Types of employment contract

While no single contract can be said to be the best in absolute terms, the type offering the strongest safeguards against labour disputes with your workers or penalties in the event of inspections is the full-time permanent employment contract.

However, you should also consider other types of contract – autonomous work, flexible contracts, training and agency work – to make the choice best fitting both your and the worker’s needs.

In your case, being the employer, you should consider your actual organisational and production requirements and choose the type of employment contract that meets them best.

To make a choice that is the best fit for your organisational targets, analyse the various forms of employment contracts, their characteristics, their value for money and how well they match an increasingly dynamic and flexible labour market.

You should also balance your interests with the workers' need for quality employment, stability, continuing training and professional development.

If you are looking for a self-employed worker

You may consider hiring a self-employed worker if the duties of the position are highly specialised and require advanced professional skills.

If you also aim to reduce direct labour costs (lower social security, insurance, salary and tax costs) and indirect costs (non-inclusion in calculation of the workforce for access to certain facilities, exemption from limits on working time and other restrictions applying to subordinate employment), you can choose from among various types of self-employment:

• project-based work
• association-participation
• contract for work and labour
• agents and representatives.

If you are looking for a flexible worker

If you target growth for your company, especially through greater productivity, you can choose flexible work, i.e. the arrangements enabling workers to have flexible working hours and/or to work off-site.

Nowadays, many Italian businesses make an incorrect use of flexible work, as a tool to select permanent staff or to save on labour costs compared to regular open-ended employment contracts.

Actually your company's productivity does not depend on the number of hours your workers spend at the company's premises: several studies have shown that workers working from home or with non-standard, flexible and personalised hours are more productive because they can manage their personal and family life better and are therefore more focused and motivated during their working time.

Flexibility is an advantage and growth opportunity and does not generate extra costs (for instance, part-time salary is perfectly proportional to the number of hours worked), and only requires a change of attitude and some practical arrangements.

If you opt for this type of contract it is important you equip your workers with the tools and technologies they need to be productive and creative, whatever their physical location.

Flexible work can take the following forms:

• Fixed-term work
• Job sharing
• Part-time work
• Intermittent work
• Teleworking

Fixed-term work

At the end of June Legislative Decree No 81/2015 was adopted. This is the fourth of the Decrees implementing the “Jobs Act” (the labour reform approved by Parliament in December 2014) and it modified the rules on fixed-term work as follows.

Duration

Fixed-term employment may last not more than 36 months. If the 36-month limit is exceeded by a single contract or a succession of contracts, the employment is converted into a permanent contract from the date the limit was exceeded.

Prohibitions

Fixed-term employment is not allowed in the following cases.

• to substitute workers exercising their right to strike;
• at production units where, within the prior six months, collective dismissals were made concerning workers with the same duties as those covered by the fixed-term contract, unless the new contract is concluded to replace absent workers or to hire workers on the mobility lists, or has an initial duration not exceeding three months;
• at production units where workers with the same duties as those covered by the fixed-term contract have been temporarily laid off or put on reduced working hours and are receiving wage support benefits (cassa integrazione guadagni);
• if the employer failed to perform the risk assessment required by workplace health and safety legislation.

If these prohibitions are infringed, the contract is converted into a permanent contract.

Extensions and renewals

The duration of the fixed-term contract may be extended, with the worker's consent, only if its initial duration was less than 36 months and, in any case, for no more than five times over a 36-month period, irrespective of the number of contracts concluded.

If the contract is extended more than five times, it is automatically converted into a permanent contract from the start date of the sixth extension.

If a worker is re-employed on a fixed-term basis within 10 days of the date of expiry of a contract lasting up to six months, or within 20 days of the date of expiry of a contract lasting longer than six months, the second contract shall become an open-ended contract. These provisions do not apply to workers engaged in the seasonal work identified by a Decree of the Ministry of Labour and Social Policies, or to the exceptions set out in collective bargaining agreements.

These limits do not apply to the innovative start-up enterprises identified in Article 25(2) and (3) of Decree-Law No 179 of 18 October 2012, converted, with amendments, by Law No 221 of 17 December 2012, for a period of four years after establishment of the company, or for the shorter period set out in Article 25(3) for already established companies.

