About the Jobs Act
The Jobs Act (Law No 183 of 10 December 2014, Official Gazette No 290 of 15 December 2014) is a delegation Law reforming the labour market.
The Law established a new system of employment promotion and protection, with provisions concerning:
- active employment policies
- the rules regulating employment relationships
- the work-life balance.
The aims of the reform
The general aims of the Jobs Act are to build a clearer, simpler and more efficient labour market, which is also more equitable and inclusive, especially to favour the employment of young people.
The law contains actions to:
- reduce the types of employment contracts, removing those of a more unstable nature
- revise the system of unemployment benefits, making them universal
- strengthen active labour policies
- simplify the establishment and management of employment relationships
- strengthen measures to support working mothers and improve the work-life balance.
1. Active and passive labour policies in the Law
As to active policies (i.e. the promotion of employment and support to and protection of job seekers), the Jobs Act provides for:
- rationalisation of incentives to employment, self-employment and entrepreneurship
- strengthening of the system to match labour supply and demand, through establishment of the National Agency for Employment
- greater deployment of IT tools
- better synergies between public and private services, the third sector and secondary, vocational and university education
- the empowerment of jobseekers, also through targeted support and retraining.
As to passive employment policies (actions targeting the unemployed and job losers) the Jobs Act provides for:
- broadening of the pool of workers eligible for income support and of enterprises undergoing temporary and resolvable crises receiving support;
- broadening of the pool of workers receiving ASpI (Social insurance for employment), to include temporary collaboration workers (pending the phasing-out of this type of contract) and matching the size and duration of the support to the worker's past monetary contributions;
- possible introduction, after expiry of the ASpI support, of an income support tool for workers facing financial hardship, subject to participation in the retraining initiatives proposed by the competent agencies.
2. The Law's provisions on employment relationships
As concerns employment relationships, the Jobs Act introduced measures to:
- review, reorganise and simplify the different types of employment relationships;
- reduce and simplify labour costs and formalities;
- streamline and simplify inspections, possibly by setting up a single Agency for labour inspections merging the inspection services currently managed by the Ministry of Labour, INPS and INAIL and coordinating its work with the Local Health Authorities (ASL) and the regional Environmental Protection Agencies (ARPA);
- promote open-ended contracts as the standard form of employment relationship, reducing its direct and indirect costs. Introduce, for new recruitments, a permanent employment contract "with gradually increasing protection". The Law preserves the reinstatement at work of unfairly terminated workers (discrimination, unjustified dismissal, unfair disciplinary termination). In the event of unfair termination on economic grounds, it excludes compulsory reinstatement but guarantees a financial compensation on a sliding scale according to the worker's seniority of service;
- review rules on job duties, allowing changes to be made to workers' duties to ensure they can be employed effectively in the event of objective changes in the company's requirements;
- review the rules on the distance monitoring of plant and work equipment, while protecting the worker' dignity and privacy;
- trial a minimum hourly wage for employees and, pending their phasing out, for workers employed under collaboration contracts;
- broaden the recourse to occasional work.
3. The Law's provisions on work-life balance
The Jobs Act includes the following provisions to improve work-life balance:
- gradual extension of maternity leave to all women workers, whatever the amount of contributions they paid;
- tax incentives to encourage the hiring of women workers in financial distress and with dependent children;
- promotion of flexitime in collective agreements to facilitate workers with underage children or having family members with special needs;
- possibility for workers to transfer part of their holidays and leave to co-workers caring for gravely ill children;
- promotion of childcare services supplied by companies or by joint employers'-workers' funds or entities;
- special leave for women included in domestic/gender violence protection schemes.
The Council of Ministers of 20 February 2015 issued several Decrees implementing the Jobs Act. These Decrees might amend certain provisions of the law (human resource management section) concerning staff recruitment and induction, the employment relationship and termination.
- The first implementing Decree introduces measures on the permanent employment contract with increasing degrees of protection, implementing Law No 183 of 2014 (final text);
- The second implementing Decree introduces provisions reorganising the rules on unemployment benefits for jobseekers/dismissed workers and re-employment of dismissed workers, pursuant to Article 1(2)(b) of Law No 183 of 2014 (final text);
- The third implementing Decree sets out the complete list of the revised and simplified types of employment contract and revises the rules on work duties (preliminary text);
- The fourth implementing Decree sets out provisions on work-life balance, pursuant to Article 1(8) and (9) of Law No 183 of 2014 (preliminary text).
