02. Employment Contracts

Minimum requirements

The Legislative Decree no. 152 of 26 May 1997, implementing in Italy the European Union Directive no. 533/91, as amended by the most recent Legislative Decree no. 104 of 27 June 2022, states that public and private employers must notify the employee – alternatively through the delivery of the individual employment contract drawn up in writing or the copy of the notice of commencement of the employment relationship – accurate information at the time of the initiation of the employment relationship and prior to the start of the employment activity. Specifically, individual employment contracts must 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 compensation and its method for calculation, the frequency at which such payment 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 to paid holiday leave;
• the workers’ duties and the related work “category” (pursuant to Section 2095 of the Civil Code);
• the procedure, form, and terms of notice in the event of termination by the employer or employee.

Additional information (such as the collective agreement, including the plant level agreement, applied to the employment relationship with an indication of the parties who signed it) can be provided to the employee within one month from the start of the working performance. In addition, the Decree Law no. 48 issued on 4 May 2023 (not yet converted into law) has provided that certain information (including the length of the probationary period, if any, and the right to receive training provided by the employer) may be communicated to the employee simply by indicating the regulatory reference or the collective agreement, including the company’s collective agreement, which governs such matters. Finally, hand delivery of the text of the NCBA is no longer compulsory: the employer may also satisfy information issues by publishing and making available to the employee on the (company) website, the national, territorial or company collective agreements as well as any company regulations applicable to the employment relationship.

Fixed-term/Open-ended Contracts

The 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. As of 25 June 2015, fixed-term employment contracts are 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 duties without any specific reason only for contracts up to 12 months duration;
• An additional term, in any case no longer than 24 months, may be applied subject only 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;
  • temporary, significant, and non-predictable increases of the ordinary activity.

The above-mentioned “conditions” shall be met also in case of extensions of already pending fixed-term contracts exceeding 12 months, or in 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 in which the limit of 12 months is exceeded;
• The number of employees employed through fixed-term contracts cannot exceed 20% of the number of workers employed under permanent contract as of 1 January of each year. Failure to comply with this provision entails the payment of a fine depending on the number of employees hired over this threshold, but the fixed-term agreements remain valid.

Recently, Section 24 of Decree-Law No. 48 of 4 May 2023, entitled “Discipline of fixed-term employment contracts”, has substantially amended the 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. These 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 30 April 2024); and
• other employees’ substitute needs (as, moreover, already provided for in the previous wording of the law).

Fixed-term contracts are prohibited in the following circumstances:

• to substitute for employees on strike;
• in productive units in which – within the previous six months – employees carrying out the same duties as the ones hired with fixed-term contracts have been collectively dismissed according to Italian Labour Law no. 223 of 23 July 1991;
• in productive units where employees carrying out the same duties as the ones hired with fixed-term contracts are suspended from working activity;
• by employers that omitted the risks assessment according to Legislative Decree no. 81 of 9 April 2008.

Fixed-term employees are entitled to the same economic and normative rights as open-ended term employees, except in cases in which the diversification has objective ground.

Trial Period

Employment contracts may provide for a probationary period – the so called “trial period” – so that each party may evaluate whether they wish to finalize an effective employment relationship.

The length of such period is determined by the applicable NCBA and varies depending on the qualification assigned to the interested employee (executive, middle-manager, white-collar or blue-collar).

In this regard, the Legislative Decree no. 104 of 27 June 2022 has established with respect to the length of the probationary period that, where provided, it cannot exceed 6 months in any case.

Section 2096 of the Italian Civil Code in particular mandates that the probationary period shall be stipulated in a written form and signed by both the parties: the lack of this requirement invalidates the probationary period and it is considered as it has never been effective. The written form, being demanded by the applicable law must be respected even in the event that the NCBAs do not require it. In the absence of a specific legal provision, it is deemed that the probationary covenant must be signed contextually with the conclusion of the employment contract and in any case prior to its execution, otherwise it is considered null and void and the employment relationship immediately acquires a definitive character.

Throughout such period both the employer and the employee are free to terminate the contract without notice and without payment of any compensation in lieu of notice.

Notice Period

Following the termination of an employment contract executed for an indefinite duration, unless resolved for “just cause” (i.e., a reason – as defined by the relevant case-law – that does not allow the employment relationship to proceed) both the employer and his/her former worker are eligible for a notice period, whose time duration depends strictly on the employee’s length of service and professional level acquired and as determined by the NCBA adopted by the company. In the event of termination of the employment contract as a result of an employer’s resolution, thus in case of dismissal, the former may exonerate the employee from working during such notice period by corresponding the relevant indemnity in lieu of notice. Instead, should the termination of the employment relationship due to the resignation of the employee, if the worker resigns without complying with the notice period as established by the applicable NCBA (save for resignation due to “just cause,” for which no notice is required), the employer can withhold the amount of compensation in lieu of notice from the payments that the employee is legally eligible to obtain following the termination of the employment agreement.