Sources of regulation
Within the broad principle of protecting
freedom of enterprise, as protected by the Italian Constitution, a body
of protective legislation and legally enforceable collective agreements
has evolved which gives considerable protection against dismissal to employees.
Contracts of employment for manual
and white-collar workers are regulated mainly by the Italian Civil Code
(CC) as amended by several pieces of legislation relevant to employment
affairs. The most important on dismissal are: Act 604 (15 July 1966)
on Individual Dismissals as amended by Act 108 (11 September 1990) and Act 300 (20 May 1970) on Workers’ Protection
(often referred to as the Workers’ Statute) as amended by Act 108. For
collective dismissals, Act 223 (23
July 1991) is also an important statute. For managerial employees the most
important provisions are laid down in their national collective agreements.
Collective agreements are of considerable
importance in Italy and almost all employees except for those employed in very small
businesses are covered by collective agreements. Industry-wide agreements
concluded between the main trade union confederations and the relevant
employers’ associations for a particular sector are binding on all employers
and all manual and white-collar employees in that sector irrespective of
whether they have been directly or indirectly involved in the drawing up
and ratification of that agreement. The onus is on the employer to comply
with the terms and conditions of the agreement and with any procedures
and provisions relating to termination of the contract of employment which
may improve upon basic statutory minima.
Even inter-union agreements drawn up in the form of recommendations
or codes of practice without the ratification of the employers may have
relevance in practice and in law. For example, the inter-union agreement
of 5 May 1966 on
collective dismissal, until recent changes in the law, was seen by the
courts as a standard of practice for employers.
Scope of legislation
The CC and Acts 300/1970 and 604/66
cover manual and white-collar workers. Labour law is concerned only with
the private sector, and is traditionally clearly distinguished from the
law on public employment.
Act 108/1990 providing mandatory protection against
dismissal does not cover domestic workers, executives and employees aged
over 60 years who are entitled to an old-age pension but who have opted to work until age 65.
Concerning remedies, the employee
is entitled to payment of damages but also reinstatement in his or her
job. Act 108 also extends these remedies to workers in non-commercial organizations
employing more than 15 people (or more than five if operating in the agricultural
sector) in the same production unit or same locality, and provides arbitration
for workers in establishments of fewer than 15 employees. Finally, the
remedies were extended by Act 108 to those employees in any enterprise
(commercial or not) with 60 or more employees.
Contracts of employment
The basic definition of employment
contracts, laid down in the CC (sec. 2094), refers to a subordinate
employee as being a worker who has engaged himself or herself to cooperate
for remuneration in an enterprise by working manually or intellectually
under the direction of the entrepreneur.
By law, any contract of employment
which is not permanent and full-time is considered to be special. Special
employment contracts are regulated by appropriate legislation and are permissible
either as part of a job-creation scheme or because they are inherent in
the nature of the work involved. Other special employment contracts apply
to domestic work and work undertaken by building caretakers. The main types
of special contracts of employment are as follows: apprenticeships, part-time,
solidarity contracts (these are intended to assist in maintaining employment
during periods of business difficulties), “work-training” contracts, fixed-term
contracts and contracts for managers (dirigenti).
Fixed-term contracts are considered
an exception to indefinite employment and the contract of employment is
considered indefinite except in cases specified by legislation (Act 230
of 1962). The permitted cases of fixed-term work include seasonal work,
replacement of ill employees or employees on maternity leave, and extraordinary
or occasional work. In addition, following recent legislation, collective
agreements may provide for further permitted cases (Act 56 of 1987). However,
legislation still provides for maximum durations of fixed-term contracts,
and limits the situations in which they can be used. Until recently, a
breach of legislative requirements on fixed-term contracts led to employers
typically being required to employ the employee indefinitely. Recently,
however, Act 196 of 1997 has limited this sanction to ongoing violations.
If employment continues for ten days beyond the expiry date, the employer
is liable to pay 20 per cent extra remuneration; for 20 days beyond the
expiry date, 40 per cent extra; and only then is the contract required
to be converted into an indefinite one. A fixed-term contract will also
be deemed to be indefinite if the employee is rehired after less than either
ten or 20 days from its expiry (ten days for contracts of less than six
months’ duration; 20 days for contracts of six months’ duration or more).
Act 196 of 1997 also deals with
the restriction on temporary work and regulates temporary work agencies.
The use of temporary work is permitted, but only in limited instances,
such as the replacement of absent workers and where permitted by collective
agreements. The Act also identifies a number of cases in which temporary
work is prohibited, including in dangerous work, to replace strikers, and
in firms shedding labour where the employees hold the same qualifications
at those to be recruited on a temporary basis.
“Work-training” contracts are also
permitted for young workers who also receive training, for a duration of up to two years.
