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ITALY: Annual Update – Expected labour law changes in 2016

By - - Employment Law

Atypical employment contracts

Rules changes for atypical employment contracts: At the end of June 2015, new rules came into force, dealing with several types of “atypical” contracts. The most significant was for contracts for “coordinated and continuous collaborations” and those based on specific projects, the so-called “co.co.co” and “co.co.pro” contracts, which have been very successful in the Italian labour market.

With effect from January 1, 2016, employee protection rules will also apply to collaborative relationships for the performance of work which is exclusively personal to the worker, continuous and whose performance is organized, in terms of place and working hours, by the employer.

The specific project type contracts (i.e. the “co.co.pro” contracts) have not been available for use since June 25, 2015. However contracts entered into before that date can continue until their expiration, governed by the previous rules and regulations.
It continues to be possible to enter into “co.co.co” contracts which will remain valid and fully effective also after January 1, 2016, provided that certain conditions are met.

The Italian government has supported the new rules with some significant economic incentives: As of January 1st 2016 – when an atypical contract (such as a “co.co.co” a “co.co.pro.” or a self-employment contract) is converted into indefinite term employment contracts, any administrative, tax and social security offences, relating to the erroneous classification of such collaborations (or self-employment) will be cancelled.
Action required: From 25 June 2015, it has not been possible to enter into new “co.co.pro” relationships. “Co.co.co”. relationships require particular care to be validly signed.
Employers should check if they have any co.co.co. and co.co.pro. relationships still in force in order to evaluate the possibility to convert them into employment relationships governed by the new “Jobs Act” (Legislative Decree no. 23/2015).

Dismissal

Re-instatement following dismissal on economic grounds: For employment contracts entered after March 7 2015, there will be no right to re-instatement even if the court holds that the dismissal grounds were invalid.

Reinstatement can only occur if the facts leading to the dismissal are shown to be non-existent. Here re-instatement is possible together with damages equal to the salary due from the dismissal until re-instatement (up to 12 months), plus social security charges.
Action required: All new hiring as of March 7, 2015 shall be subject to more favourable regulation in case of unlawful/ungrounded dismissals.

Compensation following unlawful dismissals: Instead of re-instatement, compensation for unlawful dismissals now carries the sanction of length of service based damages only. This is calculated as 2 months’ salary per each year of service, with a minimum of 4 and a maximum of 24 months.

Employers with up to 15 employees have to pay only half of any seniority-based indemnity (i.e. 1 months’ salary per each year of service, with a minimum of 2 and a cap set to 6 months).
Action required: For information only.

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