According to ordinary fixed-term contract rules (Art. 19 et seq. of Legislative Decree no. 81/2015), the extension exceeding 12 months and a renewal must be justified by one of the following reasons:
under penalty of changing the contract into a permanent relationship.
The dangers of serious economic and employment relations damage led the legislator to introduce specific exceptions for fixed-term contracts, as part of the regulatory framework to deal with the Covid-19 epidemic.
Art. 1, paragraph 279, of Law 30 December 2020, no. 178 ( Budget Law) extended until 31 March 2021 extending or renewing fixed-term contracts without the obligation to provide reasons.
This extension ensures greater flexibility, and was first introduced by the “Relaunch Decree” until 31 August 2020, then extended until 31 December 2020 by the “August Decree” and now extended by the Budget Law until next spring.
Under the above emergency legal framework extending or renewing without providing a reason is only allowed once. This means that, even if the regime’s expiry date is changed from 31 December 2020 to 31 March 2021, those who have already benefited from an extension or a renewal under the August Decree cannot use it again under the Budget Law.
A further condition provided for by the law concerns the maximum extension or renewal duration without providing a reason, of 12 months, without prejudice to the maximum total duration, when added to other periods of 24 months.
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The exception rules contained in the August Decree, and amended by the Budget Law up to the regime’s final term, have generated many interpretation doubts. Deviation from the rules governing the “stop and go” (i.e. the time that, according to the ordinary rules, must elapse between a contract stipulation and its subsequent renewal) and the maximum number of extensions.
Due to the legislator’s objectives and the wording used, The National Inspectorate of Labour, with its note no. 713 of 16 September 2020, specified that
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Budget Law 2021 covers a wide range of measures in labour, taxation, liquidity support areas and business development and, in 1,150 paragraphs, outlines the financial manoeuvre rules.
Art. 1, paragraph 279, of Law 30 December 2020, no. 178, extended until 31 March 2021 the possibility of extending or renewing fixed-term contracts by repealing the strict and controversial obligation to include reasons introduced in the fixed-term contracts’ general regulations by Legislative Decree no. 81/2015 ( Jobs Act), as amended by the Dignity Decree (Decree Law 87/18 as converted by Law 96/18).
This important exception, which provides newfound flexibility in the use of fixed-term contracts, was first introduced by the Relaunch Decree until 31 August 2020, extended until 31 December 2020 and further extended until next spring by the Budget Law. This “favourable” extension or renewal is allowed only once and for a maximum of 12 months, within the maximum duration limit of fixed-term employment contracts of 24 months.
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The National Employment Inspectorate (the ”NEI”), with note no. 1156 dated 22 December 2020, provided to the territorial inspectorates clarifications on the procedure to be followed in the event of a request to enter into a fixed-term contract in assisted form in accordance with Art. 19, paragraph 3 of Italian Legislative Decree 81/2015. This refers, in particular, to cases where derogations are made from the requirements envisaged by the legislation by virtue of a “proximity contract” lacking the requirement of greater representativeness.
The fixed-term contract may not have a total duration exceeding 24 months or the longer duration envisaged by the industry’s National Collective Labour Agreement, subject to the possibility, in accordance with Art. 19, paragraph 3 of Italian Legislative Decree 81/2015, of signing a further contract having a term of 12 months at the relevant Territorial Employment Inspectorate.
Art. 8 of Italian Decree Law 138/2011, converted into Italian Law 148/2011, states that collective agreements signed at company or territorial level by trade union associations comparatively most representative on a national basis may implement specific agreements with effect in relation to all workers involved. The agreements may concern the regulation of issues related to the organisation of work and production with reference, inter alia, to fixed-term contracts.
The note in question specifies that the Inspectorate’s activity must be limited to verifying (i) the completeness and formal correctness of the fixed-term contract, (ii) the genuineness of the worker’s consent and (iii) the signature of the same. However, if violations of the imperative rules are identified (e.g. lack of justifying causes), the recourse to the “assisted procedure” will not be admissible.
In the case submitted to the NEI, the derogation from the requirements envisaged by the legislation on fixed-term contracts derived from the regulation contained in proximity contracts signed in accordance with Art. 8 of Italian Decree Law 138/2011 (converted into Italian Law 148/2011).
In that regard, the NEI specifies that if the proximity contracts were signed in violation of Art. 8 – with particular reference to constraints of purpose, in addition to those imposed by the Constitution or, also, in relation to the requirement of greater comparative representativeness of the signatory organisations – they have no effect. Therefore, it will not be possible to enter into further fixed-term contracts according to the “assisted procedure” in application of these proximity contracts.
