Italy: 2023, Looking ahead
In 2023, Looking ahead, we explore the most important trends and developments related to labour and employment law in Italy.
TRENDS FOR 2023 –
THE YEAR AHEAD FOR EMPLOYERS
The context in which we live today is characterized by attempts to overcome the Covid-19 emergency, which-as we all know-has also had a major impact on labor law. We believe that, in the medium term, the world of work will return to being structured according to a model quite similar to that in place before the spread of the pandemic.
Before we get to that, however, we expect to see a kind of “transition period” of about to two or three years.
The main challenge for the post-pandemic world of work is certainly the management of remote work which is one of the new areas of development that is emerging in relation to labor relationship.
Moreover, one of the legislative innovations that has most impacted the Italian legal system is the amendments to regulation against offshoring. The Italian government has recently tightened the rules on collective layoff for the shutting down of business of large companies. The new amendments brought some important changes in regulation adopted to discourage offshoring, but it could raise issues of constitutional legitimacy.
Another major change regards the reform of the Italian civil procedure. The objectives to pursue have been the same for years: to lighten the excessive load of proceedings and respond to the need of speed and efficiency to ensure an effective judicial protection. As part of the reform, also the labor law procedural system will be affected by some changes.
Is remote working expected to be kept beyond the end of the pandemic?
In the last years we have seen a considerable recourse to remote working as one of the main instruments in containing the spread of the pandemic. After nearly three years from the start of the pandemic, it is clear that working remotely will not be only an answer to a transitory emergency, but it will contribute to a real transformation of the traditional work. As a matter of a fact, both employees and employers seem to appreciate the advantages deriving from remote work. Employees can benefit from saving commuting time, cost of petrol or eating. Many established businesses have also managed to reduce expenses, for example, by reducing real estate costs as it is possible to choose smaller premises, with lower maintenance and support costs for electricity, heating, air conditioning and all the other little necessities that keep an office operating.
With reduced staff onsite, refreshment and cleaning services are likely also to decline.
How do employers implement remote work?
To allow recourse to remote working during the pandemic emergency, Italy enabled the employer to activate remote working by submitting the relevant communication to the competent authority without the need to sign an individual agreement. This emergency regulation has ended at the end of 2022. From 2023 (as it occurred before the pandemic) employers and employees are required to execute a written individual agreement whereby terms of working remotely outside the employer’s premises are defined. This agreement establishes the rules the workers shall abide by while performing their working activities remotely. Key issues of flexible work are indeed to state clearly the obligations the remote workers shall comply with, making them aware of any disciplinary consequences of their actions (or the omissions).
The “right to disconnect” from work: utopia or reality?
In the last year, it becomes clearer the need to have specific regulation of the “right to disconnect” from work. Under the current system, remote workers have the right to disconnect from technological instruments and computer platforms, which is necessary to protect the employee’s rest time and health, without affecting the employment relationship and rates of pay.
Some National Collective Bargaining Agreements contains also specific rules.
For instance, following the renewal dated 19 December 2019, the National Collective Bargaining Agreement for the Credit Sector provides that outside working hours and during leaves of absence, employees are not required to access and connect to the company’s system. Moreover, it is provided that in the above cases the employee can also decide to deactivate his or her connection devices and even avoid receiving company communications.
In any case, it is certain that the right to disconnect proves to be an increasingly heartfelt demand of workers and employers should take it into account also in order to safeguard the health of each employee.
Effects on hiring procedure
Offering remote working can be a good reason for employees to accept a job offer. The remote working experience can also incentivise people to stay loyal and could help to reduce employee turnover. Flexible work arrangements may be attractive for job applicants and even once the pandemic is over many companies should be prepared for candidates wanting to work remotely. In such scenario, it seems that companies equipped to allow employees to render their work performance remotely and give greater margins of autonomy in carrying out their work schedules and tasks look to better respond to the upcoming labour market.
