Ten things to know about Italian employment law

01 | NCBAs

National Collective Bargaining Agreements (NCBAs) are contracts between trade unions and employers’ organizations. They cover aspects related to the establishment, performance and termination of contractual relationships with employees. NCBAs are not statutory laws. Their application to employment relationships is therefore neither automatic nor mandatory. Nevertheless, most employers in Italy apply NCBAs to their relationships with employees. View for a brief lesson on Italian NCBAs.

02 | Employees’ duties

Under Italian Law, employees are entitled to carry out the tasks and duties for which they were hired, or other tasks and duties that fall into the same category. In case of organizational needs related to business, an employer may unilaterally assign an employee to perform a task or tasks that belong to a lower contractual category. Moreover, an employee may be demoted to any lower contractual level, even with a lower salary, if this is an alternative to redundancy, and only after the employer, with the employee’s consent, completes a specific procedure.

03 | Transfer

Under Italian Law, employers may unilaterally transfer an employee from one worksite or business location to another if there are proven technical, organizational and production reasons. In the event that an NCBA applies to the relevant employment contract, there may be additional requirements regarding the lawfulness of the transfer, such as giving the employee a minimum notice period prior to the effective date of the transfer.

04 | Monitoring of employees

Italian Law allows employers to use tools or devices for the direct or indirect monitoring of employees’ activities at work as long as the monitoring is for legitimate purposes, which include organizational, productive or job security needs, or protection of company assets.

Any use of monitoring tools or devices by an employer must be approved by prior agreement with the relevant trade union or by authorization of the relevant local office of the Ministry of Labour.

The use of tools or devices that are necessary for carrying out normal work activities, including mobile phones and laptop computers, does not require any special agreement or authorization by a trade union or by the Ministry of Labour. However, if these tools or devices are used, or could be used, by the employer to monitor an employee’s activity at work, then the employer has the obligation to inform the employee of this circumstance.

05 | Fixed-term contracts

Fixed-term contracts are not allowed in all circumstances and Italian Law provides certain restrictions and specific rules for them.

For example, fixed-term contracts must be stipulated in writing unless the duration is less than twelve working days. They may not, under any circumstance, exceed a duration of 24 months, and, if their duration is 12 months or more, then they must be supported by a specific reason, which is provided by statutory law.

Moreover, the number of employees hired by an employer with fixed-term contracts may not exceed 20 per cent of the workforce hired by that employer with permanent employment contracts (a different limit maybe imposed under a collective agreement).

06 | Individual dismissals

Under Italian Law, subordinate employees may lawfully be dismissed without notice for “just cause,” (i.e. serious misconduct of the employee) or for a “justified reason” (i.e., significant reason relating to performance of redundancy).

Unlawful dismissal has consequences that vary according to the size of the company. For relatively small companies (less than 15 employees in a single unit or 60 employees overall), unlawful dismissal generally has economic consequences only. In other circumstances, the employer may be ordered to reinstate the employee in addition to bearing economic consequences.

07 | Mass redundancies

Italian Law provides that in the event a company employs more than 15 people and intends to dismiss at least five of them within a 120-day period, then a specific information and consultation procedure with the relevant trade union must be carried out. If this consultation procedure concludes without an agreement, then the parties involved will be summoned before the Ministry of Labour to re-examine the situation and put forward possible terms for an agreement.

In such circumstances, the employees to be dismissed must be selected according to criteria set forth by Law, which relate to seniority, family conditions and company technical reasons, as well as other criteria that may be agreed with the relevant trade union.

08 | Transfer of business

Under Italian Law, when a transfer of a whole or part of a business is carried out, employees are automatically transferred to the transferee, with no change in their rights under pre-existing employment contracts. In addition, the transferor and transferee are jointly and severally liable for all debts due to employees up until the effective date of the business transfer.

Moreover, in the event a transfer of a whole or part of a business (including a lease of business) takes place, if the transferor employs more than 15 people, then a trade union information and consultation procedure must be carried out.

Transfer of business, whether whole or part, cannot alone be grounds for dismissal of any employee.

09 | Social Security contributions

With the establishment of the employment relationship, the employee must be enrolled with the National Institute for Social Security (INPS), to which contributions must be paid.

Both employers and employees pay these contributions; the employer pays contributions on top of the salary and withholds a part of the employee’s gross salary for this purpose.

In order to certify the fulfilment of the payments by the employer of mandatory social security contributions, INPS issues a specific document called DURC (“Documento Unico di Regolarità Contributiva”).

In some cases, an NCBA may provide that the employer has to pay social security contributions for an employee to a private pension fund. These payments are in addition to the mandatory contributions that are due to INPS.

10 | Courts and disputes

In Italy, Employment Law disputes are brought before special tribunals.

There are approximately 165 tribunals and 29 Appeal courts for Employment Law disputes in Italy. Decisions issued by the Appeal courts may be challenged before the Italian Supreme Court (“Corte di Cassazione”), but only for alleged wrong application of law.

A trial relating to the dismissal of an employee can last anywhere from a few months (fast-track cases) up to several years (if the dispute is complex or if the case reaches the appellate court or the Supreme Court).