On the point, then, the NEI cited the indications provided with circular no. 3/2018 relating to circumstances of proximity agreements entered into by associations not having the requirements of representativeness required by Art. 8 of Italian Decree Law 138/2011.
In particular, with this circular, the NEI clarified that proximity contracts signed by entities “not authorised” may not produce effects of derogating from the provisions of law and regulations envisaged by the National Collective Labour Agreement. During the assessment, the inspectors must consider these contracts ineffective and adopt the consequent measures.
With reference to fixed-term contracts, in the same circular, the NEI stated that if the employer has applied rules dictated by a collective agreement not signed by the comparatively most representative organisations, the effects derogating or supplementing the regulatory rules cannot be applied. This, according to the NEI, involves the lack of application of the flexibility institutions envisaged by Italian Legislative Decree no. 81/2015 and, depending on the circumstances, also the “transformation” of the employment relationship into a permanent employment relationship.
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Since the beginning of February 2020, the Italian public authorities have issued several emergency provisions to contain the risk of contagion and mitigate the economic and social effects of the pandemic ensuring financial support to families, businesses and workers. Furthermore, as consequence of the ongoing emergency the Italian Government continues to postpone the effectiveness of some emergency measures and introduces new ones since the epidemiological state of emergency, to date, expires on January 31st, 2021. All companies are going through a critical time since they must ensure an adequate level of safety in accordance with the new emergency regulations. In particular the complex situation requires companies to deal mainly with the following topics:
In order to grant relief to all employers, social shock absorbers have been introduced by Italian Government, which can be used during the emergency period to allow the employer to suspend the employees from working within the frame of the economic downturn caused by the Covid-19. In particular, starting from February 2020, the Italian Government has provided companies with the following social shock absorbers, known in Italy as:
Except from general principles of correctness and good faith, no particular restrictions apply to the employer on the choice criteria of the employees to be suspended under the social shock absorbed and those required to continue working. It should be noted that the executives are not granted with this social shock absorbed. Companies to identify the right shock absorber will refer to the general rules that consider the number of employees and product category to which they belong. From a general standpoint CIGO is granted to industrial companies, while FIS is granted commercial companies employed 5 and 50 employees. The other instrument – CIGD – supports companies do not have access to the other support instruments. As far as the duration is concerned the government has extended the duration of the social shock absorbers several times during the year. As of today, the duration is as follows:
No. 18 weeks are available since July 13th, 2020 to December 31st, 2020 for employees hired before November 9th, 2020. No payment is due by the employer to access to the first 9 weeks whereas a mandatory contribution is due for the additional 9 weeks for companies that did not suffer a substantial loss of turnover in 2020. The contribution is equal to a percentage (ranging between 9% and 18%) of the total remuneration that would be due to employees for the suspended/reduced working hours; the amount of the contribution depends on the reduction of the company’s turnover in the 2020 first half, if compared to the 2019 first half turnover;
additional no. 6 weeks to be enjoyed from November 16th, 2020 to January 31st, 2021 has been introduced for the companies that have entirely enjoyed the above 18 weeks. The employees hired before November 4th, 2020 may have access to the 6 weeks furlough. It should be noted that no payments are due for certain categories of companies (such as restaurants) and for companies that in the first half of 2020 have suffered a reduction in turnover of 20% or more compared to the same period of the previous year. In other cases, the law provides for an additional compulsory contribution ranging between 9% and 18%.
Based on a greatly simplified procedure applicable for Covid-19 related suspensions, to access the social shock absorbers employers must now trigger a unions’ consultation procedure with an invite addressed to the signatory union parties of the collective bargaining agreement applied by the company (and internal work councils) to meet for a consultation on the need to access the social shock treatments. Following the communication, within three days, the unions may ask for a consultation meeting.
Applications to access to CIGO and FIS wage supplement schemes shall be sent to INPS whereas applications for CIGD are presented at regional level, depending on the location of the employer. The indemnity paid to the employees amounts to 80% of the ordinary remuneration due to the employee, up to certain thresholds (the maximum indemnity is equal to approximately EUR 1,200 gross per month). As far as CIGO and FIS the employer may decide (usually within the frame of the consultation procedure) to grant the indemnity as an advance payment to the employees concerned. On the contrary the CIGD indemnity is paid directly by the INPS to the employee.
As alternative to the application of the social shock absorbers, the Italian government has provided companies (except for those belonging to the agricultural sector) with special social security contributions exemption, except for premiums and contributions due to National Institute for Insurance against Accidents at Work (in Italian parlance “INAIL”). According to Article 3 of the Law Decree n. 104/2020 (so-called “Decreto Agosto”) companies that have not applied for the 18 weeks of social stock wage but have already benefited from the Covid-19 social shock absorbers in May and June 2020 may apply for exemption from social security contributions due by them, for a maximum of 4 months, until December 31st, 2020. The exemption shall also be allowed for employers who requested wage supplement periods in accordance with Law Decree no. 18 of March 17th, 2020, even partially, in periods following July 12th, 2020.