Implementation of the EU Directive 2019/1158
The EU Directive 2019/1158 on work-life balance for parents and caregivers has been implemented into Italian legislation through the Legislative Decree No. 105 of June, 30 2022, which came effectively into force as of August, 13 2022. The new regulation is aimed at supporting workers with caring responsibilities and encouraging a more equal sharing of caring responsibilities between women and men.
Have there been any changes in the rules relating to maternity, paternity, or dependents?
In line with the purposes to allow for the early creation of a bond between fathers and children, Italy confirms the mandatory paternity leave that, was till then, acknowledged under the provision of the national yearly budget law. Mandatory paternity leave comes fully into effect confirming its duration of 10 working days. During mandatory paternity leave, the employee will receive an allowance to be paid by INPS of 100% of salary. Moreover, the working father is also entitled to a compulsory abstention of 5 months in case the mother cannot use it. Up to child’s 12-years-old, parents are entitled to a leave which aggregate maximum cannot exceed 10 months (increased to 11 months if the father abstains from work for at least 3 months).
The decree contains also measures to reinforce the rights of workers with caring responsibilities. Among those, there is the introduction of the possibility to fractionate the right to monthly permits among several people, in order to respond to a need for a more balanced sharing of care tasks.
Employers are required to be attentive to such measures which have the purposes to assure the wellbeing of their employees and to improve their work-life balance.
What types of flexible working arrangements have become most common?
Part-time agreement is one of the most common forms of flexible working arrangement in Italy nowadays. However, some companies have also implemented flexible working hours policies/agreements which involve a “core” period of the day during which employees are required to be at work and more flexibility on start and finish time (provided that the employee achieves the total number of hours of works weekly/monthly). On top of that, as a result of the pandemic, we may not mention remote work which is surely becoming a widespread contractual tool intended to give flexibility in terms of time and place of work. Pursuant to the Work-life Balance Decree, employers implementing the smart working are obliged to give priority to requests made by certain categories of workers, like parents with children up to 12 years of age or caregivers of family members with severe disabilities.
Are employers applying flexible working practices to a greater degree?
Many employers are implementing flexible working initiatives promoted primarily by the HR function and consistent with the corporate culture oriented to work-life balance and employee well-being. Among the initiatives usually implemented there is the introduction of flexible working hours, the flexibility of the workplace, the provision of laptops and appropriate tools to facilitate remote communication.
What are the trends in 2023 in relation to diversity & inclusion issues?
Diversity & inclusion management issues are becoming increasingly central in Italy, at least at the level of public opinion.
This is bound to have an effect on the employment relationship as well, although, at present, diversity management practices are not yet widespread in Italian companies.
Nonetheless, several multinational companies have put in place company policies providing for a prohibition on discriminations with the aim to avoid these taking place within their organizations. These policies are adopted by companies on a completely voluntary basis since there is currently no legislative regulation on the point.
This shows, on the one hand, that this is a phenomenon of growing importance in the social reality and, on the other, that an intervention of the legislator will probably be necessary, in order to encourage the widespread adoption of diversity management practices.
Not to mention that one of the missions of the national recovery plan after the pandemic crisis is precisely that of inclusion and cohesion.
Have there been any major changes in the diversity & inclusion discipline?
The most important legislative innovation in the areas of diversity & inclusion regards gender equality.
On this point, in fact, the legislator intervened in both 2021 and 2022, with dispositions that employers will certainly have to deal with in 2023.
In particular, in 2021 Italy introduced the possibility for companies to obtain gender equality certification.
This certification was introduced for the specific purposes of decreasing the gender pay gap, improving working conditions for women, also in relation to maternity protection, increasing female employment and achieving greater inclusion.
The basis for the activation of the procedure to obtain gender equality certification was laid in April 2022, with the adoption of specific guidelines by the Ministry for Equal Opportunities and the Ministry for the Civil Service.
