Looking Ahead 2024: Italy
TRENDS FOR 2024 – THE YEAR AHEAD FOR EMPLOYERS
Italian labour law is well-known for granting employees high standards of rights in line with the values and principles enshrined in the Constitutional Chart.
Nonetheless, in the aftermath of the global economic recession brought about by the COVID-19 pandemic, the labour market flexibility has emerged as a priority.
With the purpose of delicately balancing these needs, in the course of year 2023, several legislative innovations law have been introduced by the Italian legislator and have animated vibrant discussion. These novelties and ongoing reforms are expected to have a notable impact on the world of employment in 2024.
In more detail, the Italian government has recently introduced a significant reform regarding fixed-term employment contracts, which enables companies to make a wider use of this flexible type of employment relationship.
Moreover, the legislator has intervened by simplifying the minimum mandatory requirements to be included in employment agreements during the hiring phase.
Another significant innovation that impacts most Italian companies is the adoption of a new regulation on whistleblowing aimed at encouraging employers to demonstrate their commitment to legality and transparency.
The renewal of the National Collective Bargaining Agreement for the Credit Sector, which will lead to several noteworthy enhancements affecting employees operating in this sector, is also worth mentioning.
It shall be highlighted that in the implementation of the changes pertaining to the Italian labour system, trade union organisations and by case law, are actively taking part in innovations and discussions.
Looking Ahead 2024 highlights trends and insights on the main issues relating to employment management in Italy.
- Fixed-term employment contracts
- Employment contracts’ minimum requirements
- Renewal of Credit Sector’s NCBA
- Litigation trends
Fixed-term employment contracts
The Law Decree No. 48/2023 (the so-called “Labour Decree”) issued by the Italian Government on the 5th of May 2023, converted into Law No. 85 of 3rd July 2023, introduced significant innovations on several employment law matters.
Undoubtedly, the most innovative profile of the Labour Decree is the revision of the discipline of fixed-term employment contracts.
What changes occurred regarding fixed-term employment contracts?
It is a well-known fact that an open-ended contract is the usual form of employment.
Alongside this kind of employment contract, there are alternative, more flexible forms of contract, such as the fixed-term agreement.
Since the 25th of June 2015, fixed-term employment contracts were regulated by sections 19–29 of Legislative Decree No. 81 of 15 June 2015, as amended by Law Decree No. 87 of 12 July 2018 (converted with amendments into Law No. 96 of 9 August 2018). According to such discipline:
- It is possible to enter into fixed-term contracts for any need and for the performance of any type of duty without any specific reason, only for contracts of up to 12 months duration.
- A further term, in any case no longer than 24 months, may be applied only subject to the presence of at least one of the following “conditions” related to:
- temporary and objective needs, not correlated to the ordinary company’s activity;
- other employees’ substitute needs; and
- temporary, significant, and non-predictable increases in ordinary activity.
The abovementioned “conditions” shall also be met in the case of extensions of already pending fixed-term contracts exceeding 12 months or in the case of renewals.
In case of execution of a fixed-term contract longer than 12 months, in the absence of one of the specific abovementioned “conditions,” the agreement is converted into an open-ended one as of the date on which the limit of 12 months is exceeded.
Lastly, Section 24 of the Labour Decree titled “Discipline of fixed-term employment contracts” has substantially amended the above-described regulation of fixed-term employment contracts.
In particular, the new discipline extends the range of reasons that may ground the fixed-term contracts lasting at least 12 months but not exceeding 24 months. The new reasons are:
- the one established by collective bargaining agreements (at national, territorial, or company level).
- technical, organisational and production reasons individuated by the employer and employee in the individual contract, in the absence of regulation by collective bargaining agreements (this faculty is granted only until April 30, 2024).
- other employees’ substitute needs (as, moreover, already provided for in the previous wording of the law).
In addition, it shall be noted that the above-outlined novel also provides that fixed-term contracts entered into before 5 May 2023, do not concur with the calculation of the 12-month period within which, pursuant to Italian labour law, fixed-term contracts may be freely entered into by the parties without the indication of specific reasons grounding the fixed term.