Probationary periods must be specified
in writing. Service under probation is added to the employee’s length of
service once the contract is made permanent. Probationary periods can last
between 12 days and six months, depending on job grade.
Termination of employment
The different ways in which a labour contract
can come to an end are enumerated and regulated in part by the general
law of contract and in part by specific provisions of labour law. The application
of the general principles of the civil law to the labour contract has been progressively reduced as a consequence of the
emergence of more detailed special provisions. The basic trend of these
provisions is to promote the stability of employment in favour of the employee,
restricting in various ways the possible grounds for dismissal.
An individual fixed-term contract
may be terminated when the contract expires or when the tasks for which
the contract was drawn up are completed. An indefinite contract may also
be terminated if the company ceases doing business completely (not where
the employer merely changes activity), by mutual consent, because of force
majeure or the total incapacity of the employee, the withdrawal of
one party without the consent of the other, or one party failing to fulfil
the contract.
If withdrawal from the contract is due to the employee’s resignation,
then there are no legal restrictions, although most collective agreements
stipulate periods of notice and that notice must be given in writing. However,
any employee may resign with immediate effect in the circumstances specified
in sec. 2110 of the CC (such as non-payment of wages or social security
contributions, closure of the enterprise, failure to be included within
the category or grade corresponding to the work effectively being undertaken,
refusal to grant holidays, the unilateral changing of the employee’s duties
with a corresponding reduction in wages, offences by the employer against
the duty to safeguard the physical and psychological well-being of the
employee under sec. 2087 of the CC).
Dismissal
Limitations on the employer’s freedom
to dismiss were introduced by Act 604 (1966) for companies employing more
than 35 people and extended to all organizations by Act 108 in 1990.
As far as fixed-term contracts are
concerned, termination is automatic at the end of the specified duration
or at the completion of the specified task (sec. 2, Act 230). Nevertheless,
the employer may terminate the contract earlier for “just cause” (sec.
2119, CC).
Termination of a contract of indefinite
duration by the employer (sec. 1, Act 604), on the other hand, is
only possible for a “justified reason” and provided that the notice period
is respected (sec. 2118, CC); or without notice for a just cause
(sec. 2119, CC). Collective agreements frequently list the grounds
for dismissal. Termination without grounds is limited to trial periods,
domestic workers, employees who have reached retirement age and directors.
For all dismissals an employer must make a severance payment (trattamento
di fine rapporto).
Neither Act 604 nor Act 108 contain
very precise definitions of just cause or justified motive. However, there
is a body of case law which helps to clarify these concepts. “Just cause”,
in broad terms, requires very grave conduct which, when evaluated both
subjectively and objectively, constitutes a serious and irremediable breach
of the contract of employment (sec. 2119, CC). Whether such a breach
has occurred would normally have to be determined ultimately by a court,
taking all relevant factors into account.
Justified reason is defined as the obvious failure
of the employee to fulfil contractual obligations; or reasons inherent
in the production process, the organization of work or the
smooth running of the undertaking (sec. 3, Act 604).
Any dismissal will be deemed automatically unfair
unless it is for just cause or justified motive, and the correct procedures
have been followed. The burden of proof lies with the employer.
There are a number of provisions protecting individual
categories of employees, which will render their dismissal automatically
unfair; for example, dismissal on the grounds
of political opinion, trade union membership, sex, race, language or religious affiliation
will automatically be unfair, and members of workers’ committees may not
be dismissed or transferred for one year following the cessation of their
duties on the committee without the authorization of the relevant regional
trade union organization. Discriminatory dismissals (sec. 3, Act
108) are considered null and void. Reinstatement of these workers is mandated
by law. This law also applies to directors and domestic workers. Dismissal
on the grounds of pregnancy, if the dismissal takes place between the conception
and the end of the female employee’s statutory period of absence on confinement
leave or unpaid leave, until the child reaches one year of age, is specifically
prohibited. Dismissal on the grounds of marriage is also prohibited. Protection
against unfair dismissal of managerial employees is regulated by collective
agreements.
Act 223/1991 on collective dismissals applies to all employees
except managers in firms employing more than 15 people (five employees
in the agricultural sector). All dismissals in firms of fewer than 15 employees
are regulated by the law on individual dismissals even if they take place
together. A collective dismissal is defined as a change in employment levels
caused by a reduction in, or change of, activity involving five or more
employees in a single unit of production over a period of 120 days or five
employees in several units belonging to a single employer within a province.
The law also covers job losses in firms which cease doing business entirely.
Notice and prior procedural safeguards
There are no specific procedures
for termination on the grounds of just cause, and notice is not required.
Dismissal for justified motive, however, must be in writing. The employer
must wait for five days, during which the employee has the right to be
heard, before dismissal. The employee is entitled to ask the reason for
dismissal within 15 days and the employer must reply within seven days.
