TerraLex Cross-Border Guide to Cross-Border Labor & Employment Guidance

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As well as employing individuals to work for you as employees, there are other ways to engage staff in Italy – for example, by engaging self-employed contractors or consultants (under a contract for services) or agency workers, or even using partners in a partnership.

Depending on the relationship that is created between the business and the staff, your rights and responsibilities will differ. Generally, employees enjoy the greatest legal protection, particularly the right to claim unfair dismissal and entitlement to a redundancy payment. There is a wider category of “worker” that enjoys many (but not all) of the same protections afforded to employees. The decision as to which staffing model to use is often driven by tax considerations. Before engaging anyone to work for you, you should consider the tax consequences.

Individuals employed in Italy benefit from the rights and protections granted to employees under employment law regardless of their nationality. There are no nationality restrictions for company directors in Italy, and there is no requirement that directors of companies registered in Italy be resident in Italy.

The entrance of any non-EU employees within the Italian territory is subject to a specific procedure ruled by the so-called “decreti flussi”, that are measures through which, every year, the Italian government determines the maximum number of non-EU citizens entitled to enter the Italian territory for employment purposes. When entering the Italian territory, a non-EU individual willing to work in Italy shall be provided with a visa for employment purposes.

The EU employees may freely work in Italy by virtue of the EU principles on free movement of workers, aimed at removing any discrimination among EU citizens. Three months after having entered the Italian territory, the EU citizen is required to register as a resident in Italy.

The employer willing to hire a non-EU citizen shall comply with a specific procedure supervised by the Single Desk for Immigration (“Sportello unico per le immigrazioni”). Said employer is required to complete an application form and attach the documentation attesting the employment relationship thereto. Once the Single Desk for Immigration confirms the positive outcome of its assessment, the employee shall obtain an entry visa for the purposes of working in Italy. Should the employer fail to comply with the aforesaid rules when hiring a non-EU employee, such employer shall be punished by imprisonment of six month to three years and shall also pay a fine of €5,000 for each employee hired. Imprisonment and fines are higher in cases of hiring more than three employees, hiring minors, and the exploitation of employees.

Furthermore, the employer is ordered to pay the cost to repatriate the irregular employees in question.

In Italy, an employee is hired when he signs an employment contract. When hiring the employee, the employer shall provide the former with a signed declaration proving the occurred registration with the company's personnel register and a letter of employment setting out any and all information concerning the work performance.

In Italy, the pay is determined on a minimum value set by the National Bargaining Agreement and in no event whatsoever may be contractually amended to the detriment of the employee. Under Italian law, the pay set out by the National Bargaining Agreement may be amended by the individual bargaining only if such amendment is to the benefit of the employee.

The principles under Article 36 of the Constitution of the Italian Republic provide that the pay shall be “adequate”, so as to guarantee a respectable life to the employee, and also “proportional” to the tasks carried out by the latter.

The pay usually occurs on a “time” basis. In such a case the employee is paid depending on the duration of the work performed, on the basis of the following criteria: hour, day, week, fortnight (“quindicina”), and month. Alternatively, the pay may occur on a “piecework” basis. In this case, the employee is paid depending on the quantity of work performed.

In Italy, any entities or institutions distributing pensions are called first-pillar social security institutions (“enti di previdenza di primo pilastro”) and include, among others, the Social Security Service (“Istituto Nazionale Previdenza Sociale“, abbreviated “I.N.P.S.”) and the assistance funds (“casse professionali”).

The I.N.P.S. is the main Italian social security institution. All employees operating in the private and public sector, as well as certain employees in the public sector, and certain self-employed individuals, are required to enroll in the I.N.P.S. The main purpose of such institution is collecting contributions and distributing pensions.

There are many types of pensions in Italy, but the two main pensions are: the old-age pension (“pensione di vecchiaia”) and the “quota 100” pension. An employee is entitled to receive the old-age pension when reaching the age of retirement (it is different depending on the category of the worker) and after a certain quantity of contributions have been paid. On the contrary, the “quota 100” pension is deemed as achieved when an employee is at least 62 years old and has paid pension contributions for a minimum of 38 years during his/her working life.

In Italy, an employee is entitled to obtain a pension subject to the payment of pension contributions in favor of a social security institution, whereby such payment is mandatorily carried out by the sole employer. However, both employer and employee are required to give evidence of the aforesaid payment. If the employer fails to pay the pension contributions, the latter shall be punished by imprisonment of up to three years and shall also pay a fine amounting up to €1,032.91, in addition to a fine up to 60% of the unpaid contributions. If unpaid contributions do not exceed € 10,000, there is no imprisonment, but the fine will range from € 10,000 to € 50,000.The employee may check the payment of the pension contributions by directly submitting a relevant request form to his/her competent social security institution, which shall then provide said employee with a statement attesting the payments

In Italy, workers are represented by the national trade unions, the Unitary union representative bodies, and the Plant-level union structures. A trade union is an association of employees or employers aimed at protecting the collective interests of its associates. In other words, it is an association operating on a collective basis so as to protect the common professional interests of its associates.