In the light of the new discipline, a more flexible and wider use by companies of fixed-term employment contracts is clearly enabled since it is permitted to the contractual parties to directly establish the reasons grounding it in the fixed-term contract.
From the outlined rules, the legislator’s intention to encourage employers to implement such a type of contractual relationship emerges.
In 2024, it would be interesting to assess the practical achievements of such a purpose within the Italian labour market and, in particular, if the challenge–constantly pursued–to reduce unemployment has been reached.
Employment Contracts’ minimum requirements
How has the discipline of employment contracts’ minimum content developed?
In Italy, the employment individual contract shall contain minimum requirements.
Firstly, legislative Decree No. 152 of 26 May 1997, as amended by the Legislative Decree No. 104 of 27 June 2022 (implementing Directive (EU) 2019/1152 on transparent and predictable working conditions), stated that public and private employers must notify the employee alternatively through the delivery of the individual employment contract drawn up in writing or a copy of the notice of commencement of the employment relationship, providing accurate information at the time of the commencement of the employment relationship and prior to the start of the working activity.
Specifically, individual employment contracts had to include the following:
- the parties signing the employment contract;
- the place of work;
- the starting date of the employment relationship and the duration of the trial period, if provided by the relevant agreement;
- the expiration date, if the employment contract is concluded for a fixed term (where allowed by the law);
- the salary and its method for calculation, the frequency at which such a salary is paid out, and any particular term or condition under which the salary and fringe benefits are eventually subjected to;
- the working hours;
- the yearly allowance for paid holiday leave;
- the workers’ duties and the related work “category” (pursuant to Section 2095 of the Italian Civil Code);
- the procedure, form, and terms of notice in the event of termination by the employer or the employee;
- entities that receive social security and assistance contributions (i.e., INAIL, INPS, etc.).
The above-described regulation constituted the statutory discipline of the minimum conditions that shall be contained in the employment contracts until early 2023.
According to such provisions, the burden encumbering employers at the time of hiring an employee was clearly heavy. Indeed, companies were bound to insert several (quite useless) clauses in employment contracts, which accordingly became excessively long and prolix.
For simplification purposes, the mentioned Labour Decree has provided for a reduction of the information that the employer is mandatorily required to provide to the employee at the time of recruitment. In particular, Section 26, paragraph 1 of the new Decree specifies that some of the information may henceforth be understood as being fulfilled simply by indicating the regulatory references, including those at the company level. In detail, these obligations are:
- the length of the probationary period, if any;
- the right to receive training provided by the employer;
- holidays and paid leaves;
- length of the notice period;
- salary and its method for calculation, the frequency at which such salary is paid out, and any particular term or condition under which the salary and fringe benefits are eventually subjected to;
- working hours; and
- entities that receive social security and assistance contributions.
With the aim of easing companies in the hiring phase, the most recent discipline has also established that information may be communicated to the employee merely by indicating the regulatory reference or the applicable collective agreement, including the company’s collective agreement, which governs such matters. Finally, hand delivery of the text of the applicable National Collective Bargaining Agreement is no longer compulsory; the employer may also satisfy information issues by publishing and making available to the employee on the company’s website, the national, territorial, or company collective agreements, as well as any company regulations applicable to the employment relationship.
In light of the above, it is highly likely that employment contracts entered into in 2024 will be shorter and more concise.
The new statutory regulation adopted on whistleblowing is a big news for Italy.
On the wave of an increasing trend towards transparency pushed by the European Legislator, the Legislative Decree No. 24 of 10 March 2023 implementing in Italy the European directive (EU) 2019/1937 on the protection of persons who report breaches of Union law, has finally been issued.
The new discipline encourages widespread control of the legality within the company from the perspective of stronger management transparency.
Before this decree, for a long time in Italy, 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. 231/2001 regarding the criminal liability of entities.
It is unquestionable that the new decree is big news for Italy.
What are the objectives and subjective scope of application of the new regulation?
First, the legislative decree adjusted the objective and subjective scope of application of the regulation concerning whistleblowing.
