There is no law in the Italian legal system establishing a legal minimum wage. In fact, the parameters for  ‘fair’ pay are defined by the Italian Constitutional Charter.

Specifically, Article 36 of the Italian Constitution states that fair pay is pay which ensures the worker a free and dignified existence and is proportionate to the quantity and quality of the work performed.

This pay is usually quantified by collective bargaining in the relevant sector.

In this regard, the Italian Court of Cassation confirmed in ruling no. 27711 of 2 October 2023 that, in the event that the minimum wage is determined by a legal provision, as in the case of the cooperative sector, ‘fair’ pay must in any event be assessed on the basis of the comparatively most representative collective agreement within the sector of activity or other relevant ‘financial’ information.

In particular, in the aforementioned ruling, the Italian Court of Cassation clarified that the judge, even where there is a rule establishing the minimum wage, in assessing compliance with the constitutional parameters on fair pay, must verify the consistency of that wage also in the light of the provisions of the collective bargaining agreement signed by the most representative employers’ and trade union associations. In the event of a negative outcome, the judge must extend the investigation to other concurrent parameters such as, for example, the financial and statistical indicators used to measure the poverty threshold the ISTAT index (Istituto nazionale di statistica– Italian National Institute of Statistics), the income threshold to qualify for an incapacity pension, or the statistical indicators identified by the Directive (EU) 2022/2041 on adequate minimum wages.

Decree-Law 48 of 4 May 2023, so-called  “Decreto Lavoro“, which came into force on 5 May, lays down new measures to, inter alia, simplify the employment disclosure requirements to which companies are subject under the so-called “Decreto Trasparenza” (Legislative Decree 104/2022).

Unlike in the past, some of the information that employers were bound to provide in detail in the employment contract or in a specific policy (length of probationary period, training, paid holidays and leaves, notice of dismissal and resignation, components of remuneration, working hours, overtime, social-security and insurance institutions) may now be given to workers just by referring to the relevant provision of law or of the collective agreement that applies to the employment, including the company agreement.  For simplification purposes, and in order to ensure uniformity in the employer’s communications, the latter shall deliver and make available to workers, including through publication on the website, the national, local and company collective agreements, as well as any company rules that apply to the employment.       

By Order of 6 April 2023, No 9453, the Italian Court of Cassation ruled on the subject of dismissal for poor performance. The Court clarified that this type of dismissal falls within the scope of dismissals for justified subjective reasons resulting from a significant breach by the worker of his/her contractual obligations. In this context, the employer must provide proof that the failure to achieve a predetermined result – which does not in itself constitute a breach of contract – results from a clear breach of the duty of diligent cooperation owed by the employee which is attributable to him/her.

The facts of the case and the judgment on the merits

On 5 July 2016, a worker in the Development Department of a banking institution was dismissed for just cause on the basis of five disciplinary charges. One of these charges related specifically to poor performance, alleged for the period from November 2015 to April 2016. For this period the bank had compared the small number of visits to branches and customers made by the worker involved in the disciplinary proceedings with the production figures of other colleagues working in the same office and with the same duties, which were found to be significantly higher.

In the context of the Fornero Procedure (Rito Fornero) and with particular reference to the charge of poor performance, the Court of Treviso, while ascertaining that there had been a breach of principle of promptness of the disciplinary notice, confirmed that there had also been poor performance. Therefore, on this basis, the Court limited the worker’s protection to the indemnity for damages under Article 18, paragraph 6 of Italian Law No 300/70, in the amount of 12 months’ salary.

In opposition proceedings under Article 1, paragraph 57 of Italian Law No 92/2012, the Court of Treviso confirmed the existence of poor performance which, overcoming the objection of breach of promptness of the disciplinary notice, was sufficient to justify the termination for poor performance. That being so, that Court – referring to the provisions of the CCNL (Contratto Collettivo Nazionale di Lavoro, national collective bargaining agreement) applied to the employment relationship – converted the dismissal for just cause into a dismissal for justified subjective reason, ordering the employer to repay the indemnity for damages under Article 18, paragraph 6 of Italian Law No 300/70 referred to above, net of the indemnity in lieu of notice.

On appeal, the regional Court of Venice upheld the first instance judgement of the Court of Treviso, considering the breach alleged against the worker to be of considerable significance, also taking into account the lack of objective evidence provided by the worker to justify his reduced activity.

The judgment of the Italian Court of Cassation

The worker appealed to the Italian Court of Cassation against the decision taken by the Venice Court of Appeal, which the bank resisted with a counter-appeal.

With particular reference to the issue of poor performance, the Italian Court of Cassation, on the basis of its own precedents, confirmed that dismissal for poor performance falls within the category of dismissals for justified subjective reasons, in respect of which the employer has the burden of proving not only the failure to achieve the expected result, but also that it is attributable to a culpable and negligent breach of the worker’s obligations arising from the underlying employment relationship.

In this case the Italian Court of Cassation agreed with the finding made by the Court of Treviso, noting that the worker’s performance was inadequate in view of the small number of visits made to customers and taking into account the acquisition of only one customer in the period of time taken into consideration by the employer, which, compared to the production data of the other colleagues, had led the judge of first instance to find poor performance and its seriousness.

On the subject of proof, the Italian Court of Cassation found that the Venice Court had correctly ‘assessed the breach of contract alleged’ against the appellant, ‘once the scenarios alleged by the worker (…) that could have at least partly justified it had been excluded’. Moreover, the Italian Court of Cassation, again referring to its own precedents, specified that, for the assessment of the seriousness of the breach, deviation by the worker from any ‘parameters for ascertaining whether the service was performed with average diligence and professionalism’, taking into account that the activity was performed for ‘an appreciable period of time’, ‘may constitute a signal or indication of inadequate performance’.