Note that obtaining gender equality certification allows companies to benefit of a social security contribution relief, as well as some advantages when participating in public tenders or applying for some funding.
Gender equality certification is, therefore, a benchmark employers will want to meet.
Have there been an increase in lawsuits concerning discrimination?
Generally speaking, litigations triggered by a discrimination relying on employees’ gender, sexual orientation, age, race, ethnicity, religious belief or disability status having taken place upon their hiring or promotion are rather uncommon in Italy (otherwise that happens in other countries).
Indeed, discriminations in Italy are more likely to be challenged by employees in connection with the termination of their employment relationship and this trend also appears to be a consequence of the changes in statutory rules governing protections against unfair dismissals. For employees hired after 7 March 2015 employers may be ordered to reinstate dismissed employees only under very limited cases, such as when the Labour Court ascertained the dismissal is based on discriminatory grounds and therefore invalid.
Employment contracts: do employees have to be provided with specific information in writing?
One of the recent issues that involved most employers of EU was the implementation of Directive (EU) 2019/1152 on transparent and predictable working conditions. In Italy the Directive has been adopted with the Transparency Decree 104/2022 (“Decreto Trasparenza”). Apart from several interpretive and practical issues, this Decree established that the employer must provide the employee with several information in writing, at the time of hiring or at least within seven days after the initiation of the employment relationship. Such information includes the identity of the parties, the place of work, the offices or domicile of the employer, the date of commencement of employment, the initial remuneration and the items that compose it with details of the timing and method of payment, the employee’s contractual category, level and job title and the specific type of contract, specifying whether it is fixed term relationship its duration etc.
Minimum conditions implied in employment contracts
Italian law envisages certain duties incumbent both on the employees and on the employers by virtue of the employment relationship, even if they are not expressly mentioned in the contract itself. The employment relationship is founded on the duties of loyalty, diligence and care in the employees’ working performance and non-competition during the working relationship. On the other hand, the employer must pay the agreed salary and take adequate measures to protect the physical integrity and moral personality of the employees.
To what extent is collective bargaining in Italy affecting terms and conditions of employment?
In Italy, many issues related to employment relationships – concerning salary, termination of the employment, notice period and leave of absence – are governed by the relevant national collective bargaining agreement applied by the employer. Bargaining agreements can, albeit less frequently, be entered into also at a company level by the employerand the employees’ staff representative. Typically, these agreements define specific issues of a certain company and provide more favourable conditions for its employees.
Common restrictive covenants to set down in employment contracts
Depending on the roles and type of work assigned to the employee, common restrictive covenants in employment relationships are:
– non-compete, which prevent employees to carry out activities in competition with the former employer after the employment relationship has ended;
– non-solicitation of customer/employees, which prevent employees to persuade other company’s employees or customers to leave it;
– confidentiality which prevent employees from disclosing confidential information relating to the business of the employer.
Restrictive covenants may only be deemed valid and enforceable if they are agreed in writing. When it comes to non-compete covenants, moreover, the law provides for further requirements. They must:
– grant consideration to the employee;
– define the prohibited activities and limit the geographical scope of the restrictions;
– provide a clearly specified duration within the maximum duration set out under the law.
Trends of common restrictive covenants and protection of company’s asset
Due to the increase of competitiveness among the companies of each industry, as measures to protect their assets it is common that employers arrange restrictive covenants with their employees. Employers should draft clear and specific clauses, while generic wording could not fulfil their purposes.
How do employers set their economic conditions?
The standard remuneration model consists in a base salary, determined according to the market standards, which is generally higher than the minimum wage provided by the applicable national collective bargaining agreements, and in a variable element based on the achievement of annual objectives. Multinational companies commonly apply also medium term or long-term incentive programs to their executive level employees.
Has a statutory minimum wage been introduced in Italy?
