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

Publication September 2016


Introduction

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.

Notice period prior to dismissal

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:

Comparison between the old and the new rules regarding the length of the notice period
Notice period Old rules (before August 31, 2016) New rules (as of September 1, 2016)
6 months Up to 4 years of service Up to 4 years of service
8 months From 4 – 8 years of service From 4 – 10 years of service
10 months From 8 – 12 years of service From 10 – 15 years of service
12 months More than 12 years of service More than 15 years of service

Reduced compensation for unjustified dismissals

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:

Compensation in case of unjustified dismissal served by the Company
Seniority Compensation
Up to 4 years 4 – 8 months’ salary
From 4 – 6 years 6 – 12 months’ salary
From 6 – 10 years 8 – 14 months’ salary
From 10 – 15 years 10 – 16 months’ salary
More than 15 years 12 – 18 months’ salary

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).

Compensation’s increase linked to the age of the Executive
Age of the Executive Compensation’s increase
From 50 – 55 years 4 months’ salary
From 56 – 61 years 5 months’ salary
More than 61 years 6 months’ salary

Gradually increasing minimum annual remuneration

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.

Reduced number of paid absence due to sickness or injury (except for life-threating illnesses)

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.

Social security breaks for hiring of Executives

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.


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