The catalogue of violations that can be reported now includes all infringements of national or EU regulatory provisions that harm the public interest or the integrity of the private entity. Moreover, the violations are not limited to criminal offences, but include administrative, accounting and civil offences.
Some exclusions are specified in the decree (e.g., violations linked to the personal interest of the whistleblower).
From a subjective point of view, the new decree has acted on the range of entities required to comply with the whistleblowing discipline. Thus, making it mandatory for the first time on a large scale in the private sector.
There is also an extension of the perimeter of the protection offered, which is no longer provided only in favour of the actual whistleblower, but also of persons who have in some way ‘facilitated’ the whistleblowing or, again, of those who have made a public disclosure without going through internal or external whistleblowing channels, albeit only under certain conditions.
Persons making a public disclosure, in particular, enjoy the same protection as the whistleblower if:
- the person making the disclosure has previously made an internal and external report or has made an external report directly, and no reply has been received within the time limits provided for in the decree;
- the person making the disclosure has a well-founded reason to believe that the breach may constitute an imminent or manifest danger to the public, and
- the person making the disclosure has reasonable grounds to believe that the external report may involve a risk of retaliation or may not be effectively followed up because of the specific circumstances of the case.
How are reporting channels designed?
It shall be outlined that the new decree acted on the reporting procedure, specifying in detail the requirements for the arrangement and management of the internal channel.
In this regard, the involvement of trade unions has been provided for the first time since there is a duty to inform them before the internal channel is set up.
It is then expressly provided that the management of the internal channels should be entrusted to a dedicated independent internal person or office with specifically trained staff or an independent external entity with specifically trained staff.
For the terms and conditions of the whistleblowing procedure through the internal reporting channel, it is provided that the whistleblower must be issued a notice of receipt of the report within seven days from the date of receipt. Diligent follow-up must then be given to the reports received. Finally, feedback must be given to the whistleblower within 3 months from the date of the notice of receipt or, in the absence of such notice, within 3 months from the expiry of the seven-day period from the submission of the report.
Another innovation for the private sector is the provision of an external reporting channel via the national anti-corruption authority (“ANAC”).
The external reporting channel is residual compared to the internal one since its use is possible only if one of the following conditions is met:
- absence of the internal reporting channel within the working context of the whistleblower;
- the whistleblower has already made an internal report, and this has not been followed up or has resulted in a final negative action;
- the whistleblower has reasonable grounds to believe that, in the case of an internal report, the report would not be effectively followed up on or that the report might give rise to a risk of retaliation; or
- the whistleblower has reasonable grounds to believe that the breach may constitute an imminent or manifest danger to the public.
How the Whistleblower protection and sanctions have been strengthened?
It is worth underlining that the new decree has strengthened whistleblower protection and introduced specific sanctions to make the discipline more effective.
In particular, extensive protection is provided for the whistleblower against retaliation, expressly listing some cases that fall under it (e.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 favour 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.
The protection of whistleblowers also passes through a strengthening of the guarantees for the protection of their identity (several provisions of the decree are, in fact, devoted to this issue).
Lastly, there are administrative fines punishing various violations of the regulations set out in the new decree. In particular:
- a) a fine ranging between Euro 5,000 and Euro 30,000 where retaliatory activities are ascertained, the obligation of confidentiality is infringed, and where the company has hindered, or attempted to hinder, the fulfilment of a whistleblowing procedure; or
- b) a fine ranging between Euro 10,000 and Euro 50,000 where the company failed to establish the whistleblowing channel, or such channel does not comply with the provisions of the Whistleblowing Decree, or where the company failed to follow up on a notification of wrongdoing.
How should an employer handle news regarding whistleblowing?
The newly introduced discipline would constitute in 2024 a great opportunity for companies to demonstrate their commitment to legality and transparency. The new obligations set forth by the described discipline came into force on 15 July 2023 for big companies, and for companies in the private sector employing less than 250 employees, the discipline entered into force starting 17 December 2023.
Given the significant impact of the new regulation, the ANAC has issued detailed Guidelines concerning the new measures on whistleblowing as set forth by Legislative Decree No. 24 of 10 March 2023 with the aim of providing practical instructions for employers required to comply with the rules on whistleblowing set forth by the new regulation.
