The Expo 2015 theme: feeding the planet, energy for life is an appropriate theme for Italy, where the eating habits of a nation and the culinary expertise that can be found in even the lowliest of eateries, is second to none. 20 million visitors are expected to invade Milan during the 6 month period, including one million from China.
The underlying theme of Expo 2015 from an employment law point of view is the people behind it, that do the jobs that make the Expo world go round. For foreign companies coming into Italy for the first time and wishing to set up even a temporary presence, getting it right is crucial. One of the necessary cogs in the wheel is the workforce and whether a company is hiring 1, 10 or 100 employees the basic principles are the same. A word of advice: use trusted advisors and do not try to do it yourself.
Good news for businesses on the employment law front
The law in Italy regarding fixed-term employment contracts has changed for the better recently (with the reform introduced by the new Renzi Government). The main points of interest are:
- Companies no longer need to give a reason why they are hiring on a fixed term basis (as opposed to permanent) and this is a welcome breather for businesses; it also applies to contracts for temporary agency workers. The maximum duration of fixed-term contracts has been extended from 12 months to 36 months and can be extended up to 5 times, as long as the extensions always relate to the same job, and with no need to justify the reasons for the extension.
- The prior obligation of “stop and go” still remains: i.e. to let a period of grace elapse of at least 20 days between one fixed-term contract and another (10 days if the first contract did not exceed 6 months). This rule does not apply to seasonal workers.
- These new rules on fixed term contracts do not apply to employment relationships with Executives (dirigenti) that can have a duration of up to 5 years.
- Such fixed-term contracts can only be used for up to a maximum of 20% of the open-ended employees in the whole workforce (not a single unit) as at the 1st January of the hiring year, unless different limits are provided by the applicable Collective Bargaining Agreement.
- Some fixed term employees are completely exempt from hiring limits, such as those hired during the start-up stage of the company, for substitution reasons, seasonal activities or aged over 55.
- There are fairly hefty administrative sanctions for breach of the rules: up 50% of the monthly salary, per employee.
The Jobs Act: making the Italian labour market more flexible.
Another important reform which is going through Parliament at the time of writing is The Jobs Act (name taken from Obama’s American Jobs Act 2011 ): This mean that as of 2015 new hirings on open-ended contracts will have “gradual” protections directly linked to the length of service. The remedy of reinstatement will practically disappear except for some very specific cases (e.g. unlawful dismissal, discriminatory and disciplinary cases). Disappointingly however, and for the umpteenth time, the Italian legislature has failed to seize the nettle and put on the statute book “poor performance” as a reason for dismissal. This is very often a bone of contention particularly for foreign companies operating in Italy who often have to resort to a more convoluted reason for dismissal albeit they have a well documented case for dismissing a poor performer who impacts negatively on the business.
This most recent reform is without doubt innovative; it has been the subject of much discussion throughout the country, which is a sure sign of its importance to Italian businesses. We shall have to wait for the Jobs Act to come into force later this month (January 2015), to fully evaluate its momentum in helping to turn around the Italian economy.
All change for Executives (Dirigenti): included in the collective redundancy process for the first time.
Who are Dirigenti? In Italy while top level managers (dirgenti) are employees, they enjoy fewer protections than run-of-the-mill employees. However thanks to a decision of the European Court of Justice in February 2014 and the ensuing European Law 161/2014, Italy has recently passed its own law whereby the number of dirigente bave to be included in the calculation that triggers a collective redundancy (i.e. where a company with more than 15 employees dismisses at least 5 of them within a period of 120 days).
What does this mean in practice? Previously Executives were excluded from the whole collective redundancy process: i.e. information and consultation with the unions and the application of the legal selection criteria (technical/organisational needs of the company, family dependants and length of service). With the reform, Companies will need to set up a separate negotiating table with the Executives’ unions and apply (so it appears) the selection criteria. However such critería do not take into account the peculiarity of the dirigente relationship: i.e. the bond of trust and fiduciary duty. Not only, but in the event of some defect in the procedure the Executives would be entitled to damages of up to 24 months salary thus effectively extending to them protections previously enjoyed only by employees.
In short Italy is going through important political, social and legal changes at the moment and as employment lawyers we are seeing firsthand how all of this impacts on our clients and their Italian workforce. ltaly is a work in progress and the end product will hopefully be worthy of the prestigious label: “Made in Italy”.