The Unitary union representative bodies (“Rappresentanze Sindacali Unitarie”, abbreviated “R.S.U.”) are union bodies representing all the employees of a going concern. Such bodies, formed in every public and private workplace, are composed of no less than three individuals chosen by all the business employees and have the power to sign union agreements concerning matters provided for by the collective bargaining agreements on behalf of the business employees. On the other hand, the Plant-level union structures (“Rappresentanze Sindacali Aziendali”, abbreviated “R.S.A.”) are union bodies exclusively representing individuals enrolled in the trade unions having formed such union bodies. The R.S.A. are not provided with the power of business negotiation.

The working time is determined by the employer in the business guidelines, in compliance with the provisions set forth under the collective bargaining and the boundaries provided for by the law. As a rule, the working time is set on a weekly basis and may not exceed the maximum limit of 40 weekly hours, whereby such limit is deemed as regular working time under the Italian Legislative Decree no. 66 of year 2003. However, the collective bargaining agreements may provide for a shorter working time.

The Italian law (i.e., Legislative Decree no. 66 of year 2003) does not provide for a maximum daily limit of work performance, yet it sets out that the employee is entitled to be free from work for eleven consecutive hours per 24 hours. Furthermore, the Italian law also provides that the employee is entitled to be free from work for a time period no less than 24 consecutive hours, that usually is a Sunday, every seven days. In addition to the above daily and weekly rests, the employee is entitled to be free from work on the occasion of national and religious holidays.

The managers and the executive personnel are not subject to the above rules on the working time provided for by the Italian Legislative Decree no. 66 of year 2003, as such kind of works do not require a prearranged working time.

Employees in Italy have a statutory right not to be “unfairly” dismissed. Both parties can terminate a contract (other than a fixed-term contract) by giving due notice, but termination by the employer is generally possible only for just cause or justified reasons. Just cause requires grave misconduct by the employee, such that the employment relationship is deemed unable to continue, even provisionally. In this case, no notice need be given, although the employee is still entitled to the termination payment. Justified reasons can be objective (relating to the undertaking) or subjective (relating to the employee), and entitle the employee to the notice period and to the termination payment. Other reasons for terminating the relationship are retirement, redundancies, and other substantiated reasons (e.g. business reorganisation).

According to the specifics of the case, an employee who has been dismissed without just cause or justified reasons can be entitled to be reinstated and/or to receive an indemnity ranging from five to 24 monthly salaries, plus - in some cases - the salaries from the dismissal to the reinstatement.

If the employer employs less than 15 employees, however, the employee is only entitled to a payment between 2.5 and 14 monthly salaries.

Redundancy is a form of dismissal, caused by an employer needing to reduce the size of the workforce. "Redundancy" in this context is given a particular legal meaning and reasons for a redundancy to take place can include a business closure, a workplace closure, or a reduced requirement for employees to carry out work of a particular kind. To fairly dismiss on grounds of redundancy, an employer must establish the reason that a redundancy is necessary and must follow a fair procedure. This involves consulting with unions, looking for suitable alternative employment, and other ways to avoid the redundancy.

According to Law nr. 223/1991 (which applies only to undertakings with more than 15 employees) if an employer intends to make a collective dismissal (i.e. dismissal of at least five employees during a period of 120 days within the same facility), it must comply with the following procedure:

• Give a previous communication to the facilities’ unions and to their National Associations indicating information, such as the reasons for the redundancies, the reasons which prevent the employer from finding a different solution, and the number, qualifications, and duties of the affected personnel.
• A copy of said communication must be sent to the Provincial Labor Office.
• Within 7 days from the receipt of said communication, upon request of the unions, the employer and the unions will make jointly review the situation to identify possible alternative ways of utilizing such personnel.
• The above said review must be completed within 45 days from the receipt of the communication from the employer. The results of the review must be communicated to the Provincial Labor Office by the employer.
• If no agreement is reached between the employer and the union, the Director of the Provincial Labor Office will convene parties for a further review of the situation. Such procedure must be completed within 30 days of the Provincial Labor Office’s receipt of the above said communication by the employer.
• If the affected employees number less than ten, the above said terms are reduced by 50%;
• After terminating such procedures, even if no agreement is reached with the unions, the employer can dismiss the employees, in compliance with the due notice period.
• At the same time, the employer must provide the Regional Labor Office, the Regional Commission for Employment, and the unions a list of dismissed employees indicating their age, qualification, domicile, and the criteria utilized in determining which employees to dismiss in compliance with Art. 5 of the law.
• In case of breach of the above said procedure, the dismissals are unlawful and ineffective.
• If the dismissal does not concern all the employees, the employer will choose the employees to dismiss according to the productive and organizational needs and in compliance with the criteria set forth in the National Bargaining Agreement and with the other parameters set forth by the law. In case of breach, the dismissal will be unlawful and ineffective.
• For any dismissed employee, the employer has to pay the sum provided for by section 31 of art. 2, L. 92/2012 (“the 41% of the ASpI monthly maximum amount for any period of twelve months seniority in the last three years”). If no agreement is reached with the unions within the redundancy procedure, such sum is multiplied by three (section 35 of art. 2, L. 92/2012).

