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 Court of Cassation, with its ruling no. 16253 of 29 July 2020, expressed its opinion on the applicability of the “mitigated” reinstatement protection (with employment re-establishment and compensation up to a maximum of 12 months’ salary) in cases with no underlying cause for dismissal for objective justified reasons.
The case in question originates from a judicial appeal by an employee against dismissal based on justified objective grounds after the contract under which they were employed was terminated.
The Court of Appeal of Rome, hearing the employer’s complaint, upheld the worker’s request and confirmed the first instance decision declaring the dismissal illegitimate on the assumption that the defendant company had not demonstrated a relationship between the loss of the contract and the loss of the redundant worker’s usefulness.
The Board of Appeal ruled that the contract termination did not constitute an objective justified reason for dismissal in the absence of proof of the necessary causal link between the organisational and production reason underlying the employment termination, given that the employee was not exclusively or predominantly involved in that contract.
The losing company appealed to the Court of Cassation against the decision on the merits, complaining about the incorrect application of paragraphs 4 and 7 of article 18 of Italian Law 300/1970.
The Court of Cassation, in rejecting the appeal filed by the company, focused on analysing the discrimination between the application of the indemnity protection under art. 18, paragraph 5 (all-inclusive indemnity between a minimum of 12 and a maximum of 24 months’ salary) and the “mitigated” reinstatement protection provided for in art. 18, paragraph 4 in cases of dismissal for objective reasons, under Article 18, paragraph 7 of Italian Law 300/1970.
This last provision grants the judge the power to apply the “mitigated” reinstatement protection rules in cases where they find “a lack of an underlying cause for dismissal for objective justified reasons.”
According to the Supreme Court, the legislator’s intentions should be interpreted in the sense of attributing a residual nature to reinstatement protection which functions as an exception to the indemnity protection rule in cases of dismissal for objective justified reasons.
The Supreme Court recalled a recent ruling (Cassation decision no. 29101 of 11 November 2019), on individual dismissal for justified objective reason, “the lack of a causal link between the employer’s termination and the underlying reason can be classified within the evidence required to supplement the manifest lack of a cause that justifies the mitigated reinstatement protection under article 18, paragraph 7, Italian Law 300/1970 as amended by Law 92/2012.”
The Court of Cassation observed that “the absolute lack of connection between the contract termination and the work carried out by the worker, led the Court to exclude the existence of a causal link and the fact constituting a justified objective reason for dismissal.” The Court continued: this “ictu oculi” absence, would result in the “manifest lack of fact as it appears to be so evident to have correctly induced the second instance judge to opt for a mitigated reinstatement protection referred to in paragraph 4 of article 18 in its combined effect with the seventh paragraph.”
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The judgement raises many doubts about the long-standing uncertainty regarding the application of reinstatement protection in cases of dismissal for justified objective reasons deemed unlawful. The Court’s conclusion appears controversial in a certain sense, as it supports the residual nature of reinstatement protection opposed to indemnification. However, it links the concept of manifest absence of the cause underlying the dismissal (which allows the judge to apply mitigated reinstatement protection) to cases in which the judge considers there is a lack of a causal link.
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Legislative Decree n. 104/2020 (so-called “Decreto Agosto”) has just been published in the Official Gazette n. 203 of August 14, 2020.
The most significant innovations concerning the employment profiles introduced by Legislative Decree n. 104/2020 are the following:
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The partners and associates of De Luca & Partners law firm remain available to provide any information necessary to deal with the emergency, as well as to develop the best strategies to minimize its impact on business productivity.
With judgment No. 150 lodged last 16 July, the Constitutional Court has declared article 4 of Legislative Decree No. 23 of 4 March 2015 constitutionally unlawful , with limitation to the words “for an amount equal to a monthly salary of the last pay of reference for calculating the severance pay for each year of employment”.
The constitutionality issue had been raised by the Courts of Bari and of Rome with orders dated 18 April 2019 and 9 August 2019, respectively, within the scope of legal proceedings having as subject matter the unfairness of dismissals notified in breach of the relevant procedural rules, amongst which, article 7 of Law No. 300/1970.
In the opinion of the Judges a quo, any dismissal notified in breach of the formal rules (i) shall entail the breach of mandatory provisions, established beforehand in view of ensuring the “audiatur et altera pars” principle of legal civilisation and (ii) would always take the shape of “a breach of the law which must entail ‘adequate and customised compensation’, even if by way of a lump sum”.
By aligning itself with the principles set forth in the previous judgment No. 194/2018, the Constitutional Court has found that the method for quantifying the compensation applied to those dismissals for defects of formal nature only “enhances the marginality of the formal and procedural defects, also further belittling the role of guaranteeing fundamental values of legal civilisation, aimed at protecting the worker’s personal dignity”. Indeed, such mathematical criteria does not prove to be “adequate compared to the purpose of dissuading employers from bringing about dismissals affected by formal defects”.
Furthermore, seniority of employment “neglects the assessment of the specificity of the actual case” and is unfit to disclose “the wide range of variables directly affecting the employee personally”.Therefore, it has no reasonable relation with the disvalue of the dismissal affected by formal and procedural defects, which the legislator has intended to punish and which may not be exhausted in the mere arithmetic calculation of the seniority of employment. Therefore, according to the Constitutional Court, in compliance with the minimum and maximum limit set forth by the legislator, in calculating the relevant compensation, the Judge seized must, above all, take the seniority of employment into consideration, that is “the starting point of the assessment”. In any case, in no way can the Judge set aside the application “with a properly grounded assessment” of other criteria, which contribute “in a corrective vein” to make the calculation of the compensation concerned close to the peculiarities of the specific case. Amongst these, it is worth mentioning the seriousness of the breaches, pursuant to article 18, sixth paragraph, of Law No. 300/1970, the number of people employed, the size of the company, the behaviour and the conditions of the parties, cross-referenced by article 8 of Law No. 604 of 1966.
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Last 25 June the Constitutional Court press office issued a release stating that the Court had examined, on 24 June, the issues on the constitutionality raised by the Courts of Rome and Bari regarding the criteria for determining the indemnity to pay in the presence of a dismissal vitiated only from a formal and procedural standpoint as per art. 4 of Legislative Decree no. 23/2015. Specifically, the Office made it known that the phrase “an amount equal to one month salary of the last remuneration used to calculate post-employment benefits for each year on the job” was declared unconstitutional. According to the Constitutional Court, this is because it establishes a rigid and automatic criterion, linked to the sole element of seniority. Thus the Court returns to flunk the Jobs Act. It had already ruled on the point in 2018 when it had declared art. 3, paragraph 1 of Legislative Decree 23/2015 was unlawful only for the criterion for determining the indemnity, to pay in the case of dismissal without just cause and justified reason, automatically and solely tied to seniority. The motivations for the ruling are scheduled to be filed in the coming weeks.
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