Provisions on permanent employment contracts with increasing levels of protection
Contract with increasing levels of protection
This applies to workers hired with a contract of indeterminate duration after the entry into force of the Decree, who are subject to new rules on individual and collective dismissals. Workers hired before the entry into force of the Decree remain subject to the old rules.
For discriminatory and invalid dismissals made verbally, reinstatement to the position continues to apply, as provided by the earlier rules for all workers. For dismissals for disciplinary reasons, reinstatement only applies if the “worker is exonerated from the alleged breach”. In the other cases of dismissals lacking just cause or specified grounds, i.e. in the event of “unjustified dismissal”, the worker is entitled to monetary compensation, calculated by reference to the length of service, and hence not left to the Court's discretion.
The rule for calculating this compensation is two monthly salaries per year of service, with a minimum of 4 and a maximum of 24 monthly salaries.
To avoid court proceedings, out-of-court settlement is encouraged. In this case the employer offers an amount of compensation exempt from taxation and contribution of one month's salary per year of employment, between a minimum of 2 and a maximum of 18 monthly salaries. If the worker accepts, he/she waives the Court case.
Collective dismissals
For collective dismissals the Decree provides that in the event of infringement of the procedures (Article 4(12) of Law No 223/1991) or of the selection criteria (Article 5(1)) the same monetary compensation as for individual dismissals applies (from 4 to 24 monthly salaries).
If the collective dismissal is made only verbally, the penalty remains that of reinstatement, similarly to individual dismissals.
Small enterprises
For small enterprises, worker reinstatement only applies in the case of invalid or discriminatory dismissals or dismissals only made verbally. In the other cases of unjustified dismissals, a rising compensation of one monthly salary per year of service shall apply, from a minimum of 2 to a maximum of 6 monthly salaries.
Trade unions and political parties
The new rules also apply to trade unions and political parties.
Open-ended contract with increasing levels of protection
The employment contract with rising level of protection entered into force on 7 March 2015, through Legislative Decree No 23 of 4 March 2015.
What is a contract 'with increasing levels of protection'?
This is an employment contract of indeterminate duration which provides for increasing levels of “protection” against dismissal in parallel with length of service.
This contract will replace all the current forms of employment contract: workers hired from 1 January 2016 will be either: permanent employees, fixed-term employees, or self-employed workers with VAT number who pursue their activity independently.
What will change for existing work contracts?
It will no longer be possible to hire workers under coordinated and ongoing collaboration contracts (co.co.co) or on a project basis (co.co.pro.). Those already employed under these contracts will remain in service under the previous rules up expiry of the contract; any subsequent re-hiring will be on an open-ended basis, i.e. the new contract with increasing levels of protection.
No changes have been made to the rules on fixed-term contracts (which may be renewed or extended for up to 36 months of total duration) and to on-call work.
As to apprenticeships, their costs for enterprises will be reduced, to encourage greater uptake.
What are the key features of the contract with increasing levels of protection?
Differently from prior contracts, this open-ended contract addresses the matter of dismissals
If the worker is dismissed, he/she will be entitled to monetary compensation which increases in parallel with length of service (hence the name of the contract). Thus, what 'increases’ is the amount of compensation. Only in very few cases is reinstatement at work provided for.
Who does it apply to?
This contract applies to workers hired on an open-ended basis after the entry into force of the Decree. It shall also apply to the conversions (after the entry into force of the Decree) of a fixed-term contract or apprenticeship contract into a permanent contract.
Who does it not apply to?
The new contract does not apply to workers already employed under a permanent contract and who remain protected by the old rules (including the old Article 18 on reinstatement). Furthermore, the new contract does not apply to public employees.
What does the contract 'with increasing levels of protection' mean for employees?
If a worker hired under the new contract is dismissed without just cause or specified grounds, instead of being entitled to reinstatement he/she will be entitled to compensation, which increases in parallel with the number of years of employment. The worker will be also entitled to the unemployment benefit ASpI paid by the State.
What does the contract 'with increasing levels of protection' mean for companies?
The new framework is set to replace all the current forms of employment contracts. Therefore, companies wishing to hire from now on will have a choice between contracts with rising level of protection, fixed-term contract or the new apprenticeship contract.
Application of the permanent employment contract as the common form of employment will reduce direct and indirect costs for enterprises, which will be exempted from payment of contributions for 36 months, except for the contributions payable to INAIL (premiums and contributions).