If you are considering taking on employees as a result of a business sale in Italy, you have to take into account that according to Art. 2112 of the Italian Civil Code, in the event of a transfer of an undertaking, or of a part of an undertaking, the employment contracts are automatically transferred to the transferee, and the employees maintain their respective seniority and the position that they have acquired during their employment with the transferor. Both the transferor and the transferee are jointly and severally obliged for the credits the employees are entitled to at the time of the transfer. The transfer is not a good reason to dismiss employees. However, employees whose employment conditions undergo significant changes during the three month period following the transfer may resign and claim notice compensation. Other cases for terminating the work relationship as a consequence of the transfer of undertaking may be provided for by the National Bargaining Agreements.

Following the transfer, the transferee must continue to observe the terms and conditions under any bargaining agreement applied by the transferor at the date of the transfer and on the same terms, until the date of expiry of such bargaining agreement or the entry into force or application of another bargaining agreement of the same level.

Pursuant to Art. 47 of Law nr. 428/1990, if the transferor employs, in total (i.e. irrespective of the number of employees who are actually transferred) more than 15 employees, both transferor and transferee of the undertaking must carry out an information procedure at a local level prior to the execution of any binding agreement. This must take place at least 25 days before the deed effecting the transfer is executed or, if earlier, before a binding agreement between the parties is reached. Both the transferor and the transferee must inform in writing the representatives of workers in the undertaking, and the relevant trade unions of:

• the reasons for the transfer;
• the legal, economic, and social implications of the transfer which may affect the employees;
• the measures envisaged in relation to the employees (if redundancies are contemplated, this information must be disclosed, and a collective dismissal procedure could be required); and
• the date of the envisaged transfer.

Within seven days of receiving the information outlined above, the workers’ representatives and trade unions are entitled to request a consultation meeting. Consultation must commence within seven days of receipt of such a request. The procedure is deemed complete ten days after the commencement of the consultations regardless of whether the parties reached agreement on the transfer.

If the transferor and/or the transferee do not comply with such information procedure, they will be in breach of Art. 28 of the workers’ bill of rights (Law nr. 300/1970).

Italian laws do not provide a legal mechanism for trying to resolve disputes in amicable ways. It often happens that (especially for relationships with executives) the attorney of the employee gets in touch with the employer to verify if an amicable solution can be reached.

When an employment dispute cannot be resolved informally, an employee may potentially bring a claim in the court. The procedure is simpler and faster than the ordinary procedure. There are specific courts (Labor Courts) for these disputes and their competence is mandatory.

Italian law provides employees who satisfy the eligibility criteria with a number of other rights. These include: - Access to a Statutory Sick Pay ("SSP") scheme for the duration provided for by the law for different categories of workers.

• The right not to be dismissed during the maximum period provided for by the National Collective Agreements.
• Various family-friendly rights and entitlements, including:
• • Statutory Maternity Leave and Statutory Maternity Pay;
• • Statutory Adoption Leave and Statutory Adoption Pay;
• • According to the Decree nr. 151/2001 there is a compulsory period of five months' maternity leave.

Italian law prohibits all discriminatory actions which may result in any distinctions, exclusions, or propensities whatsoever based on race, color, gender, religion, politics, national progeny and social origin, as well as any other exclusions or propensities denying or altering equal possibilities or equal work treatments. Any employees subjected to discriminatory actions are entitled to file a petition before the Italian Civil Court. If case the petition is granted by the Court’s judge, the latter could order the payment of both economic and non-economic damages in favor of the employee.

The minimum age for working is 16 years. In the case of breach, the employer shall be punished by imprisonment of up to six months and shall also pay a fine amounting up to €5,164.

Italian law does not provide for specific procedure for the protection of employees’ rights, other than the possibility to start legal action. Some National Bargaining Agreements provide for procedures to be started with the assistance of internal unions when an employee deems that his rights have been violated, but normally such procedures are not binding for employers.

Italian law does not provide for specific procedure for the protection of employees’ rights, other than the possibility to start legal action. Some National Bargaining Agreements provide for procedures to be started with the assistance of internal unions when an employee deems that his rights have been violated, but normally such procedures are not binding for employers.