Continuation of the relationship after expiry of the term

Without prejudice to the limit on maximum duration, if the employment relationship continues after the expiry of the initial or extended term, the employer must grant the worker a pay increase of 20% per day up to the 10^th day, and 40% for each additional day.

If the employment relationship continues beyond the 30^th day for contracts having a term of less than 6 months, or beyond the 50^th day in other cases, the contract shall be considered to be of indefinite duration from those dates.

Total number of fixed-term employment contracts

Unless exceptions are made in collective bargaining agreements, the total number of fixed-term contracts concluded by each employer may not exceed 20% of the number of permanent workers in employment as at 1 January of the hiring year. If the decimal is 0.5 or greater, it is rounded up to the next unit. If the activity starts in the course of the year, the percentage limit is calculated on the number of permanent workers on strength at the time of the hiring. Employers with no more than five workers have no restrictions on hiring under fixed-term contracts.

Job sharing

Under a job sharing arrangement, two workers share the same job and accept personally and directly a joint obligationto fulfil the duties of that single position.

This is a new type of flexible contract with advantages for both parties:

• the employer can obtain greater labour productivity and fewer work absences
• the workers can manage their working time better with more time to devote to their family or study, and increase their productivity.

Job sharing contracts must be written down and must include the following elements:

• the names of the two workers, their respective shares of the job and their arrangements for splitting working time (one week, month, or year each, or both on the same day). The workers may at any time swap shifts or change their arrangements by mutual consent;
• the place of work and the salary, benefits and entitlements applying to each worker, which are pro rata to those applying to a full-time worker covering the same position. Moreover, the salary is proportionate to working time as concerns annual leave, sick leave and parental leave;
• any specific safety measures applying to the duties of the position.

The employer can also allow substitution by third parties, in the event one or both of the joint workers are temporarily unable to work, provided this is agreed in writing.

Job sharing is covered by collective bargaining. Where no provisions are made in collective bargaining, the general rules on subordinate employment shall apply, mutatis mutandis, to job sharing.

Job sharing contracts may be fixed-term or permanent. In either case, the two workers count as a single unit in the company's workforce and pension and social benefits (e.g. sickness benefit) are calculated as for part-time contracts.

If one of the two workers resigns or is dismissed, the other worker's position is also terminated.

This last provision does not apply if you decided that the position can now be covered only by the remaining worker, on a full-time or part-time basis. In this case, the job sharing contract is replaced by a regular employment contract.

Part-time work

Part-time employment contracts allow you to hire workers on shorter working time compared with full-time contracts.

Part-time workers have the same rights and duties as full-time workers.

The part-time contract may be either fixed-term or open-ended and must state in writing the number and distribution of working hours.

At the end of June Legislative Decree No 81/2015 was adopted. This is the fourth of the Decrees implementing the “Jobs Act” (the labour reform approved by Parliament in December 2014) and it modified the rules on part-time work as follows.

Part-time work is no longer distinguished into horizontal (shorter working day), vertical (full-time periods alternating with periods of inactivity) or a combination of the two. The new contracts simply state the “duration of work and working hours in terms of distribution within the day, week, month and year”.

Additional work and overtime

In accordance with collective bargaining agreements, employers may ask the worker, to do additional work within the limit of regular working hours. Additional work means work beyond the hours agreed in the contract, also in terms of days, weeks or months.

If the collective bargaining agreement has no rules on additional work, the employer can ask the worker to do additional work not exceeding 25% of the agreed weekly working hours. In this case, the worker can refuse to do additional work on the grounds of proven work, health, family or vocational training needs. Additional work is paid with a 15% increase on actual hourly pay.

In accordance with collective bargaining agreements, the employer and the part-time worker may agree written flexible clauses concerning changes in the timing of work or increase in working time.

Part-time workers must not be treated less favourably than full-time workers in the same category.

Part-time workers enjoy the same rights as a comparable full-time worker and their salary and allowances are proportionate to the reduced working hours. Collective bargaining agreements can regulate the duration of the probationary period, of the advance notice to be given before termination or resignation, and of the period of retention of the position in the event of sickness or injury, pro rata to working hours.

Intermittent work

If you need workers for discontinuous or intermittent activities you can rely on on-call workers.

