Italy - Labour Law: Legal Update



  1. “DIGNITY DECREE” - AN INTERPRETATIVE CIRCULAR RELEASED BY THE MINISTRY OF LABOUR

    1. 1 Fixed-term employment contracts

    2. On October 31st, 2018 the Ministry of Labour released the Circular n. 17/2018, which provides the first interpretative indications relating to fixed-term employment contracts and manpower supply contracts following Law-Decree no. 87/2018 (“Dignity Decree”).


      With regard to fixed-term contracts, the amendments to the previous regulations made by Article 1 paragraph 1 of Law-Decree no. 87/2018 concern, first of all, the reduction from 36 to 24 months of the maximum duration of the fixed-term contract, with reference to the relationships stipulated between the same employer and the same employee, also as a result of a succession of contracts, or periods of manpower supply on a fixed-term basis, concluded for the performance of tasks of the same level and legal category, regardless of any period of interruption (art. 19, paragraphs 1 and 2, Legislative Decree no. 81/2015).

      The parties are therefore free to conclude a fixed-term contract for a period not exceeding 12 months, while for longer periods this option is only available for specific reasons justifying fixed-term employment. These conditions are exclusively represented by (i) temporary and objective reasons, unrelated to ordinary activities; (ii) the replacement of other workers; (iii) requirements connected with temporary, significant and non-programmable increases in ordinary activities.

      In order to evaluate whether such an obligatory condition exists, according to the Circular, it is necessary to take into account the total duration of the fixed-term employment relationships between the same employer and the same employee, considering both the duration of contracts already concluded and the extension of the contract.

      It is useful to remember that even in cases where the employer is not required to indicate the reasons introduced by Law-Decree no. 87, these still must be indicated in order to take advantage of the benefits provided by other law provisions (i.e. for the deductions from social security contributions referred to by Article 4, paragraphs 3 and 4, Legislative Decree no. 151/2001, granted to employers hiring on a fixed-term basis in place of employees on leave).

      The Law-Decree, on the other hand, did not modify the provision set in Article 19, paragraph 3, Legislative Decree no. 81/2015, pursuant to which, once the maximum duration of the fixed-term contract has been reached, the same parties may enter into a further contract, of a maximum duration of 12 months, before the competent territorial offices of the National Labour Inspectorate.

      Finally, with regard to extensions, the Law-Decree provides that the extension of the fixed-term contract is freely admissible within 12 months, while for the renovation the indication of the abovementioned reasons will always be required. The extension requires that the reasons which originally justified the fixed-term contract remain unchanged, except for the need to extend its duration by the time it expires. Therefore, it is not possible to extend a fixed-term contract by changing its reasoning, as this would give rise to a new fixed-term contract falling within the scope of the renovation, even if this is done without interruption with previous relationship.

      Another novelty is represented by the reduction of the maximum number of extensions, which may not exceed four, within the maximum duration of the contract and regardless of the number of contracts (Article 21, paragraph 1, Legislative Decree no. 81/2015).


    1. 2 Manpower supply contracts

    2. Article 2 of Law-Decree n. 87 extended the discipline of fixed-term contracts to the provision of manpower supply, with the sole exception of the provisions on breaks between one contract and the next - the so-called “stop and go”, (i) on quantitative limits to the number of fixed-term contracts that each employer may enter into and (ii) on the right of priority.

      However, the extension made by the Law-Decree has maintained the possibility, given to collective bargaining, to regulate the system of extensions and their duration.

      Therefore, the compliance with the maximum limit of 24 months (or the different one established by collective bargaining) within which it will be possible to make use of one or more fixed-term or manpower supply contracts, must be considered with reference not only to the employment relationship that the employee had with the supplier, but also to the relationships with the individual user.

      Other change also concerns the conditions justifying the use of manpower supply contracts in the event of contracts with a duration of more than 12 months and the related extensions. In this regard, it should be noted that the provisions introduced by the Law-Decree apply only with reference to the user.

      In the event of a manpower supply contract of employment that exceeds 12 months or a reappointment of the mission to the same user, the employment contract concluded by the supplier with the employee must indicate the reasons relating to the needs of the final user.

      The Circular specifies that it will not be possible to combine periods performed with different users, without prejudice to the maximum duration of 24 months of the relationship (or the different threshold identified by collective bargaining).


  1. CONSTITUTIONAL COURT - PUBLISHED THE RULING DECLARING ILLEGITIMATE THE CRITERIA FOR DETERMINING THE INDEMNITY FOR UNLAWFUL DISMISSAL - NOVEMBER 8TH, 2018 NO. 194

  2. On November 8th, 2018, the press office of the Italian Constitutional Court published a release summarizing the grounds of the ruling (the operative part already announced on September 26th),declaring unconstitutional Article 3, paragraph 1, of Legislative Decree no. 23/2015, both in the original text and in the one amended by the “Dignity Decree”.

