In Italy, pensions are operated by INPS and fed by salary-based contributions paid by both the employer and the employee. For employees who started working after 1 January 1996, the amount of salary to be taken into account for the purposes of calculating the pension contributions is capped at an annually determined amount depending on cost of living increases. Receipt of pension benefits is contingent upon payment of the social security contributions provided for by the law. For employees, the pension is linked to the amount of contributions paid as a percentage of the employee’s global salary during an entire working life. In certain specific cases provided for by law (e.g. periods of leave), as to allow the employee to reach the minimum pension requirements; contribution is paid directly by the government. In cases such as the interruption or the termination of work (from lack of work during one’s working life or retirement before retirement age); the contribution due can be paid by the employee.
Healthcare and Insurances
Protection of workers who suffer accidents or occupational illness is primarily controlled by the INAIL (National Institution for Insurance Against Work Related Accidents).
Holidays and Annual Leave
Under Italian law, employees are entitled to annual holidays. The minimum length of annual holidays is four weeks per year, but the applicable NCBA may provide for a longer term. The four-week period must be used for at least two consecutive weeks during the same year, if requested by the employee, and the remainder of the weeks must be used within 18 months of the end of the accrual year. Except in the case of the termination of employment, an employer cannot replace the right of the employees to benefit from the minimum annual holiday entitlement with payment in lieu thereof. On the other hand, it is possible for the employer to pay the indemnity in lieu only with regard to the annual holidays exceeding the above-mentioned minimum period of four weeks. There are approximately 11 public holidays in Italy and an additional four days that used to be public holidays, but are now working days on which workers are paid double time.
Maternity and Parental Leave
Female employees cannot work during the 2 months prior to the planned birth of the child (3 months in case of dangerous jobs, listed by the Minister), and during the 3 months following the birth. Upon permission released by the competent doctor, the maternity leave can start 1 month before the planned birth and finish 4 months later. During the maternity leave, the employee is entitled to 80% of her regular salary, which is paid by the employer who then claws back such amounts from INPS. At the end of the maternity leave, the mother has the right to come back to the same job position she left and at the same/better conditions, and until the child is one year old, entitled to work in the same office or at least, in the same city. The father is entitled to paternity leave, on the same terms and conditions as in the case where the mother is seriously mentally injured, and for the residual duration if the mother dies or abandons the child.
During the first 12 years of the child, each parent is entitled to a period of absent from work of 6 months. If both parents take the parental leave, then they are entitled to a maximum period of 10 months combined. If there is only one parent, he/she is entitled to a parental leave of 10 months. If the parental leave is taken during the first 6 years of age of the child, INPS provides an indemnity equal to 30% of the regular salary for a maximum period of 6 months of parental leave, combined between both parents. During the first year of age of the child, the mother is entitled to 2 paid hours a day to feed the child (1 paid hour a day if the working day lasts less than 6 hours). Such time off is granted to the father if: the child is in his care, the mother does not take them, the mother does not work, the mother is dead or is seriously mentally injured. The above rights are granted in case of adoption as well.
Sickness and Disability Leave
In case of sickness and disability, the employee is entitled to a period of sick leave and during this time, the employee cannot be dismissed, unless for just cause or closure of the company. At the end of the leave, the employee is entitled to come back to the same job position he/she left and on the same/better conditions.
Pensions: Mandatory and Typically Provided
In 2010, the Italian pension system introduced the “floating window” which means that effective as from 1 January 2011, the government will start paying the pension to a retired employee only 12 months after the date on which such individual achieved the requirement for retirement eligibility and actually elects to retire. In 2011, another reform to the pension system was enacted, providing for the following:
For individuals working prior to 1 January 1996
“Pensione di vecchiaia” – termination of employment (possibility to work as self-employed); attainment of age 65 and 7 months for women or 66 and 7 months for men (from 1 January 2016); and a minimum period of contributions paid over 20 years.
“Pensione anticipata” – Law No. 214/2011 changed the requirement for length of contributions with the pensions system to achieve the pensione di anzianità, providing a minimum contribution of 41 years and 10 months for women and 42 years and 10 months for men.
