Italian Labour Market moves towards an unprecedented simplification (Invest in Lombardy Blog, 8 January 2016)

Year 2015 just came to an end and it will no doubt be remembered as the one that more than any in the recent past has set a new route towards the simplification and innovation of employment laws. Italian employment law eventually came out as highly sensitive to the renovation and updating needs of the rules regulating employment. This is particularly interesting for both foreign investors and local players ready to face the great challenges ahead, now that the recent global crisis has apparently relented setting a path for a new beginning.

In this context, the Italian government started introducing a series of decrees implementing a reformed legislation commonly referred to as the “Jobs Act”, setting new rules and principles with an announced aim at making the Italian labour market simpler, and more modern and flexible. A reduction of the well-known restrictions to dismissals and material social security exemptions for new open-ended hires came first at the beginning of the year, with many others following soon after.

As for the introduction of new dismissal rules for employers staffed with more than 15 employees per production unit (or more than 60 as a whole), a first attempt had been made back in 2012 by the Monti government, with an apparently limited impact on the matter. However, it can now be stated that such a largely criticized attempt in 2012 (the first time an amendment of the discipline had been tried since its introduction back in 1970), probably allowed the present government, after less than a year in charge, to more easily implement this remarkable reform. According to these new rules, “old” reinstatement as a remedy (i.e., the right of the unfairly dismissed employee to obtain a court order removing the effects of the dismissal) is no longer applicable to employees hired on or after March 7th 2015, with the exception of certain limited cases (e.g. discriminatory dismissals, dismissals expressly listed as null by the law and dismissals based on the employee’s behaviour when the attributed misconduct did not take place). In all other cases, dismissal, if found unfair, would simply entail the possibility for the unfairly dismissed employee to seek an indemnification, calculation criteria of which are specifically set by the law, thus avoiding any room for discretion by the court in its quantification.

Equally, these changes have most likely boosted new hires in 2015. Incentives to open-ended contracts had already been introduced by the end of 2014, setting a very interesting total exemption (with limits) from social security contributions for those new contracts entered into by employers by December 31st 2015. Similar incentives are being extended to 2016; however, in the text presently under discussion in the Italian parliament, it can be presumed that these incentives will be much lower compared to those applying for new contracts entered into before the end of 2015.

Other significant improvements have been applied to the rules regulating the possibility for the employer to change duties assigned to employees, as well as to the significant restrictions in place for the employer to use equipment indirectly allowing remote control over employee activity; both are now simpler for the employer.

The latest introduction, which has already been warmly welcomed by all employers (e.g. old employers, startuppers, investors and soon) was implemented a few weeks ago with Legislative Decree no. 151/2015, which introduced a series of measures aimed at reducing bureaucracy and, as a consequence, removing once real and heavy obstacles that prevented employers and employees from “working happily ever after”.

In this context, the simplification of the procedures for employers to hire or transfer Italian (and EU) employees abroad is very clear, facilitating employees’ mobility in multinational corporations from one country to another. Specifically, the Ministry of Labour’s authorisation is no longer required before sending employees outside EU territory and, in what sounds like even more positive news, fines previously applicable in case of breach of such obligation no longer exist.

Employment books and formalities linked to compliance on health and safety in the workplace have also been simplified. For example, the employees register (listing all employees, along with their personal and contractual data) will soon no longer be required in hardcopy format at the workplace, a simple digital copy being sufficient. Moreover, the newly introduced simplification concerns those formalities that the employer needs to comply to, formalities which have been reduced vis-à-vis the National Administration for Insurance against Injuries at Work (INAIL) in case of injuries incurred in the workplace. A brand new protocol is being introduced which will allow to calculate the premium owed to INAIL with a simple online procedure.

Based on the brief summary above therefore, it is quite evident that all new rules under implementation lead to a clear and unprecedented move towards the simplification of the employment law system which is therefore moving closer to the needs and expectations of employers and employees.

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