The instructions provided are clear and detailed, and they focus on:
- the criteria to individuate the entities subject to the discipline;
- the measures aimed at granting effective protection against retaliation not only in favour of whistleblowers but also of facilitators (i.e., persons who assist a whistleblower in the reporting process, operating in the same working environment);
- the breaches falling within the whistleblowing discipline pursuant to Italian labour law;
- the principles to which companies must refer to when implementing their internal reporting channel;
- the training that shall be provided to individuals assigned to manage the internal reporting channel, and this in particular through specific communications, training events, newsletters, and dedicated sections in the company’s intranet portal;
- the management of the anonymous reports (which constitutes a novelty under Italian law);
- privacy and data protection requirements to be accurately fulfilled to ensure the confidentiality of the identity of the person making the report, of the person involved, and of the persons in any event mentioned in the report, as well as the content of the report and the relevant documentation. In detail, the guidelines promote the adoption of encryption tools by employers to ensure the effectiveness of the privacy and data protection of the involved individuals.
The ANAC Guidelines constitutes undoubtedly a helpful tool for companies burdened with implementing the whistleblowing regulation. However, it shall be evidenced that the guidance lacks indications on the management of the internal channel by multinational groups and, in particular, regarding the opportunity to implement a global reporting channel supported by local channels operating for each single entity.
Indeed, the Anti-corruption Authority only refers to the possibility for smaller entities (employing less than 250 employees) to “share” the internal reporting channel and its management with other small companies belonging to the same group, as expressly provided by Legislative Decree No. 24/2023.
Therefore, it would be desirable to have further intervention or clarification in this respect in 2024.
Statutory minimum wage: a hot topic
One of the issues addressed by the political debate in recent times that is bound to have repercussions for employees and companies during the year 2024 concerns the introduction of an adequate minimum wage.
As already pointed out, the rights of employees find their raison d’être directly in the Italian Constitution. In this respect, Section 36 of the Constitution loudly states the employees’ right to receive a salary “proportionate to the quantity and quality of work and in any case sufficient to ensure for (the worker) and his/her family a free and dignified existence.”
It is, therefore, not surprising that in Italy, the topic of “minimum wage” is highly sensitive, considering the need to allow workers an adequate life existence without ignoring the steadily rising cost of living entailed by recent worldwide events.
The core of the debate concerns the modalities through which the minimum wage can be set out: by law (statutory minimum wage), by national collective bargaining, or by a combination of statutory source and collective bargaining.
The debate also revolves around other matters, such as the level of the minimum wage, the procedures and criteria to be established for the periodic adjustment of the minimum wage, and the involvement of trade unions and employers’ organisations in determining the minimum wage.
As far as Italy is concerned, a statutory minimum wage has never been introduced. Nonetheless, most companies apply national collective bargaining agreements that set out the minimum wage, depending on the contractual level.
Current legal framework: what are the proposals?
Certainly, the discussion on this issue has increasingly developed following the presentation by the European Commission of a directive on the subject, finally approved on 14 September 2022, which must be transposed by the Member States by 15 November 2024.
The mentioned EU-Directive aims to guarantee an adequate minimum wage for employees in the Union.
Within this context, each Member State will have to consider the cost of living and the broader wage levels (thus, paying attention to state-specific wage and territorial differentiations).
In particular, Section 25 of the EU-directive states that each Member State with a collective bargaining coverage rate below 80% is obliged to take measures to strengthen the minimum wage to be granted to employees.
According to the Italian National Social Security Institute’s annual reports and statistics, in Italy, such a rate is over 95% of coverage. Therefore, there is no obligation to enter a statutory minimum wage as per the EU legislation.
However, the phenomenon of in-work poverty is growing in the country, and it continues to worsen due to inflation. Therefore, the introduction of such a measure is highly appealing.
A first proposal for the implementation of the statutory minimum wage was advanced on 22 March 2023 by the major opposing party of the current Italian government, which provided for a minimum fixed measure of wage equal to 9 Euros per hour, aimed at protecting employees belonging to the most fragile sectors of the labour market.
