of this award, we are confident that we can foster change that is underway,” Vittorio De Luca concluded.
