In its circular of 18 March 2022, the Ministry of Labour provided operating guidelines relating to the changes made by Decree Law no. 4 of 27 January 2022, (hereafter, Decreto Sostegni ter [Support Decree ter]) to the regulations on wage supplements governed by Legislative Decree no. 148/2015.

The Ministry focused on the following issues:

• Starting date of the new provisions: the amendments made by Decreto sostegni ter come into force as of 27 January 2022 and refer to wage supplements starting from that date;
• Disbursement methods and deadline for the benefit reimbursement: the administrative procedure related to the granting of Extraordinary Wage Subsidies – CIGS is carried out electronically through the GIGS on-line application. This allows the employer, who has requested INPS to directly pay workers, to provide the Institute with the employees’ data necessary for the payment of the wage supplement within the legal terms.
• compatibility with the performance of work: the wage supplement is suspended if the beneficiary worker performs fixed-term work for six months.
• joint examination: the joint examination can be carried out electronically, using computer or telephone networks.
• Company reorganisation for transition processes: the company which intends to apply for the extraordinary wage supplement for a reorganisation linked to transition processes must submit a reorganisation programme which specifies the transition measures. These measures can be carried out by planning innovative processes of digital and technological transition, or actions aimed at environmental and energy renewal and sustainability.
• Employment transition agreement: employment transitions are for those workers who cannot be reallocated and are at risk of redundancy after a company reorganisation or reorganisation programme. For these employees, an income support measure is envisaged when the assessment by the company on the need to safeguard employment levels is carried out after the conclusion of the wage subsidy measure. In addition, the workers concerned by the agreement have access to a specific employment service process, called “Percorso 5: ricollocazione collettiva” (Course 5: collective reallocation).
• Conditionality and retraining: the conditionality mechanism applies to workers benefiting from wage subsidies paid by funds (bilateral, wage supplement fund – FIS and local fund). The training and retraining courses offered to these workers must be planned and coordinated with the labour demand in the area. Failure to participate unjustifiably in training initiatives may result in the loss of the wage subsidy;
• Transitional provisions: companies which cannot use CIGS, can access an additional period of extraordinary subsidy, of a maximum of 52 weeks, under certain conditions, and which can be used until 31 December 2023;   
• Canteen and cleaning contractors: Canteen and cleaning contractors can use ordinary and extraordinary wage subsidies, regardless of the subjective conditions of the client company to which they provide their services. Specific clarifications are provided to these companies on the operational aspects to access the company crisis status and solidarity contract;
• Publishing: publishing companies can apply for CIGS when the suspension or reduction of work is determined by the approval of a company reorganisation programme due to a crisis or a company crisis under bankruptcy. The maximum total duration is 24 months, even consecutively. These companies are allowed to use the solidarity contract.

Other related insights:

• Legislative reform on social safety nets during employment
• Ministry of Labour: first operating indications on revision of the regulations in terms of social safety nets
• Safety nets: mandatory info, meeting and joint exam with Unions 

The Supreme Court of Cassation, with its ruling no. 23385 of 23 October 2020, stated that regarding waivers and settlements, the employee’s declaration may be considered as a waiver if the settlement agreement was issued with awareness of determined or objectively determinable rights and with a conscious intent to waive or settle them.

Facts of the case

This case originated from an appeal filed by a manager of a public limited company, who was appointed company CEO in 1995. No specific remuneration was paid to the manager for this position. Having ceased to hold office, the manager applied to the Court of Venice asking for the payment of the remuneration, indicating as a quantification parameter the remuneration that had been determined in 1998 in favour of a new CEO.

The Court of First Instance and the Court of Appeal rejected the manager’s request on the grounds that the remuneration issue was settled under an agreement reached between the parties on 17 September 1998, despite the fact that the text was unclear. The Court of Appeal considered that the settlement had definitively ended the management relationship and all matters relating to the CEO position, including remuneration. This decision assumed that when interpreting contracts, the agreement wording cannot be the only element to be considered but it must include other factors such as subsequent conduct, to identify the parties’ common intention.

The manager appealed to the Court of Cassation against the decision on the merits, complaining of an “unjustified” devaluation of the settlement agreement’s literal elements. He argued the parties had used the terms only in the singular and referred only to the management employment relationship, while there was no reference to the CEO position and no waiver of the related remuneration.

The Supreme Court of Cassation’s ruling

The Court of Cassation considered the appeal filed by the manager to be unfounded and referred to several basic principles regarding the interpretation of waiving and settlement acts concerning reciprocal rights deriving from the employment relationship.

Firstly, it was stated that “Regarding waivers and settlements, employment relationship and its termination, the employee’s declaration may be considered as a waiver provided that, based on the interpretation of the settlement agreement, it is ascertained it was issued with the awareness of determined or objectively determinable rights and with the conscious intent to waive or settle them. (see 10056/1991; Court of Cassation ruling no. 1657/2008).

According to the Court of Cassation the settlement agreement subject must be identified not by literal expressions used by the parties, but the objective situation of conflict that they have begun to settle through mutual concessions in the dispute and any dispute that they intend to prevent. To investigate the scope and content of a settlement agreement, the trial judge may draw on any element suitable for clarifying the agreement terms, even if not directly mentioned, without this entailing a violation of the principle according to which the settlement must be proved in writing (cf. 729/2003; Court of Cassation ruling no.  9120/2015).