In cases of disciplinary dismissal, the conciliation procedures laid down
in sec. 7 of the Workers’ Statute must be followed. The section
states that an employee can request, via his or her trade union, that his
or her case be heard by a conciliation and arbitration tribunal. Failure
to observe the correct procedures renders the termination null and void.
According to sec. 2118 of
the CC, either party may terminate a contract of unspecified duration by
giving the required notice as specified by existing regulations or customs
and practice or according to the principles of equity (see however the
reference to the need for a “justified reason” above). Either party failing
to give the required notice becomes liable for a payment equal to the remuneration
which would have been paid during the period of notice. The employer must
also make such a payment in lieu of notice in cases where the employee
dies in service. The length of periods of notice is governed largely by
collective agreements at the national industry level and varies according
to the sector, category of employee and length of service.
The notice period runs from the
first day of the month following that in which the notice is received by
the employee.
To initiate redundancy procedures,
companies must inform employee representatives and the appropriate industry
union in writing of their intention. Where there are no local representatives,
the company must notify full-time officials in the relevant union(s). The
company must also notify the labour authorities. Within seven days of union
representatives being informed, the parties must conduct a joint examination
on the reason for the surplus labour and proposed dismissal, and the possibility
of redeployment, use of solidarity contracts or the introduction of flexible
working time to forestall dismissals.
These discussions may last for up to 45 days from
the receipt of the initial communication by the employee representatives.
The period may be halved if fewer than ten jobs are at risk. If no agreement
can be reached, the labour authorities will attempt conciliation. Following
the attempts to mitigate dismissals, the company and the employee representatives
will move to conclude an agreement on measures for those faced with redundancy.
This procedure has two elements: (a) an order of priority in the choice
of workers; and (b) an obligation to rehire the discharged workers if the
employer intends to fill the same jobs within one year. Dismissal may only
occur as a last resort. However, the employer’s economic grounds, if genuine
and objective, may not be reviewed.
Severance pay
The use of the indemnity has been
made flexible to some extent. Act 233 provides that a maximum of 70 per
cent of the indemnity acquired can be requested in advance given certain
conditions (e.g. minimum eight years of seniority, no prior requests) for
certain expenditures and purchase of initial residence.
Since 1977, a scheme of severance
pay has existed by law. It is partially protected against inflation. Employees
are entitled to a severance payment for any termination of contract based
on the formula of a year’s salary divided by 13.5, plus 1.5 per cent for
each year’s service plus compensation for inflation. It is payable whenever
an Italian employee leaves his or her job for whatever reason, and is based
on length of service with the company. Instead of assessing it on the basis
of the last wage multiplied by the years of service, Act 233 provides that
every year a certain amount of wages is set aside to be paid upon termination.
At the termination of employment, whatever the method used to effect it, the worker is entitled to receive from the employer,
in addition to any other sum of money, a special allowance called seniority
indemnity. This indemnity is peculiar to Italian law and has undergone
long evolution.
Avenues for redress
An employee wishing to contest a
dismissal must do so in writing within 60 days of receiving notice of dismissal
(Act 604). Act 108/1990 empowers the judge to order reinstatement in cases
of unjustified, discriminatory or formally vitiated dismissal. Discriminatory
dismissals because of union activity or affiliation can also be attacked
through the special procedure of sec. 28 of Act 300 of 1970.
Employers employing more than 15
employees (or five in the agricultural sector) in each establishment, branch,
office or autonomous department, and employers employing more than 60 workers,
wherever located, are liable for reinstatement of the employees and payment
of damages equal to a minimum of five months’ pay. Alternatively, the employee
can refuse reinstatement and request payment of damages equal to 15 months’
pay. If the employer invites the employee to return to work and the employee
does not take up the offer within 30 days, the contract is automatically
terminated.
Where there are fewer than 15 employees
in each unit or fewer than 60 employees in total, the case cannot come
before a magistrate unless conciliation has been requested beforehand according
to the procedures laid down in collective agreements or in secs. 410
and 411 of the Code of Civil Procedure.
Should attempts at conciliation
fail, either party can request within 20 days that the matter be referred
to arbitration. If the matter is still unresolved and the court finds the
dismissal unlawful, the employer must reinstate the employee within three
days or pay damages: a minimum of two-and-a-half months’ pay up to a maximum
of 14 months’ pay. In these cases, the employer can choose between reinstatement
and compensation.
Under the Workers’ Statute any employer
who refuses to comply with a magistrate’s reinstatement order must continue
to pay the employee his or her full remuneration until the employer complies.
If the unfair dismissal is in connection with the employee’s trade union
duties, the employer is liable to pay an additional day’s pay for every
day of non-compliance. The employer may immediately lodge an appeal against
the decision to reinstate.
Further information
|