The new rules also cover collective dismissals. Therefore, if a company in economic distress manages its redundancies without complying with the selection criteria set out in Law No 223/ 91, workers hired after 7 March 2015 will be eligible for monetary compensation but not for reinstatement.
In which cases of dismissal will the worker be entitled to reinstatement and compensation?
The right to reinstatement for unfairly dismissed workers is repealed in cases of dismissal on economic grounds or disciplinary grounds which are found to be invalid. The right to reinstatement is preserved for dismissals which are:
- discriminatory (on account of gender, ethnicity, religious or political belief or affiliation or trade union membership)
- made verbally
- invalid
- wrong disciplinary dismissal (only if the alleged fact did not occur).
In this case, workers hired under the new contract are also entitled to reinstatement plus compensation (not less than 5 monthly salaries). The only difference in this case is that within one month from the Court's reinstatement order the worker can decide whether to return to work or receive a compensation of 15 monthly salaries.
In which cases of dismissal will the worker be entitled to compensation only?
The new legislation provides that in the following cases of dismissal the worker is entitled to monetary compensation proportionate to his/her length of service:
- individual dismissal on invalid economic grounds
- individual dismissal on invalid disciplinary grounds
- collective dismissal in breach of procedures or selection criteria.
Moreover, for compensation to apply, the employment relationship must have lasted at least three years before dismissal. In these cases, the compensation is equal to two monthly salaries at the latest reference salary for calculation of severance pay, multiplied by each year of employment, with a minimum of 4 salaries and a maximum of 24 salaries, to be established by the Court.
What is the amount of the compensation?
The amount of the compensation is established by the Court, solely on the basis of the worker's length of service:
- For companies with more than 15 workers: 2 salaries per year of employment (between 4 and 24 monthly salaries);
- For companies with fewer than 15 workers: 1 salary per year of employment (between 2 and 6 monthly salaries);
In alternative to Court proceedings, an out-of-court settlement may be reached whereby the employer offers one monthly salary per year of service up to a maximum of 18 salaries.
What is the settlement offer?
To avoid Court proceedings and without prejudice to the possibility for the parties to pursue other out-of-court procedures allowed by law, within 60 days from the dismissal, the employer can offer the dismissed worker (before the court, arbitrators or a certification committee) a specified sum, which is exempt from social security contributions and from tax.
What is the amount of the settlement offer?
The employer can offer to the dismissed worker, within the time limit for challenging the dismissal, an amount which is exempt from income tax and social security contribution, equal to:
- For companies with more than 15 workers: 1 salary per year of employment (between 2 and 18 monthly salaries);
- For companies with fewer than 15 workers: 0.5 salary per year of employment (between 1 and 6 monthly salaries);
The worker receives the payment by means of banker's draft. By accepting the payment, the worker waives his right to challenge the dismissal.
Reorganisation of the rules on redundancy and unemployment benefits
NASPI
The Decree has introduced NASPI, the new social insurance for employment. This insurance applies to all workers made redundant from 1 May 2015 and to all those workers who have lost their jobs and who totalled at least 13 weeks of contributions over the last 4 years of work and at least 18 actual working days over the past 12 months. The base for calculating NASPI is the income of the last 4 years of employment (with or without breaks) divided by the number of weeks in which the worker paid his contributions and multiplied by the coefficient 4.33.
The benefit is granted for half the number of weeks of contribution in the last 4 years of work.
The amount of the benefit is proportionate to the salary and cannot exceed EUR 1,300. After the first 4 months, the amount of NASPI is reduced by 3% per month. It duration is half the number of weeks of contribution in the last 4 years of work.
To be eligible for NASPI, the unemployed worker must participate in retraining or job-seeking initiatives.
ASDI
This year, ASDI will be rolled out on a trial basis: it is an unemployment benefit which will be paid to those workers who, after expiry of the NASPI, are still out of work and in acute need for financial support. The amount of this benefit will be 75% of NASPI and its duration will be 6 months. The benefit will be paid until the EUR 300 million budget created to fund it is exhausted.
Dis-Col
Dis-Col (Unemployment benefit for Collaborators) is the unemployment benefit for workers known as co.co.co (collaboration contract workers) (under separate social security management by INPS) who lose their job.
To be eligible for the benefit, the workers must have paid three months of contributions in the period from 1 January of the year prior to their dismissal.
The amount of the benefit is proportionate to income and is decreased by 3% starting from the fourth month it is paid. The benefit is paid for half of the months of contribution paid, for up to 6 months. To be eligible, workers must participate in retraining and job-searching schemes.
