NEW MEASURES ON EMPLOYMENT ADOPTED BY THE LETTA GOVERNMENT AND BY THE EU COUNCIL Update  

avv.  Guido  Callegari    avv.  Gaspare  Roma  dott.  Matteo  Azzurro    

 

Labour and Employment

Labour and Employment Update

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CONTENTS NEW MEASURES ON EMPLOYMENT ADOPTED BY

THE LETTA GOVERNMENT AND BY THE EUROPEAN COUNCIL

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I. “DECRETO DEL FARE” - “Urgent measures to stimulate

the [Italian] economy” (Law Decree no. 69 of June 21st, 2013 - published in the Official Gazette of the Italian Republic and entered into force on June 21st, 2013)

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II. “DECRETO OCCUPAZIONE” OR “DECRETO LAVORO” - “First urgent measures to promote youth employment and social harmony, as well as in matter of value added tax (VAT) and other urgent financial measures” (Law Decree no. 76 of June 28th, 2013 - published in the Official Gazette of the Italian Republic and entered into force on June 28 th, 2013)

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III. EUROPEAN COUNCIL OF JUNE 27/28TH, 2013 9

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NEW MEASURES ON EMPLOYMENT ADOPTED BY THE LETTA GOVERNMENT AND BY THE EUROPEAN COUNCIL The government of Enrico Letta has recently approved measures to stimulate the Italian economy (the so-called Action Decree - “Decreto del Fare”) and to tackle youth unemployment, which has risen to the alarming rating of about 40% (the so-called Employment Decree - “Decreto Occupa-zione” or “Decreto Lavoro”). This document briefly sets out the main measures of both these Law Decrees (LD no. 69/2013 - “Decreto del Fare” and LD no. 76/2013 - “Decreto Occupazione”). In particular, the main measures contained in the “Decreto del Fare” on the matter of employment regard: - certificates of mental and physical fitness - simplifications for short term employment contracts - safety at work and work contracted out - pregnancy certificates - attestation of due payment of social taxes and contributions (“DURC”) while the main measures provided by the “Decreto Occupazione” concern: - incentives for the employment of young people - apprenticeships and traineeships - scholarships for professional traineeships in Southern Italy - measures for the “Youth Guarantee” - fixed term employment contracts - jobs on call - project work agreements - dismissals for objective and valid reasons (“giustificato motivo oggettivo”) - incentives to hire unemployed workers - termination of self-employment contracts - database - joint and several liability of parties to contracts to provide work or services and to procurement contracts - collective bargaining employment agreements at local or company level - immigration - groups of independent farmers and agricultural companies Italy is not alone in taking important measures to fight unemployment. On June 27th, 2013 all the 27 EU governments kicked off a two-day summit to come up with job creation plans and to take concrete action on issues that matter to millions of people. The latter part of this document describes the 3 main areas of intervention agreed by the European Council.

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It is important to remember, however, that, according to the Italian Constitution, the two Law Decrees, while having full force of law for 60 days after their publication, need to be converted into a full law by Parliament no later than August 20th, 2013 as to the “Decreto del Fare” and no later than August 27th, 2013 as to the “Decreto Occupazione”. Otherwise, they will retroactively lose all force and effect. I. “DECRETO DEL FARE” - “Urgent measures to stimulate the [Italian] economy” (Law Decree no. 69 of June 21st, 2013 - published in the Official Gazette of the Italian Republic and entered into force on June 21st, 2013) In summary, the main measures of the “Decreto del Fare” on the matter of employment are as follows. 1.1 Certificates of mental and physical fitness LD no. 69/2013 repeals a number of provisions of Italian law imposing the duty on certain categories of students and/or of workers to submit a fitness certificate as a condition for their admission to school or to get a job. Concerning workers in general, minors and apprentices will no longer be required to submit a so-called certificate of fitness to work (“certificato di idoneità all’assunzione”) in order to get a job, and candidates for jobs in the Civil Service or the National Health Service will no longer be required to submit a certificate of physical fitness for employment in the public sector (“certificato di idoneità fisica per l’assunzione nel pubblico impiego”). Likewise, stu-dents of secondary schools will no longer be required to submit a so-called certificate of robust constitution (“certificato di sana e robusta costituzione fisica”) in order to be enrolled at school. Minor provisions repealed concern clerks of the Court of Auditors, tax

collectors, ski instructors and students of nursing schools. 1.2 Simplifications for short term employment contracts A Ministerial Decree to be jointly issued by the Labour Minister and the Health Minister should simplify the duties of employers in relation to health information and surveillance for workers hired with employment contracts for terms not exceeding 50 days in the aggregate per calendar year. 1.3 Safety at work and work contracted out A Ministerial Decree to be issued by the Labour Minister is to set the criteria for identifying activities with a low level of risk of accidents at work and occupational diseases. For these activities the Decree will establish a form of attestation to replace the more complex docu-ment of evaluation of the risk of accidents at work and occupational diseases (risk assessment form) which employers must currently prepare in accordance with the law on

