On 29 December 2022, Italian Law No 197/2022, entitled ‘State budget for the financial year 2023 and multi-year budget for the three-year period 2023-2025’ (‘Bilancio di previsione dello Stato per l’anno finanziario 2023 e bilancio pluriennale per il triennio 2023-2025’ – hereinafter ‘Budget Law’) was published in the Italian Official Gazette.
The above-mentioned legislation, among the various measures, introduced some contribution exemptions for the year 2023. In particular, employers who in 2023 hire workers under the age of 36 under a permanent employment contract will be able to benefit from total exemption from social security contributions up to a maximum amount of EUR 8,000 for a maximum period of 36 months. This exemption is also granted for fixed-term contracts which are converted into permanent contracts in the same year. The relief in question is granted (and this is new) also in the case of employment of persons who receive ‘citizenship income’ (‘reddito di cittadinanza’).
In addition, the above-mentioned contribution benefit is guaranteed if the permanent contract (or the contract that is converted into a permanent contract) concerns female workers who, regardless of age, have been (i) unemployed for at least 24 months or (ii) unemployed for at least six months if they are resident in ‘disadvantaged’ (‘svantaggiate’) areas.
The reliefs introduced do not only concern social security contributions but also those relating to tax. On this point, in fact, the Budget Law reduces the tax rate on ‘productivity bonuses’ (‘premi di produttività’) which goes from 10% to 5% up to a maximum amount of EUR 3,000. The tax relief therefore applies to performance bonuses of variable amounts whose payment is linked to increases in productivity, profitability, quality, efficiency and innovation, as defined in the context of a corporate or territorial collective agreement. This relief applies to those who in the previous year have earned employee income not exceeding EUR 80,000.
Finally, the Budget Law extended until 31 March 2023 the right for ‘vulnerable’ (‘fragili’) workers to work through remote working. For the other categories of workers, on the other hand, remote working is permitted only after signing an individual agreement between the employer and the employee under Articles 18 et seq. of Italian Law No 81 of 22 May 2017.
The Italian Budget Law 2023 (Italian Law No 197/2022) was published in the Official Journal (Gazzetta Ufficiale) on 29 December 2022 and comes into force on 1 January 2023 and introduces the following important initiatives in the employment law field.
Agile working: as of 1 January 2023, the categories of workers with the right to agile working will be reduced. Until 31 March 2023, only so-called ‘vulnerable’ persons will have this right, workers with children under 14 being excluded.
Parental leave: an extra month of optional, 80% paid parental leave is introduced. The leave may be taken by either parent, alternatively, until the child is six years old.
Recruitment incentives for permanent contracts: for the whole of 2023, there will be incentives for the recruitment of permanent hires with a contribution threshold of up to EUR 8,000 for those who already have a fixed-term contract and in particular for women under 36 and for citizenship income recipients.
Productivity bonuses: as of 2023, the taxation of productivity bonuses will decrease from 10 per cent to 5 per cent. The preferential taxation applies to variable bonuses not exceeding EUR 3,000.
Temporary income: the possibility of using temporary employment services is extended by increasing the maximum limit of remuneration that can be paid by each employer from EUR 5,000 to EUR 10,000 per year. These temporary services may also be used for agricultural activities, as well as by employers with up to ten employees on permanent contracts, instead of five.
Vouchers: employment vouchers for temporary services are back, with a limit rising from EUR 5,000 to 10,000, for temporary services used in certain sectors, including agricultural activities, the hotel industry, personal care activities, and domestic work.
Pensions: there is a lot of news on the pensions front. The renewal for 2023 of the Early Pension (Anticipo Pensionistico – ‘APE Sociale’) and the extension of the Woman’s option 2023 (Opzione donna 2023) are confirmed, the latter with some limitations on the prerequisites with respect to the original measure (only for caregivers, women with disabilities and employees of companies in crisis). Introduction of the new ‘Quota 103’ whereby the pension prerequisite is reached at the age of 62 and after 41 years of contributions, but only applies to 2023. Finally, a new pension revaluation system for the years 2023 – 2024 is also in the offing.
