Article written by Vittorio De Luca and Federica Parente
The Stability Law for 2016 introduces a special system which allows workers, if they meet certain requirements, to reduce their work hours benefiting from an imputed contribution proportional to the remuneration corresponding to the work not performed. In addition, for this cut in hours the employee will receive a sum from his/her employer, exempted from taxation and social security contributions, corresponding to the contribution for pension purposes related to the unperformed work.
The requirements
This opportunity is reserved for workers in the private sector, registered with the general obligatory social security scheme or alternative forms, hired with a full-time open-ended contract who:
• by the end of 2018 will have the right to retire based on age;
• have already met the minimum contribution requirements;
• reduce their work hours between 40% and 60% hours for a period of time not greater than the period between the date of granting of the benefit and the date the worker is eligible for retirement.
The reduction of work hours must be the subject to a specific agreement with the employer who is required to inform Inps and the territorial employment office of the stipulation of the contract and relative granting of such which will be clarified with the Decree of the Ministry of Labour to issue by 1 March 2016.
However the legislator has already explained that the reduction in hours must be authorised by the territorial employment office and the benefit will be granted by Inps within the limits of the resources earmarked by the same Stability Law (60 million in 2016 and 2018, 120 million in 2017).
It should be noted that for the purposes of the imputed contribution, the Stability Law for 2016 expressly refers to paragraph 6 of article 41 of the Legislative Decree 148/2015 containing the provisions for an overhaul of the social shock absorbers in terms of employment. Consequently, for the purposes of identifying the remuneration to use as a basis for the calculation, the number of weeks worked part-time must be considered as neutralised.
This is the only common point with another provision of a law also aimed at providing incentives to reduce the work hours of employees nearing retirement age.
The Jobs Act, with article 41 of Legislative Decree 148/2015, for companies which apply job-creation contracts, allow employees whose age is not more than 2 years before retirement and who have accrued the minimum amount of contributions, to obtain their pension if they accept to perform a job of a duration not more than half of the work hours prior to the reduction as per their collective contract. This arisen from the change in their job occurring within a year after the job-creation contract is stipulated and based on clauses that require an increase in employment for the greater reduction in hours. To this end the Stability Law, with the paragraph 285, introduced the possibility that the employer, bilateral entities or solidarity funds pay the contribution for pension purposes correlated to the remuneration lost by workers who do not access part time pension.
The origins of the intervention
Lastly, it should be noted that part time pre-retirement originated from a 2012bill proposed by Senator Treu which included a sort of intergenerational job creation contract consisting in tax and contribution breaks for the employer for hiring young people as a consequence of the reduction in hours. Compared to the subsidised part time of the Jobs act and Treu’s bill, the Stability law does not include any obligation or incentive for employment for the employer in order to grant the benefit. Therefore, the new option constitutes an interesting instrument that lets the employer reduce the cost for employees nearing retirement age but still allows them to benefit from the experience that the workers have acquired over the years.
The legislation also seems to be popular with the affected workers who can perform their jobs at a pace better suited to their age by using the imputed contribution for the work they do not perform.
Source: