Who has the power to dismiss the employee in the case of an outsourcing contract? The issue, which at first glance may appear technical, has widespread application in Italy, where the use of outsourcing (or sub-contracting) is frequent. In particular, companies have to keep on top of both developments in the regulations as well as case law, to ensure that that they act lawfully, considering social policies have changed significantly over the years. “For an outsourcing contract to be considered genuine it will need to comply with the requirements on personnel organisation and management, the coordination of resources and the assumption of business risk by the contractor”, explains Vittorio De Luca, partner of the law firm De Luca & Partners. “Although the relevant legislation has remained substantially unchanged for 20 years, the case-law, due to the particular sensitivity of the matter, has developed in a way that has, generally, lead to more negative consequences for the principal”. Finally, there is also new case-law regarding the sham outsourcing contract, which emerges when the principal imposes external management, governing the ‘outsourced’ workforce of the contractor by interfering directly in how the activities are carried out. In this case, the courts may consider the dismissal of the employee to be ineffective if it is not carried out by the principal in its capacity as de facto employer.
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