Self-employment: the flat-rate regime, which provides for taxation at a rate of 15 per cent, will apply to revenues up to EUR 85,000, instead of the current EUR 65,000.
Other related insights:
Covid-19 and right to the use of parental leave: INPS provides the first indications
Law 30 December 2020, no. 178 (2021 Budget Law) introduced a new protection period from 1 January 2021 to the following 28 February for public and private at-riskemployees. INPS clarified this with its message no. 171 of 15 January. This protection involves equating the period of absence from work to hospitalisation for workers in possession of certification indicating their at-risk status. They must provide documentation about their disability or risk condition resulting from immunosuppression or the results of oncological diseases or due to life-saving treatments. Equating the absence with illness means recognising the worker’s financial benefit and contribution within a maximum period provided for by the legislation for the employee qualification and working sector. In addition: This protection allows the at-risk employee to carry out their duties in remote working, including (i) the assignment to different tasks included in the same classification category or area, as defined by collective agreements or (ii) the performance of specific vocational training activities which can be done remotely.
Other insights related:
In Official Journal no. 304 dated 30 December 2019, Law no. 160 of 27 December 2019 was published. “Budget Law 2020“, in force since 1 January 2020.
There is a great deal of news relating to labour and social security.
News relating to labour and social security.
One of the main innovations characterising the 2020 Manoeuvre concerns the reduction of the so-called “tax wedge” on employees. A comprehensive reform of the IRPEF (Personal Income Tax) regime is inaugurated through a progressive plan to reduce payroll taxation, which will produce its first effects, in economic terms, as of July 2020. In parallel and in support of this reform, the establishment of a Fund for the reduction of the tax burden on employees with a budget of €3 billion for 2020 and €5 billion from 2121 onwards has been provided for.
Having said that, it is expected, with certainty, that the details of the bonuses granted to employees and the possibility for companies to review the amount of taxation on labour will become known. The text of the 2020 Budget Law, in fact, refers to the adoption of a subsequent implementing decree to regulate the operational aspects of the Manoeuvre.
Amongst the changes made, there are new tax exemption thresholds for “meal vouchers” which introduce a daily non-taxable limit of €8 for electronic meal vouchers and €4 for those in paper format. In order to take advantage of the tax relief introduced, meal vouchers must be intended for employees and collaborators whose remuneration is included in the income from employment or, in any case, assimilated.
Furthermore, with the entry into force of the new measure, funding for “Industry 4.0” is confirmed with the condition precedent that the activities implemented must ensure environmental sustainability. Amongst the novelties contained in the package of measures are the interventions in support of start-ups and small- and medium-sized enterprises, provided that they are innovative.
The “2020 Recruitment Bonus” is reconfirmed to support the re-launch of employment of young people aged up to 35 years. Employers that, as of 1 January 2020, will hire young people under the age of 35 under an open-ended contract will be able to benefit from a tax break. This benefit provides for the payment of 50% of the mandatory INPS (social security) contributions for the first 3 years of the contract and, in any case, up to a maximum amount of €3,000 per year of tax relief. All employers, regardless of the region in which they are based, will be able to take advantage of this innovation.
For employers in the South of Italy, on the other hand, the bonus increases to 100% relief on compulsory contributions for the first 3 years of the term of the contract term (the so-called “2020 South Recruitment Bonus“).
In both cases, the condition remains that, for the first 6 months of activity, the hired young person cannot be dismissed.
News in the field of social security As regards social security, on the other hand, (i) the “Quota 100” Reform is confirmed for the whole of 2020 and until 31 December 2021; (ii) the financial subsidy that leads to retirement is renewed for those categories of workers who need greater protection, the so-called “Social APE” and (iii) the so-called “Women’s Option“, which provides for the possibility for public and private workers to anticipate their retirement also for 2020, is extended.