The amount of social security contributions exemption may not exceed twice of the hours of wage supplementation already received by the companies in May and June 2020. Furthermore, a special social security contributions exemption is granted to employers that hire employees under an open-ended contract, in the event of an increase in net employment (for a maximum period of 6 months since the hiring). The maximum limit of exemption is equal approximately to EUR 8,000 on an annual basis. This exemption will also be allowed in case of transformation of the employment agreement from temporary to permanent.
Lastly, according to Article 12 of the Law Decree no. 137/2020 (so called “Decreto Ristori”) the non-agricultural employers who do not apply for the 6 weeks shock absorbers treatment provided by Decreto Ristori (i.e. additional 6 weeks described under the above paragraph) are granted with an exemption from the payment of social security contributions, for an additional maximum period of four weeks, usable within January 31st, 2021. The amount of social security contributions exemption may not exceed the hours of wage supplementation already received by the companies in June 2020.
Until December 2020, employers are entitled to extend or renew fixed-term contracts even in absence of the grounds prescribed by Article 19, paragraph 1, of Legislative Decree no. 81/2015. Extensions or renewals must be made no later than December 31st, 2020, but the expiry date of such contracts may be later than that date. The overall maximum duration of the fixed term contract remains 24 months as provided by Article 19 of the Legislative Decree no. 81/2015.
The current emergency due to the spread of Covid-19 led the Italian Government to ban dismissals pursuant to Article 3 of Law no. 604/1966 and collective dismissal pursuant to Law no. 223/1991, except for the following hypotheses:
definitive cessation of the business, with liquidation of the company. However, the closure of a production unit does not itself lead to the suspension of the ban on dismissal;
collective company agreement with the comparatively most representative trade unions on a national level, containing a layoff incentive for subscribing employees. The union counterparties of these agreements are those that are comparatively more representative at national level. The concept of collective contract was introduced by Article 51 of Legislative Decree no. 81/2015 stating that such contracts are “national, territorial or company contracts signed by unions comparatively more representative at national level. The employees who adhere will receive involuntary unemployment benefits (so called “NASPI”);
bankruptcy without any provisional exercise of the activity, with total cessation of the same;
the personnel affected by the dismissal, already employed in the contract, are hired following the takeover of a new contractor by virtue of the law, of the national collective labor agreement or clause of the contract.
In the emergency phase a simplified mode of remote working has been introduced. Indeed until the end of the epidemiological state of emergency, the remote working may be activated even in the absence of individual agreements. As consequence once the emergency shall have expired it is necessary to switch from the emergency remote-working to the ordinary one regulated by Legislative Decree no. 81/2017. The Covid-19 emergency has awakened interest in remote or agile working, with the aim of limiting the spread of the virus and ensuring business continuity. In addition, with the overcoming of the emergency phase, it is to be hoped that remote working recovers the original spirit aimed at increasing competitiveness and a greater possibility of reconciliation of life and work. Lastly, even though it is possible to activate the remote working in the simplified variant for Covid-19 without the individual agreement with the employee, it must be considered very useful to provide in any case an individual agreement in order to discipline, for example: (i) the control power of the employer, (ii) certain profiles related to the use of IT tools that have obvious privacy implications, (iii) the so-called right to disconnect (the times of non-work, of unavailability).
Source: Invest in Tuscany
The discipline of fixed-term employment relationships has undergone important amendments by the emergency legislation which has been the subject, and still is, of a wide debate by doctrine who did not spare themselves in identifying the countless critical profiles and contradictory.
The contribution of the Vittorio De Luca and Antonella Iacobellis first offers an high-level overview of the discipline pursuant to Legislative Decree 81/2015 and subsequent amendments related to the fixed-term contract and the leasing contract, then focusing on the emergency discipline in this area which has partially derogated from the provisions of Legislative Decree no. 81/15.
The legislation on COVID-19, also with the aim of facilitating the use of forms of forward bargaining, proved to be so cumbersome and full of critical issues that instead led to a dissuasive effect.
Dissuasive effect that has certainly been fostered by the current crisis, by total uncertainty about the economic and future scenario and also by the emergency legislation that sanctioned the prohibition of dismissal, except for the exceptions dictated by the same.
This is confirmed by the ISTAT data updated to August 2020, which highlighted a vertical collapse of fixed-term contracts: about 425,000 less than in August 2019.
Source: Guida al lavoro de Il Sole 24 ore.