At the end of June Legislative Decree No 81/2015 was adopted. This is the fourth of the Decrees implementing the “Jobs Act” (the labour reform approved by Parliament in December 2014) and it modified the rules on intermittent work as follows.

Under an intermittent employment contract, which may be open-ended or fixed-term, the employer can rely on the worker in a discontinuous or intermittent manner according to the needs identified in the collective bargaining agreements. This may include work at specific times of the week, month or year. Intermittent employment is reserved for workers younger than 24 years (working up to the 25th year) and older than 55 years. In any case, except for the sectors of tourism, public establishments and entertainment, a single worker may provide intermittent work to the same employer for a total not exceeding 400 days of actual work over a three-year period

Intermittent work is not allowed in the following cases:

• to substitute for workers on strike
• if in the previous 6 months your company made collective dismissals or placed workers in temporary redundancy or reduced working hours with wage support (cassa integrazione)
• if you failed to perform a risk assessment pursuant to the current H&S legislation.

Teleworking

Teleworking is when the worker does not work from the company's premises, but from other locations - usually from home or dedicated facilities - using IT tools (computer, smartphone or tablet) and remote connection.

Teleworking differs from home working, which does not employ IT tools and often concerns low-skilled jobs.

Companies usually rely on teleworking for IT tasks such as data inputting, processing and transmission.

This type of flexible contract has the following pros:

• it reduces the company's overheads and increases worker motivation, productivity and creativity;
• it creates new employment opportunities, especially for people with disabilities;
• it reduces traffic, pollution and energy consumption;
• it helps workers balance their personal and work life and saves them the time and cost of commuting;
• it increases the workers’ job satisfaction.

Teleworkers have the same legal, contractual, pay and social security rights as their co-workers in the same category working at the company's premises. There are however some differences as concerns organisation of working time. Teleworkers can organise and manage their working time freely, while ensuring they are reachable at the times specified in their employment contract to facilitate communication with the employer and transmission of work instructions.

If you are looking for a trainee worker

If you wish to hire young people aged between 15 and 29 years, you might consider the new apprenticeship contract.

Apprenticeship is an open-ended contract which allows you to train at your company young workers wishing to master the technical and professional skills required to perform specific tasks and thus to hold a specific professional position.

The apprenticeship contract offers the following benefits:

• obtain various incentives which will allow you to slash labour costs and to access favourable terms, subsidies or funding such as: tax rebates, hiring the apprentice on reduced pay (entry salary) on account of the training provided in return, and exclusion of apprentices from calculation of your company's workforce;
• train specific professional profiles tailored to your production and growth requirements;
• recoup part of the training costs incurred through access to inter-industry training funds, continuing training funds or regional funds;
• check, during the mandatory probationary period, the aptitude and predisposition of the young apprentice for the duties he is being trained in.

The minimum duration of the apprenticeship period is 6 months. Throughout this period, the trainee must be flanked by a company trainer of proven professional experience.

There are three types of apprenticeship contracts:

• apprenticeship for vocational qualification and diploma
• apprenticeship for learning a trade
• apprenticeship for advanced training and research.

If you are looking for leased staff

If your aim is to outsource part of your production process using manpower not directly employed by you or contracting out the supply of works or services, you can consider other types of contracts:

• staff leasing
• works/services contracts
• deployment.

These contracts allow you to have a leaner and more flexible production system which is more adaptable to changing market situations and to reduce fixed costs of production, first and foremost labour costs.

In organisational terms you can opt for a small core team of permanent professional workers and a larger number of temporary workers hired and salaried by a temp worker agency.

If you are looking for a permanent worker

In terms of organisation it may be a good idea to rely in the long-term on a small team of permanent professional workers responsible for the core part of your production.

The open-ended employment contract is the tool enabling you to make this choice, as it allows you to have “stable” workers. It also remains the most common form of subordinate employment.

At the end of June, Legislative Decree No 81/2015 was adopted. This is the fourth of the Decrees implementing the “Jobs Act” (the labour reform approved by Parliament in December 2014) and it provides that employment contracts of an indefinite duration are the general form of employment relationship.

These employment contracts (also known as open-ended or permanent) have no expiry date and are the general form of employment (standard contract). The open-ended contract has no end date (other than the worker's compulsory retirement age) and can be full-time or part-time.

The employer is required to pay a given monthly salary, while the worker undertakes to provide intellectual or manual work to the employer, following his instructions.