In support of this view, the Italian Court of Cassation referred to another of its precedents (Italian Civil Court of Cassation, Employment Division, judgment No 18678 of 4 September 2014) which confirmed the lawfulness of a dismissal for poor performance of a worker who had been found to have committed a ‘clear breach of the diligent cooperation due from him’ and which was attributable to him, ‘as a result of the enormous disproportion between the objectives set by the production programmes for the worker and what was actually achieved in the reference period, taking into account the average activity among the various employees and regardless of the achievement of a minimum production threshold’.

On the other hand, with regard to the short period of time considered for the purpose of assessing the breach of contract, the Italian Court of Cassation rejected the appellant’s arguments, especially in view of the fact that the evidence offered by the employer (i.e., the comparison of the data of the dismissed worker’s activity with those of his colleagues) had revealed ‘a very significant disproportion between the performance of the present appellant and that of several of his colleagues in the same development office; a disproportion which, in turn, can clearly constitute a significant breach of the worker’s contractual obligations’.

The worker’s appeal was therefore dismissed and he was ordered to pay the costs of the proceedings.

Other related insights:

Dismissal for poor performance is unlawful if based on conduct previously raised against the worker

Dismissal of employees for poor performance. What is ‘poor performance’ (Newsletter Norme & Tributi No 167 Camera di Commercio Italo-Germanica – Vittorio De Luca, Luca Cairoli)

The National Labour Inspectorate (Ispettorato Nazionale del Lavoro, ‘INL’), in note No 2572 of 14 April 2023, provided operational guidelines for the issuance of authorisations for video surveillance systems and instruments which enable remote control of workers within the meaning of Article 4 of the Workers’ Charter (Italian Law No 300/1970). As set out in the operational note, the guidelines are based on application experience and operational problems that have emerged over time, including in the light of the technological evolution of the instruments that can be adopted, while also taking into account the guidelines of the Italian Data Protection Authority (Garante per la protezione dei dati personali).

The INL has, among other things, specified that:

• the installation of an audio-visual system or other instruments which may enable remote control of workers must necessarily and as a priority be preceded by a collective agreement with the workplace unions (Rappresentanza Sindacale Aziendale/Rappresentanza Sindacale Unitaria, ‘RSA/RSU’). The authorisation procedure, in fact, appears to be only contingent and subsequent to failure to agree with the unions and is conditional on proving the absence of the RSA/RSU;
• the installation of such instruments cannot be justified by any consent, even informed consent, of the individual workers concerned. In this case, installation would not only be unlawful but also criminally sanctioned;
• undertakings with several production units located within the competence of the same INL area office may submit only one authorisation application;
• companies located in several provinces, as an alternative to concluding individual agreements with the RSA/RSU, may conclude a single agreement with the trade unions that are comparatively more representative at national level;
• Article 4 of Italian Law No 300/1970 applies to companies where there are workers: (i) in the case of establishing a new company that at the time of the application has no workers but plans to employ staff as soon as the business activity starts, it may submit the authorisation application indicating the number of workers that there will be when the activity starts; (ii) in the event that a company already in operation with a plant legitimately installed and functioning but without workers, intends to employ personnel, it may submit an application but must – at the same time – certify the decommissioning of the plant, which will be put into operation only after the authorisation measure, if any.

The note also clarifies how geolocalisation systems can be used. The INL, expressly referring to the conclusions that the Italian Data Protection Authority has over time provided on the subject, refers to the Authority’s requirements for the configuration of these systems. The systems, in fact, must:

• exclude continuous monitoring of the worker;
• allow authorised persons to view the location only when strictly necessary in relation to the purposes pursued;
• allow the device to be deactivated during breaks and outside working hours;
• process by pseudonymising personal data;
• provide for the storage of collected data only when necessary and with retention times proportionate to the purposes pursued.

The INL also clarifies that the procedure imposed by Article 4 of Law No 300/1970 also applies to the types of work to which the protections given to subordinate employment relationships are extended by law. This includes collaborations that take the form of predominantly personal, continuous services organised through an employer (etero organizzate), even if organised through platforms, including digital ones.

Other related insights:
Video surveillance: the repetition of the procedure following a change in the ownership structure is unnecessary

Video surveillance: note of the Ministry of Labour no. 1241 dated 1 June 2016

In its message no. 1269 of 3 April 2023, the INPS [Italy’s National Social Security Institute] extended the deadline for submitting the request for social security contribution exemption for private employers who are in possession, as of 31 December 2022, of the gender equality certification referred to in Article 46-bis of Legislative Decree of 11 April 2006, no. 198

In particular, the application deadline for the 1% social security contribution exemption (initially set for 15 February 2023) was postponed to 30 April 2023.

In the same message, INPS also announced that special indications will be provided, in agreement with the Ministry of Labour, to allow – also in light of the results of the first phase of the application for the exemption – access to the social security contribution relief to employers who have obtained the gender equality certification after 31 December 2022.

Lastly, it should be noted that the Ministry of Labour, in its press release of 28 November, announced the ministerial decree of 20 October 2022, which defines the criteria and procedures for granting the social security contribution exemption for private employers who achieve the gender equality certification introduced into our system by Law No. 162/2021.

This is a voluntary certification that the most virtuous companies can apply for, and obtaining it brings with it a series of benefits, including: relief from social security contributions of no more than 1% and up to a maximum of €50,000.00/year for each company; advantageous criteria in the case of tenders; possibility of access to a bonus score for the evaluation, by national and regional European funds authorities, of project proposals for the granting of State aid to co-finance the investments made.