Italy employment law update: New CBA for executives in the trading sector

On July 21, 2016, the new collective bargaining agreement (the “New CBA”) for executives working for companies in the trading sector (“Trading Executives”) was signed.  This followed the major reform of the Italian Employment Law introduced in 2014/2015 by the “Italian Jobs Act”, and the release in December 2014 of the new collective bargaining agreement for executives in the manufacturing sector (which, among other changes, reduced the periods of notice and compensation due to executives dismissed by their employer).

The New CBA is effective until December 31, 2018.

The major changes introduced by the New CBA are set out below.

An important change introduced by the New CBA relates to the notice period required to be given by the company prior to dismissal. The New CBA, establishes the following notice period requirements:

The main change introduced by the New CBA relates to compensation for dismissals served after September 1, 2016, which cannot be justified. The level of compensation will generally be less than the amount payable under the former CBA, especially for executives with a shorter length of service.

The New CBA provides that in the event that a Court or an Arbitration Council finds that the dismissal of a Trading Executive is not justified by legitimate reasons, the amount of the compensation to that employee is established according to his or her seniority, as indicated in the table below:

The amounts above will be automatically increased, depending on the age of the executive (if he is older than 49 years) where the executive has worked for a period of more than 12 years for the same company (under the previous rules it was 10 years).

The New CBA provides for a gradual increase to the minimum annual remuneration for Trading Executives: an increase of € 80 gross per month as of January 1, 2017; € 100 gross per month as of January 1, 2018; and € 170 gross per month as of December 1, 2018.

These salary increases may be “absorbed” in the salary package provided by the individual’s employment contract, where the salary provided is higher than the increase set out in the CBA.

In cases of absence due to sickness or injury, the executive is entitled to keep his job and the employer shall pay him his full salary, for a maximum period of 8 months in the past year (the previous rules granted a protection for a period of 12 months). At the end of such period, if the sickness or the injury persists, the executive is entitled to request an additional unpaid leave of 6 months. Only in cases of life-threating illnesses, will the executive be entitled to receive his full salary during the additional leave of 6 months. At the end of the additional six month period (whether paid or unpaid), if the sickness persists, the employer is free to dismiss the executive by paying him, on top of the mandatory severance payments (e.g. T.F.R.), a payment in lieu of notice.

The New CBA provides for reduced levels of social security contributions for:

• companies which hire, on an indefinite contract, executives younger than 48 years or unemployed executives older than 55 years;
• companies which hire executives with a fixed term contract of longer than 1 year;  
• companies which hire (as of October 1, 2016), executives whose gross annual salary is below € 65.000.