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safety at work (Legislative Decree no. 81 of April 9th, 2008). Where work contracted out is on the list of activities identified by the above Ministerial Decree, the party contracting out the work will be permitted to replace the risk assessment form which must be jointly prepared with the contractor by appointing a fully qualified dele-gate in charge of the supervision and coordination of the parties for the purposes of compliance with the safety at work law. 1.4 Pregnancy certificates Hard copies of pregnancy certificates will be replaced by communications to be sent online by doctors of the National Health Service to the National Institute of Social Security (“INPS”), in accordance with the instructions contained in a Decree of the Labour Minister still to be issued.

1.5 Attestation of regular payment of social taxes and contributions (“DURC”) The attestation of regular payment by contractors under procurement contracts of social taxes and contributions (the so-called “Documento Unico di Regolarità Contributiva” or “DURC”) will be made available by INPS (the Italian social security authorities) to government bodies and other public entities online. Previously, the burden of obtaining and sub-mitting such attestation was placed upon the contractors. Irregular payment of social taxes and contributions will lead to the freezing of payments to the contractor under the procurement contract. In case of irregularities, however, the social security authorities will be bound to urge the contractor to regularise the payments within 15 days.

II. “DECRETO OCCUPAZIONE” OR “DECRETO LAVORO” - “First urgent measures to promote youth employment and social harmony, as well as in matter of value added tax (VAT) and other urgent financial measures” (Law Decree no. 76 of June 28th, 2013 - published in the Official Gazette of the Italian Republic and entered into force on June 28th, 2013) Its main measures in matter of employment are as follows. 2.1 Incentives for the employment of young people Up to and until June 30th, 2015 employers who hire workers aged 18 to 29 under an employment contract of unlimited duration will be granted a reduction of social

taxes and contributions payable for each such worker for an 18-month period from the date of commencement of the employment, provided however that the worker:

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- has not been in employment, and has not been paid a regular salary for a period of time of no less than 6 months; and/or - has no secondary school qualification; and/or - lives on their own with one or more dependents. The same reduction will apply to fixed term employment contracts with workers meeting the above conditions, which are converted into employment contracts of unlimited duration, for a 12-month period from the date of conversion of the contract. The reduction will amount to 1/3 of the gross monthly salary of each employee concerned, with a cap at 650 Euros per month per employee. 2.2 Apprenticeship and traineeship With a view to enhancing apprenticeship as the main way for young people to enter the la-bour market, the Permanent Conference for Relations between the State, the Regions and the Autonomous Provinces of Trent and Bolzano/Bozen is required to adopt guidelines by September 30th, 2013 aimed at regulating and facilitating the hiring of apprentices by micro, small and medium-sized companies for the period ending on December 31st, 2015. For the best university students enrolled for the academic year 2013/2014 willing to under-take a professional traineeship of no less than 3 months, Universities will pay 50% of the compensation payable to them by the hosting entities, with a cap of 200 Euros per month per student/trainee.

2.3 Scholarships for professional traineeships in Southern Italy 56 million Euros for each of years 2013, 2014 and 2015 were allocated by the Government to finance scholarships for professional traineeships for people aged 18 to 29 not in em-ployment, education or training (the so-called “NEET Generation”) resident in the southern regions of Italy. 2.4 Measures for the “Youth Guarantee” For the implementation of the EU programme “Youth Guarantee”, LD no. 76/2013 creates a task force within the Labour Ministry. The task force will be co-ordinated by the Secretary General or by a Director General of the Labour Ministry and will be composed of the President of the Italian Institute for the Development of Workers Professional Education (“ISFOL”), the President of the State-owned company Italia Lavoro S.p.A. whose mission is the promotion of labour, employment and social policies, the General Manager of the Italian National Institute of Social Security (“INPS”), the Chiefs of the General Divisions of the Labour Ministry, 3 representatives of the Permanent Conference for Relations between the State and the Regions, 2 representatives of the Union of the Italian Provinces and 1 repre-sentative of the Union of the Italian Chambers of Commerce. Members of the task force will be entitled to a refund of expenses, but no fee.