This proposal has been recently overcome by a new provision submitted to the exam of the parliament by the Italian government. This regulation focuses on guaranteeing to each employee a fair and sufficient wage in compliance with Section 36 of the Constitution but does not set out a determined minimum fixed wage amount. Indeed, the target shall be achieved by strengthening collective bargaining–also at the company level–and specifically by taking as reference the minimum overall economic treatment of the most widely applied national collective bargaining agreements.
The law provision under exam also regulates the intervention of the Ministry of Labour to adopt the necessary measures with regard to the minimum overall economic treatment in the event a bargaining contract has expired and has not been renewed within the deadlines set by the social parties and also for sectors where there is no reference to a bargaining agreement.
The discussions are ongoing and under high social media exposure.
It shall be highlighted that the case law has made its views heard on the topic.
In this respect, on one side, the Italian Supreme Court (recently with judgements No. 27711 of 2 October 2023 and no. 28230/2023) affirmed the central role of collective bargaining in determining wage levels set through collective bargaining agreements in the relevant sector. On the other side, it opened the way to a more penetrating judicial review of minimum wage levels established by sectoral collective bargaining agreements. In fact, in different rulings, the judges have deemed the remuneration applied in accordance with the sectoral collective bargaining agreement to be insufficient and inadequate pursuant to the enhanced constitutional provisions and deemed applicable—to the employment relationship examined in the relevant case—a different collective bargaining agreement considered more suitable for granting adequate protection to the involved employees.
The debate is open and will certainly result in further developments.
We will see how this complex framework will evolve and what modalities will be implemented to achieve the goal of the “adequate wage.”
Renewal of the Credit Sector NCBA
What changes will affect the Credit Sector?
On 23 November 2023, the trade union associations signed the renewal of the National Collective Bargaining Agreement for Credit Sector (hereinafter the “NCBA for Trade Sector”) which expired on 31 December 2022.
The renewal is effective until 31 March 2026 and is bound to have a significant impact for many companies. Therefore, it is worthy to have a look on the main changes introduced thereby.
Firstly, the agreement provides for an average salary increase of Euro 435 gross per month, divided into four instalments as follows:
- Euro 250 gross or 57.5% of the total starting in December 2023;
- Euro 100 gross (23%) in September 2024;
- Euro 50 gross (11.5%) in June 2025;
- Euro 35 gross (8%) in March 2026.
Therefore, more than 80% of the salary increase defined in this agreement shall apply to employees of the credit sector in the first 9 months of the effectiveness of the new discipline.
It will be necessary to assess on a case-by-case basis the possibility of absorbing such contractual increases with the superminimo. Legal guidelines on the subject, which could set limits in this respect, are awaited.
The reduction of working time
An important novelty, aligned with the current times, is provided regarding the organisation of working time. In fact, the new contract states a reduction in working time. Starting 1 July 2024, the current 37.5 hours per week will be reduced to 37 hours, with no variation in salary.
In addition, the number of hours for paid training will rise from 8 to 13, with the aim of enriching and promoting the development of employees’ skills. In this regard, procedures are envisaged to enable banks to access funding for staff training from bilateral bodies and the European Union.
Maternity protection and statement on gender-based violence
The renewed NCBA for the Trade Sector also plays a significant role with reference to social rights. In fact, the female employees in a state of pregnancy “at risk” will be granted their full economic treatment, which before the novelty was provided only for five months. Furthermore, the NCBA for Trade Sector has now expressly included in its text the “Declaration on Harassment and Gender-based Violence in the Workplace” to prevent, combat, and refuse any form of behaviour resulting in intimidation, harm, or physical, sexual, and psychological suffering.
