For Vittorio De Luca, Managing Partner of the law firm De Luca & Partners, “from an employment law point of view, the most important changes are the new fixed-term contract regime, aimed, at least partially, at overcoming the restrictions introduced by the so-called Dignity Decree, as well as those in the field of safety at work, accidents and welfare. The changes made in the field of fixed-term contracts are significant and considerably expand employers’ flexibility, without reaching the point of complete deregulation introduced almost 10 years ago by Italian Decree-Law no. 34/2014. The Dignity Decree introduced new grounds for relationships lasting longer than 12 months. With the changes introduced it is now possible to enter into, renew or extend fixed-term contracts (i) in the cases provided for under collective agreements referred to in Article 51 of Italian Legislative Decree no. 81/2015, (ii) in the absence of provision for collective bargaining, for technical, organisational or productive needs identified by the parties, as well as (iii) in the event of the replacement of other workers. Article 24, paragraph 1-ter also provides that only employment contracts entered into on or after 5 May 2023 should be considered for the purposes of reaching the 12-month ceiling. Following the applicative uncertainty caused by the content of this provision, the Ministry of Labour, in a Circular of 9 October 2023, clarified that, as from 5 May 2023, employers will be able to make use of fixed-term employment contracts for a further (maximum) period of 12 months, without the need to indicate the ground”.
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With this circular the Italian Ministry of Labour provided its first guidelines on the most significant new initiatives introduced by Italian Decree-Law no. 48 of 2023, converted into law with amendments by Italian Law no. 85 of 3 July 2023, on fixed-term contracts.
From among these, the most significant clarification provided by the Ministry concerns the provision referred to in Article 24, paragraph 1-ter of Italian Decree-Law no. 48/2023, added when converting it into law, which provides that “For the purpose of calculating the 12-month period provided for in Article 19, paragraph 1, and Article 21, paragraph 1, of [Italian] Legislative Decree no. 81 of 2015 […], only contracts already entered into on the date of entry into force of this decree are taken into account” (Editor’s note: 5 May 2023).
In this regard, the Ministry has clarified that, under above provision, any fixed-term employment relationships between the same parties under contracts entered into before 5 May 2023 do not count towards the 12-month period within which the use of fixed-term employment contracts is permitted without restriction.
From 5 May 2023, employers will therefore be able to use fixed-term employment contracts for an additional period (maximum) of 12 months, regardless of any relationships already existing between the same employer and the same worker under contracts entered into before 5 May 2023, without prejudice to the maximum duration of fixed-term contracts provided for by law or national collective bargaining.
For example, the Ministry has clarified that, if after 5 May 2023, a fixed-term employment contract entered into before that date expires, that contract may be renewed or extended “without restriction” for a further 12 months.
Otherwise, again by way of example, if in the period between 5 May 2023 and 4 July 2023 – the date of entry into force of paragraph 1-ter – the parties have already renewed or extended a fixed-term employment relationship for six months, they may enter into a fixed-term contract for a further period not exceeding six months “without conditions”.
It is therefore the time when the employment contract was entered into – before or after 5 May 2023 – that must be referred to for application of this provision.
In this regard, the Ministry continued, the expression “entered into” used in Article 24, paragraph 1-ter must be considered to refer both to the renewals of previous fixed-term employment contracts and to the extensions of existing contracts.
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Despite the failure to challenge previous agreements and the loss of the worker’s ability to challenge these agreements, exceeding the maximum limits permitted for fixed-term contracts can render the employment relationship invalid. This was established by the Italian Court of Cassation in judgment no. 15226/2023 of 30 May 2023, based on a well-established interpretation and adopting a restrictive reading of the rules governing fixed-term work.
The facts of the case
The ruling of the Italian Court of Cassation originates from a judgment of the Court of Appeal of Brescia (no. 127 of 2017) which rejected a worker’s appeal concerning a fixed-term contract and numerous previous relationships with the same employer.
In the case, the worker had complied with the legal time-limit of 60 days from the end of the relationship to challenge only the last agreed fixed-term contract. The Court of Appeal of Brescia, considering this fact, dismissed the appeal, rejecting all connected requests.
The worker lodged an appeal with the Italian Court of Cassation against the judgment of the Brescia Court of Appeal.
The decision of the Italian Court of Cassation
The Italian Court of Cassation partially reviewed the aforementioned decision of the Court of Appeal. On the one hand, it reiterated that ‘on the subject of the succession of fixed-term agency employment contracts, the out-of-court appeal of the last contract in a series of contracts does not extend to the preceding contracts, even where a period of less than 60 days has elapsed between one contract and the next for the purposes of challenging the contract’. Therefore, the Court confirmed that the challenge in relation to the last contract does not extend to the preceding ones, even if less time has elapsed between one contract and the other than is necessary to bring the challenge.
After establishing this principle, the Italian Court of Cassation analysed the worker’s ability to claim abusive use of fixed-term contracts by the employer due to their excessive and repeated use, even if the limitation period had expired. The Court started from the recent interpretation of EU law by the European Court of Justice (judgment 14 October 2020 in case no. C-681/18, relating to the parallel institution of temporary agency work), according to which the Member States must adopt measures to preserve the temporary nature of temporary agency work, to avoid circumvention of the directive on this type of work.
In the light of this principle, the judge is called to evaluate the effect that the recurrence of fixed-term contracts can have in circumventing the EU rules which establish limits on the duration and quantity of fixed-term contracts. The Court held that the historical existence of previous relationships can and must be taken into consideration to assess whether the reasons for resorting to fixed-term work are actually of a temporary nature and that this assessment remains valid even if the limitation period for the worker to challenge those contracts has expired.