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2.5 Fixed term employment contracts As general rule, the typical contract of employment in Italy is for an unlimited term. Fixed term employment contracts are permitted only in specific circumstances (e.g. a peak of production or the need to replace another worker temporarily absent from work) justifying a limitation of their duration. Law no. 92 of June 28th, 2012 (the so-called “Legge Fornero”), however, introduced the possibility of resorting to fixed term employment contracts even in the absence of a reason justifying a limited duration for workers hired for the first time by an employer, provided that the term of the contract is no longer than 1 year (the same principles apply to the hiring of temporary workers in the framework of a so-called employee supply arrangement - in Italian “somministrazione di manodopera”). LD no. 76/2013 further extends this possibility to other cases, to be identified by collective bargaining, even at company or local level. Furthermore, no restrictions apply to the hiring under fixed term employment contracts of unemployed workers dismissed in the framework of a mass redundancy process. LD no. 76/2013 reduces also the previous “stop and go” minimum term between the end of a fixed term employment contract and the beginning of a new one with the same employer to 10 days if the term of the former contract was no longer than 6 months, and to 20 days if it was longer than 6 months.

2.6 Job on call Workers may undertake to work for an employer just upon request of the latter, as formerly contemplated by Legislative Decree no. 276 of September 10th, 2003 (the so-called “Legge Biagi”), under a specific type of employment contract named “intermittent work employment contract”. LD no. 76/2013 now limits the commitment of the employee to no more than 400 working days per triennium. 2.7 Project work agreements This type of contract falls within the domain of self-employment and has repeatedly been re-moulded by the Italian legislator mainly with a view to preventing it being used to circumvent employment law rules. LD no. 76/2013 now specifies that a project work agreement must clearly contain the follow-ing indications: - the duration of the agreement; - a description of the project to be implemented by the worker and the goal to be achieved by the worker at the end of the project; - the amount of the fee payable to the worker, the criteria for its calculation, the timing and ways of making relevant payments, the conditions for the reimbursement of out-of-pocket expenses; - how the employer and the worker will coordinate their work; - the safety-at-work measures applicable to the project worker.

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2.8 Dismissals for objective and valid reasons (“giustificato motivo oggettivo”) For employers having more than 15 employees in a single location or within a single municipality, or more than 60 workers in the aggregate wherever located, Law no. 92 of June 28th, 2012 (the “Legge Fornero”) made the effectiveness of dismissals for objective valid reasons 1 conditional upon the carrying out of a newly shaped mediation process in front of the competent Territorial Labour Directorate (“DTL”). LD no.76/2013 has now removed this condition for such dismissals where based on: - an absence from work for sickness for a period of time exceeding the maximum grace period as set by the applicable collective bargaining employment agreement; - the termination of a procurement contract or in general of a contract under which a contractor undertakes to do work for, or provide services to the other party and the entering into of a new contract of the same kind with a new contractor for the same work or services, where the new contractor is not bound by law to hire all the personnel employed by the previous contractor for the performance of the work or ser-vices concerned; - the completion of construction works and the closing down of the relevant construction site. 1 Notionally, dismissals caused by objective circumstances, such as e.g. the suppression of a job position within a company.

2.9 Incentive to hire unemployed workers Employers giving full-time employment of unlimited duration to unemployed workers receiving government unemployment benefit (the so-called “ASPI”) will be granted an incentive amounting to one half the residual unemployment benefit payable to the unemployed workers concerned. 2.10 Termination of self-employment contracts The effectiveness of resignations and terminations by mutual consent of project work agreements and individual joint ventures 2 is made conditional upon the carrying out of the same process of confirmation as that contemplated by Law no. 92 of June 28th, 2012 (the “Legge Fornero”) for resignations from employment contracts. 2.11 Database LD no. 76/2013 provides for the setting up of a database to be kept by the Italian Labour Ministry containing the data of all individuals, young people in particular, seeking work on the labour market. This is aimed at rationalising the activities of central and local job centres and better matching employment supply and demand, as well as

2 In Italian “associazione in partecipazione”, an arrangement contemplated by the Civil Code under which an individual makes his/her own contribution - in this case his/her services - available to another individual or entity in relation to a specific business for a consideration consisting in a share of the profits of the business concerned.