Simplified consolidated rules on types of employment contracts
Essential points for reorganisation of the types of employment contract
Project-based collaboration contracts (Co. Co. Pro.). From the entry into force of the Decree no new project-based collaboration contract may be set up (while current ones can continue until expiry). In any case, from 1 January 2016 personal collaboration relationships with repetitive duties and organised by the employer will be subject to the rules on subordinated employment. This leaves unaffected collaborations governed by collective agreements, concluded by the most representative national-level trade unions, containing specific rules as to salary and benefits due to specific production and organisational requirements of the sector, and a few other types of collaboration.
The following will be also phased out: association-participation work contracts and job sharing.
The following types of contracts shall remain:
- Fixed-term employment contract, which remains largely unchanged.
- Temporary agency worker contract. The scope of staff leasing (open-ended) contracts is extended, removing the need to justify recourse to this type of employment, while setting a limit to its use in terms of percentage of total permanent employees of the company (10%).
- On-call contract. The contract will continue to be activated by SMS messaging, as done currently.
Occasional work (voucher-based). The annual limit per worker will be raised to EUR 7,000, remaining within the no-tax area, and traceability by means of SMS will be introduced, similarly to on-call work.
Apprenticeship. The idea is to simplify first-level apprenticeship (for high school or vocational diploma holders) and third-level apprenticeship (advanced education and training and research) also to reduce the costs for enterprises using this recruitment mode, in order to promote its use in line with the policy of alternating school with work.
Part-time work. The new rules define the limits and way in which, in the absence of specific provisions in the collective bargaining agreement, the employer can ask the worker to do extra work and the worker and employer can agree on elastic clauses - changing the timing of work shifts or flexible clauses, those allowing extra time in vertical or mixed part-time work.
Workers may also request to be put on part-time if they care for seriously ill family members or as an alternative to parental leave.
Duties. In the event of company restructuring or reorganisation and in the other cases set out in collective employment agreements, the company may change the worker's duties and level (maximum one level change), without changing his/her salary (save for ancillary payments linked to the specific way of performing the job).
Individual agreements between employer and employee may be made at trade union premises. These agreements may include changes in employment category and salary in order to remain employed, change professional profile or improve living conditions.
Work-life balance
This Decree mostly amends the Consolidated Law on the Protection of Maternity (No 151 of 26 March 2001) and includes measures to support parental care and protect the maternity rights of women workers. Some of the new rules are based on judgments of the Constitutional Court which had not yet been implemented by national law.
Firstly, the Decree amends the rules on compulsory maternity leave, in order to make it more flexible in special cases such as preterm delivery or hospitalisation of the newborn. In the case of preterm delivery the days of statutory leave not used before delivery are added to the post-delivery maternity leave period even if the sum of the two periods exceeds the total limit of 5 months. In the case of hospitalisation of the newborn, the mother can obtain suspension of the maternity leave period, provided she submits a medical certificate attesting to her good health. Both solutions are designed to support mother-child bonding while safeguarding the mother's health.
The Decree also extends the period during which workers may request parental leave, from the current 8 years of life of the child to 12 years. Part-paid parental leave (30%) is raised from age 3 to age 6 of the child; unpaid parental leave is raised from age 6 to 12. A similar provision is introduced for adopted or foster children: in this case the period of entitlement to parental leave is calculated from the time the child enters the household. The total duration of the period of entitlement remains unchanged.
Paternity leave is extended to all types of workers, hence not only employees, as is currently the case. Fathers can use this leave when the mother cannot do so for natural or contingent reasons.
Rules to support parenting are introduced in the case of adoptions and foster care, extending the provisions already applying to birth parents.
In addition to amending the rules on maternity, the Decree introduces two innovative provisions on teleworking and women who are victim of gender violence.
The rule on teleworking grants benefits to private employers who apply it to facilitate their employees' parental care duties. This type of teleworking is exempted from the restrictions set out in law and employment contracts on the total number of teleworking contracts per enterprise.
The second rule introduces leave for women victim of gender violence and included in duly certified protection schemes. Private-sector employees can take up to three months' leave for this purpose, at full pay. The leave period is calculated as work towards annual leave and ancillary salary elements. Women workers may also request to be transferred from full-time to part-time employment.
Women workers on project-based collaboration contracts are also entitled to suspension of their contract for the same reason, again for up to three months.