A statutory minimum wage has never been introduced in Italy. However, most companies apply national collective bargaining agreements that set out the minimum wage, depending on the contractual level. The statutory minimum wage is a topic of debate also at EU level. Directive (EU) No. 2022/2041 of October 19, 2022, of the European Parliament and of the Council on adequate minimum wages in the European Union has been published in the Official Journal. Member States will have to take the necessary measures to comply with this directive by November 15, 2024. We will see how Italy will abide by this directive. Though the setting of the wage remains a sensitive topic considering the need to allow workers a decent living and it cannot ignore the steadily rising of the cost of living in light of the recent events.
Gender pay gap in Italy
Another issue we expect to be debated in 2023 is certainly the pay gap we see between women and men.
According to the Global Gender Gap Report 2022, out of 146 countries, Italy ranks 63th for gender parity. Italy manages to close more than 70% of its overall gender gaps. This is attributable to a greater share of women parliamentarians, improvements on wage equality for similar work and a further closing of the country’s gender gap in estimated earned income. For the year ahead, we are expecting further improvements that will reduce such unreasonable gap.
What are the changes relating to monitoring employee’s emails, telephone calls or use of an employer’s computer system?
The main changes on statutory rules governing employees’ surveillance took place in 2015, when the so-called “Jobs Act” regulations came into force. These changes have loosened restrictions governing employees’ remote control, taking into account the technological progress. The purpose is to find a balance between the production-related and organizational needs of the employers, on one side, and the dignity and the right to privacy of the employees, on the other.
Employee’s right to privacy
As to data protection, it is worth noting that the Legislative Decree no. 196/2003 (the so-called “Privacy Code”) has been deeply amended by the Legislative Decree no. 101/2018 in order to have provisions under the above “Privacy Code” being compliant with those set forth by the EU Regulation no. 679/2016 of the European Parliament and of the Council on the “protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing directive 95/46/EC (general data protection regulation)”, which became enforceable as from 25 May 2018, after a two-year transition period. Also in the context of remote control, employers should collect and treat personal data relating to their employees in compliance with privacy law.
Use of social media in and outside the workplace
As to social media, there is indeed an increasing number of case-law triggered by employees’ dismissals due to their comments on social media. Generally speaking, in the event that an employee expresses a negative comment on the company, this may lead to the termination of the employment relationship by the employer, depending on the seriousness of the breach by the employee in the particular case. Indeed, the relevant assessment shall be carried out on a case-by-case basis, thus taking into account the specific circumstances characterizing each case.
Litigation trends concerning employee’s use of social media
Criteria to be taken into consideration by the Labour Courts when carrying out such an assessment include, but are not limited to, the existence of a company policy hereof which has been breached by the employee, the fact that the employee’s profile on social media is public or private (as, in such a case, the comments by the employee may only be read by those individuals who qualify as his/her “friends”), whether the employee’s conduct could damage or not the employer’s brand. Another criterion which has to be taken into account is the freedom of expression under section 21 of the Italian Constitution: indeed, based on case-law, employees are entitled to criticize the employer as a right associated with their freedom of expression, to the extent that either certain requirements are met, either “substantial” (the criticism relies on founded grounds as this is true) or “formal” (modalities used by employees are not as such as to unfoundedly damage the respectability of the employer or cause any damage whatsoever to this).
How should an employer handle the employee’s use of social media in or outside the workplace?
Due to the absence of a statutory regulations governing the use of social media by employees and considering its increasing importance, we expect that employer would implement company policies regulating its use, which may help when taking disciplinary measures against an employee.
What changes are expected regarding whistleblowing in the workplace?
Whistleblowing is certainly one of the hot topics in Italy for 2023. The long-awaited Legislative Decree implementing Directive (EU) 2019/1937 on the protection of persons reporting infringements of Union law is about to be issued. In Italy, in fact, for a long time the specific legislation on whistleblowing only covered civil servants and employees in banks and financial institutions.
