The first clarifications by the Italian Employment Inspectorate with regard to the increased penalties provided for by the 2019 Italian Budget Law

The increases provided for by the 2019 Italian Budget Law

Article 1, paragraph 445, of the 2019 Italian Budget Law concerns increases to the penalties for measures affecting the protection of workers’ interests and dignity.

According to the provisions in question, the values of the following penalties, in the context of employment and social legislation, are being increased as follows:

1. 20% for amounts due for breaches of the provisions of:

–     Article 3 of Italian Decree-Law 12/2002 (converted with amendments by Italian Law 73/2002) governing the maximum penalty for unreported employment;

–     Article 18 of Italian Legislative Decree 276/2003, which punishes sham employment intermediation; and

–     Article 12 of Italian Legislative Decree 136/2016, which punishes breaches of administrative obligations linked to procedures for the transnational posting of workers.

–     Article 18-bis, paragraphs 3 and 4, of Italian Legislative Decree 66/2003, which punish breaches of obligations

–     concerning the maximum limits for working hours, weekly rest time, public holidays and daily breaks;

1. 10% for amounts due for breaches of the provisions of Italian Legislative Decree no. 81/2008, punished in criminal or administrative proceedings;
2. 20% for amounts due for breaches of other provisions concerning employment or social legislation, identified in a decree of the Italian Ministry of Labour and Social Policy.

The Italian Budget Law also established that the increases must be doubled if, in the three previous years, the employer has been subject to administrative or criminal penalties for the same offences.

Without prejudice to the provisions of Article 13, paragraph 6, of Italian Legislative Decree 81/2008, the increases in question must be paid into the government budget in order to be reassigned, with a decree of the Italian Ministry of the Economy and Finance, to the preliminary budget of the Italian Ministry of Labour and Social Policy and allocated to an increase in the National Employment Inspectorate’s Decentralized Resources Fund for the optimization of personnel of the same Inspectorate according to criteria to be defined through supplementary collective bargaining in accordance with the provisions of the Italian Legislative Decree of 27 October 2009.

The Employment Inspectorate’s circular

With Circular 2 of 14 January 2019, the Italian Employment Inspectorate provided some clarifications. Specifically, it noted that, by virtue of the principle of tempus regit actum, the increases in question are applicable in relation to conduct carried out from 2019 onwards.

According to the Italian Employment Inspectorate, account must be taken of the fact that – as has been demonstrated by case law on several occasions – conduct of a permanent nature must be deemed to have been carried out when said conduct ceases (e.g. the maintenance of an unreported employer between 2018 and 2019 will be subject to the new penalty amounts).

The Employment Inspectorate also specified that further increases of 20% may be established for amounts due for breaches of other provisions concerning employment or social legislation, identified in a decree of the Italian Ministry of Labour and Social Policy.

Moreover, the Inspectorate confirmed that the procedures for establishing a special tax code have been initiated, and that “pending the issuance of said code, the increases must in any case be applied using the current tax codes”.