The Court of Cassation stated that “on the general interpretation of contracts, if the literal expressions used are insufficient to reconstruct the common will of the parties, it is necessary to consider the common intent they have pursued.” To verify the nature of such a settlement agreement and its content, it is necessary to investigate whether the parties tried to end the dispute through the agreement. It is not necessary, however, for the parties to express their disagreement on the opposing claims, nor to use directly revealing expressions of the settlement agreement, the existence of which can be inferred from any element expressing the will to end any further dispute.

According to the Court of Cassation, the decision of the trial judges can only be considered legally correct and logically appropriate, thus avoiding any Court evaluation.

Insights related:

• A settlement agreement must provide for specific waivers

INPS, with message no. 3359 of 17 September 2019, summarised and explained to the economic operators and their area offices, the principles established at the Supreme Court level regarding the compatibility between the ownership of corporate offices and/or the figure of the shareholder of corporations with a clear employment relationship.

The message is based on what has already been stated on the subject by the Institute itself in Circular Note 179 of 8 August 1989 (“Investigations and evaluation of the existence of the subordinate employment relationship“), partly revised in light of message 12441 of 8 June 2011.

The Social Security Institute, starting from the assumption that the position of director of a joint-stock company does not exclude a priori the configurability of a subordinate employment relationship provided its relative characteristics exist (i.e. the subjection to the authority of management, control and disciplinary management body), resides in the various corporate positions highlighting, for each of them, the limits to the compatibility with a parallel employment relationship.

Corporate positions

1. Chairman of the Board of Directors

First of all, the position of Chairman of the Board of Directors is examined, which, in the Institute’s opinion, is not incompatible with the status of a subordinate worker, without prejudice to the submission of the Chairman to the directives, decisions and control of the Board, even in the presence of the possible conferral of legal representation of the company.

• Sole Director

As above, unlike the sole director since “he/she has the power to express on his own the will of the corporate body, as well as the powers of control, command and discipline“. The position of sole director is, in fact, incompatible with an employment relationship because the employee would end up performing work ordered by the governing body, i.e. by himself.

• Managing Director

The compatibility between the office of Managing Director and a parallel employment relationship must be assessed, according to the Supreme Court and the Institute, on the basis of (i) the extent of the delegation conferred by the Board of Directors, (ii) the number of any other managing directors and (iii) the ability to act jointly or severally.

In view of this and without prejudice to the existence of the typical elements of subordination, the Institute – on the basis of the judgements examined – considers that the figure of the managing director to whom specific and limited powers are conferred and who acts in the presence of other delegated bodies is not an obstacle to the establishment of a genuine employment relationship.

• Sole shareholder and partner (not single)

On the other hand, it is not possible for the sole shareholder of a limited company to have an employment relationship, since the concentration of ownership of the shares by a single person in essence excludes his actual subjection to the directives of a corporate body, thus becoming the “sovereign” of the company itself.

The case of the partner (not single) of a limited company, on the other hand, is different. In fact, even in the presence of a simultaneous position as director, it is not abstractly possible for this figure to set up an autonomous subordinate employment relationship, subject to the concrete verification of the performance of activities outside the functions inherent in the working relationship, distinguished in any case by the typical characteristics of subordination.

Proof of the cumulative nature of corporate office and employment relationship

Lastly, the Institute focuses its analysis on the evidence that must be provided in court by the subject who wants to enforce the bond of subordination in the presence of a relationship of a purely managerial type.

Starting from the decisions of the Supreme Court, the INPS specifies that the cumulation of corporate office and employment relationship requires proof of the following conditions:

1. The assignment of decision-making power of the Company to a collegiate body aimed at forming the will of the entity both internally and externally;
2. the existence of the constraint of subordination also, possibly, in the attenuated form of managerial work, and in particular the subjection of the worker to an effective power of hierarchical supremacy of another subject;
3. the existence of a concrete differentiation between the activities carried out by the person concerned as an employee and as a director.

In this context, INPS specifies certain distinctive elements of subordination will be evaluated later, such as:

• the frequency and predetermination of the remuneration;
• observance of contractual working hours;
• The classification within a specific company organisation;
• The absence of even the slightest entrepreneurial organisation;
• The absence of risk on the part of the worker;
• the distinction between amounts paid as remuneration and those deriving from corporate income.

In essence, with the exception of the sole shareholder of a corporation, the Institute allows the cumulation of the office of director and that of subordinate worker provided that concrete and rigorous proof is provided of the performance of activities outside the functions inherent in the staff relationship and characterized by the typical characteristics of subordination.

From 14 June 2017, remote working has become officially operative, as “a way of implementing an employment relationship” carried out in part at the premises of the company and partly at a different location, without a fixed workplace, but within a maximum duration limit of the daily and weekly work hours established by law and the collective bargaining agreement. Such a way of implementing the employment relationship must be established by written agreement between the parties, also through organization by phases, cycles and objectives, with the possible use of technological means to carry out the work activity.