In relation to the private sector, in 2017 Italy regulated the status of the whistleblower within the peculiar framework of Legislative Decree No. 231 of 8 June 2001, which provides for the faculty for entities to adopt organizational models to be exempted from liability for certain criminal offences. The new Decree is a big news for the year ahead for several reasons.
First of all, it is intended to be the regulatory point of reference both for the public and private sectors. Secondly, its scope covers a wide area of violations of national and European law that are such as to harm the public interest or the integrity of the public administration or private entity. The most important profile to highlight, however, is the fact that the adoption of whistleblowing procedures will become mandatory for certain companies (while before, in the private sector, it was optional, except for certain “big” publicly listed companies).
Then, in the Decree there are also specific sanctions.
How will the new whistleblowing procedure be designed?
The new Decree provides for a more detailed discipline of the whistleblowing procedure. In particular, in relation to reporting channels, it is required that each public or private entity adopt an internal reporting channel, the management of which, subject to compliance with legal requirements, may also be outsourced. The use of an external reporting channel, established at the moment at the Italian anti-corruption authority (ANAC), is also possible, but only residually compared to the use of the internal reporting channel. Public disclosure cases are also considered, albeit the protection for the reporting person in this case is subject to strict constraints.
How will whistleblower protection be strengthened?
From a subjective point of view, protection is extended by granting it not only to whistleblowers in the strict sense, but also to so-called facilitators (i.e. persons who assist a whistleblower in the reporting process, operating within the same working environment and whose assistance is to be kept confidential) and other persons – better specified in the Decree – close for various reasons to the whistleblower himself.
From an objective standpoint, extensive protection is provided for the whistleblower against retaliation, expressly listing some cases that fall under it (i.g., dismissal, suspension or equivalent measures; downgrading or non-promotion; change of duties, change of place of work, reduction of salary, change of working hours; etc.).
In the event of disputes concerning retaliation against the whistleblower, a legal presumption in favor of the whistleblower is set out.
Even in the case of a claim for damages made by the whistleblower, the damage is presumed to be a consequence of the whistleblowing.
How should an employer handle such news regarding whistleblowing?
Entities of the public and private sector falling within the scope of the Decree will have to organise themselves to comply with the new rules.
This can be done either by updating the whistleblowing procedure, if already adopted, or by establishing such procedures from scratch, complying with all legal requirements.
What changes have there been that affect mass redundancies?
In the context of collective redundancies, there were some important legislative innovations, which will certainly have an impact in the world of work in 2023.
Reference is made to the new procedures introduced in the case of offshoring and in the one of company in crisis.
Therefore, in 2023 employers will have to deal with the following.
The special procedure in case of offshoring
The Law of 30 December 2021, no. 234, in force since 1 January 2022, (Budget Law 2022), provided for a specific procedure for employers staffed with 250 or more employees (except for those which meet certain requirements; for example, those in economic-financial conditions that are likely to incur in crisis or insolvency) that intend to shut down a production unit, thus fully decommissioning the relevant activities, and dismiss at least 50 employees owing to said shutdown.
With this regulation the Italian Legislator intended to adopt measures aimed at preventing the relocation of businesses, by establishing onerous and burdensome fulfilments for the employers in the information and consultation procedure.
This intention of the legislator was made even clearer with the so-called Aiuti ter Law Decree, that tightened up the rules for such procedure.
In particular, the layoff procedure can last up to 255 days. There is in fact an obligation of prior communication to various parties by the employer, which must be followed, within the next 60 days, by the presentation of a plan. Subsequently, the discussion phase of the plan begins (which can last a maximum of 120 days), which ends either with the conclusion of an agreement or with the activation (after 180 days from the prior communication) of the collective dismissal procedure (which takes 75 days).
The Law Decree also tightened up the sanctioning system designed by the first version of the discipline. In order to discourage procedures that do not result in an agreement, in fact, the dismissal contribution the employer shall pay in case of collective redundancies was increased by 500%. 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.
