The so-called “Dignity Decree”, approved by the Council of Ministers on July, 2nd 2018, introduces important innovations concerning fixed-term employment contracts, supply of work and penalties in the event of illegitimate dismissal, as provided by the so-called. Jobs Act (i.e., for open-ended contracts stipulated after March 2015).
The Dignity Decree will enter into force the day after its publication in the Official Journal, which usually takes place a few days after the text approval by the Council of Ministers and the signature by the President of the Republic. Thus, it is presumed that by the end of next week the Dignity Decree should enter into force.
As a decree law, the Dignity Decree shall then be converted into law by the Parliament within 60 days of its entry into force.
Please find below the most significant reforms concerning employment contracts.
FIXED – TERM CONTRACT
A term of no more than 12 months may be applied to the employment contract.
A longer term, in any case no longer than 24 months (instead of the previous 36 months), may be applicable only in the presence of at least one of the following conditions (the so-called obligations):
- temporary and objective needs, unrelated to the ordinary activity, for other employees’ substitute needs;
- requirements connected to temporary, significant and non-predictable increases of the ordinary activity.
The above-mentioned obligations shall be provided also in case of extensions of an already pending fixed term contract exceeding 12 months or in case of renewals.
Given the maximum duration abovementioned, the extensions of the contract cannot be more than four (instead of the previous five).
These provisions will apply to fixed – term contracts stipulated after the entry into force of the decree, as well as to renewals and extensions of contracts ongoing at the same date.
SUPPLY OF WORK
Now also the supply of work may have a maximum duration of 24 months and shall be subject to the “stop and go” discipline.
The substantial equivalence between the supply of work and the fixed-term contract, introduced by the Dignity Decree, is already raising strong objections and criticisms by professionals (even with respect to a possible violation of EU principles).
FIXED – TERM AND SUPPLY OF WORK RENEWAL CONTRIBUTIONS
To each renewal of the fixed-term and/or supply of work contracts, the additional contribution provided by the so-called Fornero Law, equal to 1.4%, is increased by 0.5%, to be paid by the employer.
PENALTIES FOR ILLEGITIMATE DISMISSAL
The Dignity Decree, modifying Article 3, paragraph 1 of Legislative Decree no. 23/2015, tightened the protection applicable to dismissal of employees hired after March 7, 2015, and declared illegitimate by a judge.
Under the new legislation, the compensation due to the aforementioned employees will be calculated as an amount between a minimum of 6 and a maximum of 36 months of their global salary, taking into consideration the length of service (while, in the previous legislation, the indemnity varied between a minimum of 4 and a maximum of 24 months).
The abovementioned amounts are halved (within the maximum limit of 6 months) for dismissals under the so-called mandatory protection (i.e., by companies employing up to 15 employees).