This type of contract offers the strongest safeguards to workers, including a series of rights which are strengthened through length of service, including automatic pay rises, annual leave, marriage leave, maternity leave, Christmas and summer bonuses (13th – 14th month salaries), productivity bonuses and severance pay.

The employer also needs to insure the worker with INAIL (Worker Compensation Authority) against workplace injuries. This will protect you as the employer should the worker or third parties be injured or affected at work. The employer also pays the worker's income taxes on the worker's behalf (the law requires employers to act as "tax collector"), and pays the social security contributions.

The letter of appointment can establish a probationary period lasting not more than 6 months (the worker must countersign this). If the worker completes this period without being terminated, he becomes a permanent worker. During the probationary period, the contract may be terminated by either the worker or the employer without notice and for whatever reason. In this case, the worker will be paid for the days actually worked. To be valid, the probationary period must be specified in writing, otherwise the worker will be considered to be permanent from the start.

If you are looking for a worker belonging to a protected category

Larger companies may be required by law to hire a certain number of workers with disabilities. But most importantly this is a form of corporate social responsibility which promotes among your workforce the values of solidarity, altruism, tolerance and mutual personal growth.

Offering a job to a person with a disability often means:

• aiding this person to become fully integrated in society
• obtaining higher productivity than from a "normal" worker.

To hire a worker with this profile, you must contact the dedicated job centre established at the Provincial Employment Services Centre, to receive technical advice for an appropriate match meeting your company's production needs.

Hiring a protected category worker also allows you to receive financial and tax advantages.

For more info, read the following articles:

• Workers with disabilities
• Targeted employment
• The companies required to hire workers with disabilities
• Workers with disabilities and incentives

Workers with disabilities

Companies and public entities can hire persons with disabilities if these are of working age, unemployed and on the special recruitment lists held by the Employment Services Centres (Centri Servizi per il Lavoro - CSL).

To enrol on these lists, persons with disabilities must belong to one of the following categories:

• civilian disabled with a reduction in work capacity exceeding 45% (verified by the competent medical board);
• work disabled i.e. individuals disabled as a consequence of industrial injuries, with 33% disability (verified by INAIL)
• war disabled, disabled from law enforcement and other public safety services and civilian disabled from war-related causes (verified in accordance with the law on war pensions)
• the blind and the deaf and speech impaired
• widows, orphans, surviving spouses of persons who died on the job, in war or in the line of duty, refugees and repatriated Italians and victims of terrorism and organised crime.

These categories may also include those who as a consequence of an accident or illness while employed suffer an impairment of working capacity of 60% or higher, provided these events are not due to the employer's disregard of workplace H&S rules.

By 28 February of each year, disabled individuals on the special lists must go to the targeted employment office at the local CSL (Employment Service Centre) to confirm their wish to be on the list. Being on the list is a requirement for being hired by one of the private companies and public entities subject to a mandatory recruitment quota.

Targeted employment

Targeted employment, which is governed by Law No 68/1999, is a service that supports the employment of disabled individuals, promoting their professional competences, capacities and mental and physical abilities.

This service matches the work skills of the disabled individual with the labour demand from enterprises. It allows employers to find the right disabled worker for the right position.

This approach allows you to employ disabled individuals at the same levels of productivity as other workers.

Legislative Decree No 469/97 has transferred the competences for employment services, including targeted employment services for the disabled, from the Ministry of Labour to the Regions and Provinces.

The Regions have competences in the field of labour policies; their purpose is to promote greater employment of disabled workers, also appointing ad hoc committees with competences for targeted employment.

The Provinces deliver employment services, including to disabled workers, through the Labour Services Centres (CSL). These have provincial offices for the targeted employment of disabled workers, which handle the following activities:

• employability initiatives;
• drafting of the lists of special categories of jobseekers pursuant to Law No 68/99;
• issue of authorisations for partial exemption and geographical balancing;
• conclusion of agreements;
• implementation of targeted employment.

The companies required to hire workers with disabilities

As an employer you are required to hire disabled workers if you have at least 15 workers.

To fulfil this obligation you must submit to the local targeted employment office a hiring requestwithin 60 days from the time you become subject to the obligation; alternatively, you can conclude ad hocagreements.

