The latest Inps data show that this year’s use of the Extraordinary Redundancy Fund has increased by 45.65%. Widespread fears that this data will worsen rapidly, making appropriate government measures necessary.
Rising energy costs and the difficulty in finding raw materials herald a tough autumn for Italian companies. Firms which are grappling with multiple critical factors such as the pandemic aftermath, record inflation, the sudden (hopefully temporary) disappearance of important markets such as Russia and Ukraine and a looming new recession.
The risk is a general reduction and suspension of production (which may affect companies across the board and not only the “energy-intensive” sectors) with a surge of requests for redundancy payments by companies.
The latest Inps data (Monthly Report August 2022 – INPS Coordinamento Generale Statistico Attuariale (General Statistical Actuarial Coordination)) on the redundancy fund are not reassuring. Between January and July of this year, recourse to the Extraordinary Redundancy Fund (which is the social safety net used for structural difficulties) increased by + 45.65% compared to the same period in 2021. This affected industry (+35.81%), construction (+34.88%) and commerce (+103.62%).
The widespread fear is that the reported figures will worsen rapidly, which makes appropriate government measures necessary.
Recently, the government intervened to link up with the Orlando Reform which has been in force since January by introducing
The exempted Redundancy Fund expired on 31 May, while the other two measures are set to expire at the end of 2022.
The difficult task of the government will be to find solutions which work with those recently adopted within a Budget that leaves little room for manoeuvre to support businesses and workers against the effects of inflation, the energy crisis and the Russian-Ukrainian conflict.
An encouraging sign is that the imminent Energy bis Decree , which is being prepared by the government, includes the reintroduction of the Redundancy Fund without additional contribution.
Without suitable measures, companies would be forced to contain costs by proceeding with layoffs. This solution, however, would not be painless for the state coffers, as it would entail a NASPI increase cost, and come at a high social cost.
De Luca & Partners Managing partner and labour lawyer Vittorio De Luca explained to Verita&Affari: “This is a perfect storm between inflation, war, and increases in energy and raw material prices.” The worst thing is that the government has little room for manoeuvre to contain the wave of layoffs that are likely to arrive in autumn.
“At the moment, there is nothing tangible for anyone to work with.” De Luca imagines two possible options. “The first is the exemption from the payment of surcharges on the Redundancy Fund (9%, 12%, 15% depending on the use of the subsidy, ed.).”“The second is to allow access to redundancy fund for periods exceeding the 24-month limit in the mobile five-year period.”
This applies mostly to energy-intensive companies under the Energy Decree for the five sectors most in difficulty (steel, wood, ceramics, automotive, and the agro-industry). This is not only for them since energy increases have created difficulties across the board. The problem is how to make ends meet with the scarce resources. The new Extraordinary redundancy fund alternative is hard and painful. “Without this temporary social safety net, companies would be forced to contain costs with layoffs. However, this solution is not painless because it has a cost for the State which is Naspi and a significant social cost.” The next government will have to choose the solution to support businesses and workers in an ever-darkening economic scenario. Not only for Italy.
Source: Verità&Affari
Although the redundancy fund for the workforce (or a department) takes precedence over sick pay, the protected period continues to apply. This means that the dismissal of an employee who exceeded the protected period in such circumstances is legitimate.
In a 17 July 2021 order, the Court of Foggia ruled on the validity of a dismissal that exceeded the protected period. The Court stated that even if the wage supplement replaced the relevant daily allowance during illness, the employer could not arbitrarily change the reason of the employee’s absence, so the protected period continued to run during a certified illness unless the employee requested a change in the attribution of their absence from work.
In this case, an employee was dismissed for taking 430 days of sick leave instead of the 420 days provided for by the collective agreement applied to the employment relationship. The employee took legal action requesting the dismissal be declared unlawful, arguing that he had been placed, together with the other company employees, under the ordinary redundancy fund for Covid-19, which had legally replaced the sick leave he was taking. To support his claim, the employee refers to Art. 3, paragraph 7, of Legislative Decree no. 148/2015, and INPS Circular no. 197/2015, according to which “the wage subsidy replaces the daily sickness allowance in case of illness, and any contractually provided supplement.” The Court rejected the appeal referring to the arguments expressed by the Court of Pesaro in ruling no. 16/2021 and pointed out that with the above art. 3, paragraph 7, of Legislative Decree no. 148/2015, the legislator intended only to provide for a different attribution of the financial benefit received by the employee when using a period of wage subsidy, which remains, however, the responsibility of INPS (as in the case of illness), without intervening on the absence reason which pertains to the private relationship between employee and employer. Such a different attribution has nothing to do with the protected period and the work suspension. According to the Court, the employer cannot arbitrarily change the employee’s absence reason when they are on sick leave because that would mean giving the employer extra ordinem power, which would be contrary to a constitutionally guaranteed right, such as the right to health.
Continue reading the full version published in Norme & Tributi Plus Diritto of Il Sole 24 Ore.
The Court of Cassation, with its order no. 2289 of 2 February 2021, declared the failure to inform the trade unions in advance of the criteria to identify the workers to be placed under the redundancy fund and rotation methods unlawful.
A company in receivership appealed to the Court of Cassation against a Decree by which the relevant local Court admitted an employee with priority right to the creditors’ list after they had been placed under the redundancy fund in breach of procedural and trade union representative (RSA) consultation rules. According to the Court, the losing company failed to make the communication referred to in Art. 1, paragraph 7 of Italian Law no. 223 of 1991 (“Criteria to identify workers to be suspended and rotation methods provided for in paragraph 8 must be the subject of the communications and joint examination provided for in Article 5 of Law no. 164 of 20 May 1975“).
The company objected to the employee’s lack of legitimacy to bring proceedings for having asserted a collective procedure defect, given that the agreement reached with the trade unions would have remedied the complained defect.
In rejecting the company’s appeal, The Court of Cassation stated that “for the specific criteria identifying workers to be displaced and the rotation methods, the verification of the communication adequacy (under art. 1, paragraph 7 of Italian Law no. 223 of 1991) must be carried out with an assessment in the abstract and ex ante and not in the practical and ex post.” If a redundancy fund that involves a temporary surplus of staff is activated, the work suspension measure is unlawful if the employer “whether it intends to adopt the mechanism of rotation or otherwise, fails to communicate to the trade unions the specific criteria, possibly different from the rotation, to identify the workers who must be suspended, for joint examination purposes, to verify the choice meets the criteria.”
The Court of Cassation observed that an obligation to notify the company and provincial trade union representatives of the criteria to identify workers to be suspended and the rotation methods (or alternative criteria) “provides a procedural guarantee and operates on a dual level of protection – trade union prerogatives and individual guarantees – fulfilling the function of placing the trade unions in a position to negotiate the criteria for selecting workers to be suspended and ensure the potentially suspended worker, the prior identification of selection criteria and the verifiability of the employer’s private power.”
As for the alleged remedial effect of the agreements reached with the trade unions, the Supreme Court stated that it is excluded. This was because the unions signed the agreement without being aware of the content of data to be processed.
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