In other words, according to the Italian Court of Cassation, the expiry of the limitation period prevents the worker from taking direct action with respect to the previous unchallenged contracts, but the judge can consider their existence as historical precedents that may be used to assess whether their repetition has been abusive and whether the maximum duration established by law (36 months) has been exceeded.
In the light of this judgment, the principle emerges according to which, and in relation to successive fixed-term contracts, an appeal directed only against the last contract of a series, when the party is time-barred from appealing previous contracts, does not exclude the fact that the judge must take into account, in assessing the lawfulness of the contract challenged within the limitation period, the factual information on the existence of previous fixed-term relationships, to verify whether the relationship, considered as a whole, can be considered actually temporary or whether there has been abusive repetition, to be ascertained according to the rulings in the ECJ judgment of 14 October 2020, case C-681/18.
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The Budget Law extends the exception to extensions and renewals of fixed-term contracts
With note no. 1363 of 14 September 2021, the National Labour Inspectorate (“INL”) provided some clarifications concerning the amendments made by Decree Law no. 73/2021 ( “Decreto Sostegni bis“) to the regulation of the reasons for fixed-term contracts.
The “Decreto Sostegni bis“, as converted by Law no. 106/2021, supplemented the rules set out in Art. 19 of Legislative Decree no. 81/2015, introducing the first part (letter a), the possibility for collective bargaining (at the national, local and corporate level) to identify specific needs for the stipulation of a fixed-term contract lasting more than 12 months. These requirements are in addition to the other justifying reasons set out in the same Article.
As for the “specific needs” substantial features, INL clarified in the circular in question that the rule does not set any content constraints since they are only required to be specific and actual and avoid generic formulations.
INL pointed out that the delegation to collective bargaining to identify the reasons affects the stipulation of the first contract for a period longer than 12 months and the rules governing renewal and extension, under art. 21 of Italian Legislative Decree no. 81/2015.
The addition of one of the reasons identified by Art. 19 is always required (under penalty of conversion of the fixed-term contract into an open-ended contract) for renewals and extensions only when the contract duration exceeds 12 months.
It will be possible to renew or extend a fixed-term contract under the new collective bargaining provisions (specific needs)
By letter b) of the same paragraph 1 of Art. 41 bis, paragraph 1.1 was added to Art. 19, according to which “the time limit exceeding 12 months, but not exceeding 24 months, referred to in paragraph 1 of this Article, may be applied to employment contracts which meet the specific needs provided for by the collective labour agreements referred to in Article 51, under letter b-bis) of the same paragraph 1, until 30 September 2022“.
Many interpretative doubts had arisen concerning the application scope of the 30 September 2022 time limit under the new provision.
The INL note dispelled any uncertainty, clarifying that the time limit (30 September 2022) for the use of the new reason (needs identified by collective bargaining):
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In the light of INL’s clarifications, we can conclude that:
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Since the beginning of the pandemic, the strict restrictions on the possibility of concluding fixed-term contracts have been suspended for the obvious purpose of favouring employment (albeit fixed-term), which was severely damaged by the economic fallout of the epidemic. Indeed, as early as with the law converting Decree Law no. 18/2020 (so-called Cura Italia), the possibility of concluding fixed-term contracts had been introduced as an exception: (i) to the prohibition of concluding fixed-term contracts or temporary work contracts in production units where social safety nets were also being used (Art. 20, par. 1, letter C) and Art. 32, par. 1, letter c), Legislative Decree. no. 81/2015); (ii) to the obligation to have a period of unemployment elapse between a fixed-term contract and its renewal with the same employer (so-called stop&go, Art. 21, par. 2 of Legislative Decree 81/2015); and (iii). Further exceptions to the ordinary rules on fixed-term contracts were then introduced with the so-called Rilancio Decree whose Art. 93 introduced an exception to the motivation obligation [translator’s note: the obligation whereby a fixed-term contract must be justified] in the case of the renewal or extension of fixed-term contracts in force on 23 February 2020, by 30 August 2020. Since it was not clear, from reading the rule, whether this right of extension or renewal without motivation was possible only for contracts expiring by 30 August, the National Labour Inspectorate intervened with note no. 160 of 3 June 2020, confirming that the double condition for the enforcement of this option necessarily required the existence of the fixed-term contract on 23 February and the expiry of its term by 30 August 2020, so that contracts existing on 30 August but not expiring by that date could not be renewed or extended. The August Decree further reworded the exception to the motivation obligation, establishing the possibility of extending or renewing fixed-term contracts without motivation for “no more than twelve months and once only”, though within the limit of “a maximum total duration of twenty-four months”, no longer requiring that the renewed fixed-term contract had already been in place on 23 February, and extending the possibility of an extension or renewal by 31 December 2020 also to contracts expiring after that date. The scope for the application of extensions and renewals without motivation was subsequently extended until 31 March and, later on, until 31 December 2021 (Art. 17 of the Sostegni Decree. Therefore, according to current law, fixed-term contracts may be extended and/or renewed until 31 December 2021, without motivation, once only and for a period of 12 months provided that employment does not last longer than 24 months. However, the sequence of extensions and renewals (of the legislation derogating from the motivation obligation) did not discuss or even only mention the fundamental clarification contained in the very first emergency legislation (Art. 19bis Cura Italia Decree) which clarified that fixed-term contracts could be extended and/or renewed even where social safety nets were in place.
To the relief of the operators in the sector, the National Labour Inspectorate intervened once again on this point in note no. 762 of 12 May 2021 specifying that Art. 19bis is still to be regarded as in force since it is a rule used for the authentic interpretation of Arts. 19 to 22 of Decree Law 18/2020 which introduced the emergency social safety nets, never repealed and extended from time to time.
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