The new collective redundancy procedure for companies in crisis
A new collective redundancy procedure was also introduced by the Business Crisis Code, which came into force – after numerous postponements – in July 2022.
Such procedure is characterised by greater celerity and simplicity than the general one for collective redundancies (features that also differentiates this procedure from the one regarding relocations, mentioned above).
The most significant simplification is undoubtedly the incorporation into a single phase of the two distinct phases (so-called ‘union’ or ‘endo-corporate’ and ‘administrative’), provided for by the general rules.
Also, within this procedure there is an obligation of prior notification by the liquidator, which is followed within 7 days by a joint examination if requested by the trade unions (or within 40 days if requested by the territorial labour inspectorate). Thereafter, either an agreement is reached within 10 days or the receiver can proceed with the dismissals.
Have there been any changes in the way employment cases before the courts and tribunals are reported?
At the end of 2022, Italy adopted a decree, effective for the most part from March 2023, implementing a major reform of the Italian Civil Procedure System. As part of such reform, also the labour law procedural system will be affected by some changes.
Abolition of the so-called Fornero Procedure
Among those, there is the abolition of the current dual-track-system to challenge dismissals. For unfair dismissals, Italian law envisages two procedures: the first for employees hired before 7 March 2015 and the second for employees hired after 7 March 2015. The reform is aimed at implementing a new procedural rule based on the principle and guiding criterion of unifying and coordinating the discipline of proceedings to challenge dismissals that entails the abolition of the Fornero Procedure introduced in 2012. Already in 2015, with Legislative Decree 23/2015 the Italian legislator excluded the application of Fornero-Procedure in case of dismissals of employees hired after 7 March 2015, therefore, it is not surprising that the Government decided to eliminate such procedure that despites the objectives of efficiency and rapidity that the legislator of 2012 had intended to pursue, had ultimately the only effect of further aggravating an already overloaded procedural system.
Have there been any changes in the use of ADR?
The reform has certainly incentivized the use of the so-called ADRs, thus attributing a direct and immediate benefit to the parties, together with the further indirect effect of lightening the litigation burden on labor courts. In particular, lawyer-assisted negotiation has been finally approved as additional tool of conciliation. In this regard, the employee and employer may proceed on a purely optional basis to settle out-of-court any disputes pending between them on the condition that they are assisted by “at least one lawyer”. This procedure does not constitute a mandatory condition for the proceeding of the court application. The agreement signed by the parties constitutes an enforceable agreement and contain final and mutual waiver between the parties.
Is it common to have employment court hearings held by video rather than on site? Have there been changes due to the COVID-19 pandemic in this respect?
Before the spread of Covid-19 in Italy, it was not common to have employment court hearings held by video rather than on site. However, since the pandemic outbreak video conference has become a common way to hold employment court hearing.
Summing Up Current and Future Trends
What are the top challenges in the area of human resources and labor market in Italy?
Unemployment, particularly among young generations, is the main current issue, which – we must recall – the government tried to manage, also through the introduction, during pandemic, of the ban on dismissals. Other challenging topic regards the measures to increase attractiveness of the Italian labor market in order to incentivize new investments from multinational companies and discourage them from leaving.
Which human resources issues generate the most litigation?
Human resources’ issues that generate the most litigation in Italy are those related to dismissals (both individual and collective ones). Other frequent cases refer to fixed-term employment agreements and illicit lease of manpower, qualification into employment contract or payment of salary differences (e.g. due to overtime work or professional demotion). On the other hand, litigations relating to discrimination by itself are still few, although in the recent years they are becoming a little more frequent.
Which challenges in the area of human resources law and practice do you expect to become more important over the next five to ten years?
As a result of the pandemic remote working has surely become one of the most debated topics in human resources area also due to the revolution it involves in terms of company organization and due to the interest of employees in a better work-life balance. The work in the Gig-Economy too and the relevant issues arisen with the platform workers will continue being a significant challenge to face. We therefore expect these topics to be even more important and discussed over the next years.