For individuals who started work on or after 1 January 1996
“Pensione di vecchiaia” – termination of employment; attainment of age 66 and 7 months for men or 65 and 7 months for women, along with a minimum contribution term of 20 years; or attainment of age 70 and 7 months for both women and men, along with a minimum effective contribution term of 5 years.
“Pensione anticipata” – a minimum contribution of 41 years and 10 months for women and 42 years and 10 months for men; or attainment of age 63 and 7 months for both women and men, along with a minimum effective contribution term of 20 years.
Covid-19 Emergency Measures
In order to respond effectively to this unprecedented threat to public health and the global economy in the wake of the Covid-19 pandemic, the Italian Government has implemented a number of new measures to support businesses and stimulate the nation’s economy, including, amongst others:
The government has incentivised smart working measures.
The government has granted a period of ordinary and extraordinary wage fund (initially up to a max period of 9 weeks, later extended up to 31 October 2020, then extended for an additional 18 weeks by the so called ‘Relaunch’ Decree n. 2 ( Law Decree 104/2020).
The so called ‘Ristori’ Decree (released on 28 October) has made changes to the ordinary salary integration fund, to the ordinary allowance and to the salary integration fund in derogation, providing in particular, an extension of the salary integration treatment up to six weeks, with regard to the period between 16 November 2020 and 31 January 2021.
Employers who apply for the extension period must pay an additional contribution, determined on the basis of a comparison between the company’s turnover in the first half of 2020 and the corresponding half of 2019 equal to: 9% of the total wage that would have been due to the worker for hours not worked during the suspension or reduction of work, for employers who had a reduction in turnover of less than 20%; 18% of the total remuneration that would have been due to the worker for the hours not worked during the suspension or reduction of work, for employers who had no reduction in turnover.
No additional contribution for employers who had a reduction of the turnover equal to or more then 20% and for those who started their activity after January 2019, or those employers who were obliged to stop their activity due to the Decree of the President of the Ministers’ Council of 24 October 2020.
The decree provides the exemption of the payment of the social contributions due for November 2020, for those employers who were obliged to stop their activity due to the Decree of 24 October 2020.
By means of the Wage Fund, employees are paid up to 80% of their salaries (capped at 1.190 euro gross on a monthly basis) by the government.
Parents may take leave – continuous or split – not exceeding 30 days (overall between the two parents) for children not older than 12 years. During such leaves, they are granted an allowance equal to 50% of their salary. Alternatively, parents can choose to receive a baby sitting bonus equal to Euro 1200,00 or decide to spend the bonus to pay child care centres and services. In addition to the above, employees with children aged 16 years or less, have the right to abstain from work for the entire period of suspension of childcare services and educational activities in schools, without payment of allowances or recognition of imputed contributions, with a ban on dismissal and the right to remain in employment.
The creation of a so called ‘emergency remuneration’ equal to a minimum EUR 400,00 and a maximum EUR 800,00.
The payment of a compensation equal to EUR 1.000,00 for freelancers having a VAT position, who have suffered a reduction of their income equal to at least 33% in the second bimester 2020.
Bonuses and State Aid
New bonus of EUR 1.000 for seasonal workers in tourism, spas and entertainment who have suffered damages as a result of the epidemiological emergency caused by Covid-19.
In addition, an all-inclusive indemnity equal to EUR 1.000 is granted to the following employees and self-employed workers who, as a result of the epidemiological emergency caused by Covid-19, have ceased, reduced or suspended their activity or employment relationship, and who are not pension holders or holders of another employment contract of indefinite duration, other than the intermittent contract.
Sickness indemnity treatment granted to employees who are in quarantine (imposed).
The Italian Government has granted the possibility for the employers to suspend the payment of social security contributions: a) for companies whose revenues do not exceed the limit of EUR 2 million in the tax period prior to the one in progress; and b) for employers performing activities in specific fields, such as tourist operators, sports associations, cultural associations, etc.
Increase in disability pensions: the invalidity pension has been raised from EUR 285,66 to EUR 516,00 for persons with a permanent and all-inclusive (100%) incapacity (invalidity pension) and with incomes below EUR 6713.98. On top of that, the Italian Government has implemented several additional economic measures (e.g. suspension of certain taxes and/or postponement of the payment/grounding of funds, etc.).