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activating the Youth Guarantee contemplated by EU legislation. 2.12 Joint and several liability of the parties to contracts to provide work and/or services and to procurement contracts Under Sect. 29 of Legislative Decree no. 276 of September 10th, 2003 (the “Legge Biagi”) both the parties to contracts under which a contractor undertakes to provide work and/or services to the other party are jointly and severally liable for the payment of the salaries and social taxes and contributions of the employees used by the contractor (and by the sub-contractors, if any) for the contracted work and/or services. LD no. 76/2013 extends such joint and several liability to the payment of the fees and compensation, as well as of social taxes and contributions, of self-employed workers used for the performance of the contracted work and/or services. Such liability can be limited by collective bargaining agreements, but not for social taxes and contributions. LD no. 76/2013, however, makes clear that the above joint and several liability does not apply to the parties to procurement contracts. 2.13 Collective bargaining employment agreements at a local or company level LD no. 76/2013 confirms the possibility introduced by Law Decree no. 138 of August 13th, 2011 for collective bargaining agreements at company or local level to derogate from a wide range of provisions of employment law and/or of national collective bargaining agreements, provided

however that relevant company or local agreements are filed with compe-tent Territorial Labour Directorate (“DTL”). 2.14 Immigration The hiring of a non-EU national residing abroad is made conditional upon the negative re-sult of a check to be made in advance by the employer as to whether there is a worker in Italy available for the job. 2.15 Groups of independent farmers and agricultural companies LD no. 76/2013 introduces the possibility for groups of independent farmers and agricultural companies to jointly hire personnel who may work for all and any of the members of the group. This also applies to the parties to a network agreement 3 provided however that at least 50% of them are independent farmers or agricultural companies. In the above cases all the members of the group or all the parties to the network agreement are jointly and severally liable for the obligations of the employer arising from the employment contracts concerned (including those in matter of social taxes and contributions).

3 In Italian “contratto di rete” which is an agreement that may be entered into by two or more companies, partnerships or individual entrepreneurs in order to increase their innovative capability and competitiveness.

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III. EUROPEAN COUNCIL OF JUNE 27/28TH, 2013 3.1 Youth employment The fight against youth unemployment is an immediate commitment of the EU, considering the un-acceptably high number of young Europeans who are unemployed. The EU will mobilise all available means of supporting youth employment. The European Council agreed on a comprehensive approach based on the following measures: - in the strengthening of Structural Funds, a particular focus will be placed on youth employment. As a first step to this end, unspent Structural Funds will be reprogrammed, where appropriate. The Commission and Member States will exploit all possibilities offered by the European Social Fund (ESF), which is one of the main financial tools at EU level for social purposes. In particular, ESF will finance not only welfare measures, but also the creation of new jobs for young workers. The Member States are invited to improve their capacity to administer the ESF, building up best practices even with the support of enhanced technical assistance from the Commission; - all the necessary steps will be taken for the Youth Employment Initiative (YEI) to be fully operational by January 2014. Funds will be allocated prevalently in favour of the EU regions experiencing a youth unemployment rate higher than 25%. The former overall allocation

of 6 billion Euros for the Multi-Annual Financial Framework (MFF) covering years 2014 to 2020 was increased to 8 billion Euros, out of which 6 billion Euros were allocated for, and will be made available to the beneficiaries in years 2014 and 2015. Member States benefiting from the YEI are expected to adopt a plan to tackle youth unemployment, including im-plementation of the Youth Guarantee before the end of year 2013. In year 2016 the Com-mission will report on the implementation of the Youth Guarantee and of the YEI; - Member States are expected to make new efforts to promote the mobility of young job-seekers, including strengthening the use of the “Your First EURES Job” programme. Member States are encouraged to use part of their ESF allocations to support cross-border mobility schemes. The “Erasmus +” programme fostering cross-border vocational training is expected to be fully operational as from January 2014. An agreement between the European Parliament and the Council on the recognition of professional qualifications would be particularly welcome. The proposals of the Commission for the creation of a network of public employment offices should be rapidly examined. As to Italy, the European Council allocated 1.5 billion Euros to be spent in the years 2014/2015 to tackle youth unemployment.