The request to hire a disabled worker can be replaced by an annual report to be submitted online by 15 February of each year to the competent services of the Ministry of Labour, showing:

• the total number of workers in the company;
• the number and names of disabled workers already employed and the number of disabled workers still to be hired to reach the mandatory quota;
• the positions and duties available for disabled workers.

You are not required to send the report if the previous year there were no changes in your manpower that would have triggered the requirement to hire disabled workers.

You can hire disabled workers in one of two ways:

• personal selection when you pick the disabled candidate best suited for your vacant position by consulting the lists (referred to in Article 8 of Law No 68/99) of disabled jobseekers, or by signing an ad hoc agreement;
• selection by position in the list; this is done on the basis of the ranking of the disabled job-seekers in the lists held by the ‘targeted employment’ office of the competent employment service centre, taking into account the competences you require. If no appropriate profile is found, disabled workers with similar qualifications are selected, after receiving training for the intended position.

The quota of positions reserved for disabled workers is determined pro-rata to the size of your company, as shown in the table:

In some cases companies can be granted exemptions, suspensions or offsetting of the requirement.

Workers with disabilities and incentives

The Budget Law of 2008 (Article 1(37) of Law No 247/2007) introduced a contribution for the hiring of disabled worker, calculated as a percentage of labour costs.

The potential beneficiaries of this scheme are public and private employers, social cooperatives and consortia and charities.

The contribution granted towards the hiring of disabled workers is funded by the National and Regional Fund for the employment of the disabled.

You can obtain the following subsidies by signing an agreement with the local Province:

WORKERS/DISABILITY

SUBSIDY

If you hire workers with disability above 79%

You will be granted a subsidy of 60% of the cost of the salary of every disabled worker hired on an open-ended basis under agreements pursuant to Article 11 of Law No 68/99.

If you hire workers with mental-cognitive disability, regardless of the percentage of disability

You will be granted a subsidy of 60% of the cost of the salary of every disabled worker hired on an open-ended basis under agreements pursuant to Article 11 of Law No 68/99.

If you hire workers with disability between 67% and 79%

You will be granted a subsidy of 25% of the cost of the salary of every disabled worker hired on an open-ended basis under agreements pursuant to Article 11 of Law No 68/99.

If you hire workers with disability of 50% or lower

You will receive a partial flat-rate reimbursement of costs incurred for adapting the workstation, for teleworking technologies and for removing architectural barriers.

If you decide to convert the relationship from full-time to part time or to terminate the employment for reasons not attributable to the disabled worker, the contribution will be reduced proportionally (according to actual hours worked or to the duration of employment).

These subsidies are additional to any other job-creation incentives.

If you are looking for worker without contract

Occasional work is a very innovative form of work enabling you to employ workers on an occasional, infrequent basis without having to submit documents or to report the hiring online on the SilSardegna portal.

Occasional work is a flexible way of covering sporadic labour needs. It is subject to limits on duration and on total pay.

It concerns work activities not classifiable as either employment or self-employment. The work is done directly for the beneficiary of the service, with no intermediaries.

The purpose of the rules on occasional work is to ensure correct use of this type of work, focusing on three targets:

• transforming undeclared work into declared work;
• by so doing, protect workers at risk of social marginalisation, especially the younger and older workers who struggle in the labour market without insurance and social security protection;
• favour the integration of weaker workers, improving the opportunities for domestic work and work in the non-profit sector.

Warning

At the end of June Legislative Decree No 81/2015 was adopted. This is the fourth of the Decrees implementing the “Jobs Act” (the labour reform approved by Parliament in December 2014) and it modified the rules on occasional work as follows.

A worker is defined as an occasional worker when his total income in the calendar year from all his 'clients' does not exceed EUR 7,000 , subject to annual adjustment for inflation according to the changes in the ISTAT index of consumer prices for blue collar and white collar worker households. Within the overall limit of EUR 7,000 per year, the income from any single businesses or professional cannot exceed EUR 2,000 per client, inflation-adjusted each year.

Occasional work can also be performed, in all production sectors, including for local authorities, within a limit of EUR 3,000 of income per calendar year, adjusted for inflation, by workers on wage or income support schemes. INPS shall deduct from the non-cash contribution of the wage support benefit the contribution payments relating to occasional work.