Extra working activities
The green light was also given to the possibility of employees to carry out extra working activities without the necessary prior authorization by the company/bank that has been suppressed. This provision finds its rationale in the current legislative framework, recently amended with the introduction of the Transparency Decree (Legislative Decree No. 104 of 27 June 2022), which in Section 8, without prejudice to the obligation laid down in Section 2105 of the Civil Code, provides that the employer may not prohibit the employee from carrying out other working activities at times outside the agreed work schedule nor, for that reason, treat him less favourably. Indeed, according to the aforementioned legislative provision, the employer may only restrict or deny the employee the performance of another and different work relationship if one of the following conditions exists: (a) an impairment of health and safety, including compliance with the regulations on rest periods; (b) the need to guarantee the integrity of the public service; (c) the case where the different and additional working activity is in conflict of interest with the main work activity.
Sickness and disability
Sick leave days for employees with severe disabilities (Law 104/92, Section 3, Paragraph 3) are increased by 50% compared to the previous contractual rules.
Which is an enduring topic issued before the Italian courts?
The work in the Gig-Economy and the relevant issues that arise with the platform workers are confirmed to be amongst the most challenging topics under discussion within the Italian legal system.
In particular, over the last years, with the inexorable spread of the phenomenon of platform work, the Courts had to face the matter concerning the qualification of relevant employees in the categories of subordinate work or self-employment. Indeed, this bipartition has traditionally demarcated the scope of application of the legal safeguards established in Italian Labour Law to workers employed through an employment agreement rather than self-employed individuals (even if – currently – as a result of various legislative interventions – such as Law 22 May 2017, no. 81 – the Italian legal framework is being enriched with provisions aimed at ensuring increasingly effective protection for this peculiar category of workers as well).
What is the trend, and what are the implications for employers?
Under a general perspective, in determining the nature of the relationship established, it is important to assess the concrete characteristics of the relationship itself, such as the presence of the power to direct, manage and control the employee, rather than the formal classification of the employment contract agreed by the parties.
In this regard, according to the Italian case-law, the employment relationship shall be qualified as subordinate whenever the employees are not free to organise on an autonomous basis the performance of their activities as they are subject to the company’s directives.
It is highly recommended for employers to accurately evaluate the consequences of the wrong qualification of the workers employed in the platform given the significant implications arising from the acknowledgement of employees as subordinate.
The trend of Italian case-law is now well-established in the direction to acknowledge platform employees and riders as subordinate employees.
Within this context, Italian case-law recently issued a very impactful decision.
In particular, it has been stated that the Uber Eats Italy riders are subordinate employees rather than self-employed workers. The remarkable consequence of that statement was, amongst others, that in cases of mass dismissals, the procedures mandatorily set forth by the law shall be triggered.
By applying such considerations, the Tribunal found the conduct of the company anti-union, for having shut down the business of food delivery in Italy, terminating the riders by disconnection from the platform by way of email communications. It ordered the company to revoke all withdrawals from the riders’ employment contracts.
Beyond borders: EU perspectives
The mentioned judgement consolidates a well-established case law, and it is fully aligned with the EU legislation objectives on the matter.
Indeed, according to the EU institutions, most of the 28 million platform workers, including taxi drivers, domestic workers and food delivery riders, are formally self-employed. However, many of them are subject to the restrictions applying to employees. This circumstance indicates that these workers should be entitled to labour rights and social protection granted to subordinate employees under national and EU law.
On 9 December 2021, the European Commission formulated a proposal for a directive, which aims to remedy the several critical issues that the use of digital technologies has brought within the so-called gig economy.
On 12 June 2023, the EU labour ministers and, on 12 December 2023, the EU Commission and the Parliament have reached an agreement on the new rules to protect riders and platform workers. Among the main points of the common position of the 27 states’ representatives is the classification, according to certain criteria, of gig economy workers as employees and no longer as self-employed.
In detail, the EU proposal provides for a “presumption of subordination” with reference to employment relationships through digital platforms on the occurrence of at least two of the following requirements: (i) unilateral determination of the level of remuneration; (ii) obligation to abide by specific rules of conduct; (iii) digital control of the work and the quality of the results; (iv) limitation of the person’s freedom to organise himself; (v) limitation of the possibility of having one’s own clientele or working for several clients.
The imprinting given by the EU proposal for a directive is clearly set up.
The topic is expected to continue to be the core of discussions and debates between experts, labour courts and the public opinion in 2024.