Italy: Employment Settlement Agreement with the Assistance of the Lawyers Only

New rules will apply for settlements relating to labour disputes. The reform overcomes the current system where settlement agreements on employment rights must be signed at protected venues. Right now, only public bodies or trade unions can mark a settlement agreement as full and final. It is based on the idea that they are the only subjects who can ensure the will and awareness of the employee in settling labour matters. From June 30, 2023, lawyers also can play the role of guarantors of the agreement validity.

Under the new regulation, employer and employee can execute settlement agreements under the “assisted negotiation” procedure on the condition that each party has the assistance of a lawyer. The procedure will start with an invitation to enter into the agreement that set out the negotiation procedure terms.

The agreement indicates the matter of dispute.  It specifies the length of the procedure, provided that it cannot be less than one month and longer than three. Such period can be extended of further thirty days with the agreement of the parties. Failure to respond within 30 days or the refusal to the invitation may be used by the judge to evaluate the conduct of the party for the purposes of determining any legal expenses.

The agreement signed by the parties and the lawyers constitutes an enforceable title and is sent, by either party, to one of the certification commissions. This procedure is neither mandatory nor a precondition to bring suit. Assisted negotiation procedure is indeed optional and it as a mean to incentive an out-of-court dispute resolution between the employee and employer.

Key Action Points for Human Resources and In-house Counsel

• Settlement agreements in an employment context are ordinarily used to provide legal certainty following the conclusion of an employment relationship.
• Considered the legal implications of signing a settlement agreement, it is important that both parties have received legal advice from a lawyer to ensure that they had understood the full effect of it.
• ADR could be the first approach to take before resorting to legal proceedings, but it is not mandatory in L&E matters.