Italy: Amendments to Regulation against Offshoring: Costly and Longer Procedure
The law against relocation of business was introduced in January 2022 and applies to big companies, not in crisis, with at least 250 employees, that intend to cease an activity involving the dismissal of more than 50 persons. Despite the purpose of restraining offshoring, this regulation applies regardless of whether the company would relocate. In such case, the collective dismissal procedure shall be preceded by a preliminary phase.
First, the employer must inform the trade union representatives, the Regions, the Ministry of Labour, the Ministry of Economic Development and Anpal about the intention of closure. Within 60 days, the company must draw up a plan containing a series of actions to deal with the social consequences of the closure. The plan must be discussed with the trade unions and institutions. This could lead to an agreement, or not.
Consultation phase may last up to 120 days (as extended from the initial 30 days). Until the end of this phase, the employer may not proceed with collective dismissals, nor with individual dismissals for objective reasons. If the parties will not reach an agreement within such period, the collective dismissal procedure may be initiated.
The collective dismissal procedure may last up to 75 days. As a consequence, the preliminary phase (60 + 120 days) and the collective layoff procedure (75 days) can reach up to 255 days during which the employer were required to pay wages, in addition to the relevant contribution charges.
In order to discourage procedures that do not result in an agreement, the new Law Decree increased by 500% the dismissal contribution the employer shall pay in case of collective redundancies. On top of that, if the termination of activity results in a reduction of more than 40% in the workforce in the unit concerned, company has to repay any public subsidies received in the previous 10 years. Repayment will be made in proportion to the percentage of the workforce reduction.
Key Action Points for Human Resources and In-house Counsel
- When implementing a groupwide reorganization, local HR and In-House Counsels should know that collective redundancy may fall under the regulation against offshoring.
- In case of shutting down of business, big corporations with more than 250 FTEs would be forced to comply with a complex procedure, that may result particularly costly especially if they do not manage to find an agreement.