    First of all, the Court notes that the provision criticised is contrary to the principle of equality, in particular as regards the unjustified homologation of different situations. As a matter of fact, by anchoring the indemnity for unjustified dismissal exclusively to seniority in service, the Legislator would have excessively compressed the Court’s discretion and its ability to assess the particular situation of the individual employee as a whole. The protection linking the indemnity exclusively to the length of service essentially dictates a uniform measure and, therefore, forfeitable, independent of the peculiarities and diversity of the events of the dismissals, removing the need to customize the damage suffered by the employee, imposed by the principle of equality.

    The inflexible dependency of the increase in the indemnity on the increase in length of service alone shows its inconsistency, especially in cases of low length of service, by failing to achieve a balanced composition of the interests at stake, namely the freedom of organisation of the employer, on the one hand, and the protection of the unlawfully dismissed employee, on the other.

    According to the judgment, furthermore, Article 3 is contrary to the principle of reasonableness, since the indemnity, as provided for, is neither suitable to constitute adequate compensation for the prejudice suffered by the employee, since it is not linked to the actual damage suffered, nor is it useful to deter the employer from dismissing unlawfully, since the employer can assess in advance the possible costs arising from the unlawful dismissal.


  3. SUPREME COURT OF CASSATION – RECENT RULINGS

  • Court of Cassation, labour section, 29/10/2018, no. 27380 – proof and dismissal for justified objective reason
  • The evidence of the justified objective reason for dismissal, which also includes the impossibility of repechage, as an extinction of the employment relationship, can only burden the employer. This is based on the express provision of art. 5 of Law no. 604/1966 and on the general principle that the creditor, having proved the legal or negotiating source of his right, then has only the burden of attaching the non-compliance of other parties, while the debtor must prove the facts that prevent, modify or extinguish the demand; it was also pointed out that the discrepancy between the allegation burden and the burden of proof does not appear to be consistent with the principles governing the Italian procedural system, since whoever has the burden of proving a primary fact also has the burden of the relative full allegation.


  • Court of Cassation, labour section, 31/10/2018, n. 27948 – appeal against dismissal and time limit for dismissal
  • In the case of an appeal against dismissal, when the out-of-court action is followed by a request for an attempt at conciliation, the 60-day time-limit for lodging the appeal shall apply only in the event of failure to carry out the conciliation procedure, whether caused by the refusal of the same or by failure to reach agreement on its completion. In this case, therefore, the different additional 20-day standstill period provided by Article 410, paragraph 2, of the Italian Procedure Civil Code cannot be invoked, since this refers to the different type of attempt at conciliation actually carried out, with a negative outcome.


  • Court of Cassation, labour section, 31/10/2018, n.27950 – percentage contributions and prescription
  • As regards the so-called “percentage” contributions, the constituent event of the contribution obligation is the production of a certain income by the self-employed worker. Therefore, although the credit is created on the basis of income production, the starting point of the prescription period depends on the moment in which the corresponding contribution is actually payable and therefore on the moment in which the payment terms of the contribution expire.


  • Court of Cassation, labour section, n. 28019 – pay slips subscription and salary payment
  • There is no absolute presumption that the remuneration received by the employee corresponds to that resulting from the pay slips, even if they have been signed by the employee. In any case, it is always possible to ascertain that any subscriptions made to pay slips are not in the nature of receipt.


  • Court of Cassation, labour section, 06/11/2018, n.28232 – charging leave for absence and dismissal
  • According to settled jurisprudence, the employee is not allowed to attribute the holidays still to be taken to the days of absence from work and this circumstance is suitable to justify a dismissal for subjective reasons.


  • Court of Cassation, labour section, 07/11/2018, n.28448 – settlement and exchange of concessions
  • In order to qualify the agreement between the employee and the employer as a settlement act, it must contain an exchange of reciprocal concessions. Where the element of the “aliquid datum, aliquid retentum”, essential to integrate the scheme of the transaction, is missing, the settlement is not configurable. In particular, the settlement in which the employee, following his waiver of any further claim deriving from the previous employment relationship, obtains nothing but the TFR (severance pay), a right already recognized by law, is null and void.


  • Court of Cassation, labour section, 07/11/2018, n.28465 – employment and indexes of subordination
  • If the preliminary inquiry does not reveal clear evidence to demonstrate that the work carried out takes the forms of subordinate employment, such as the quantitative and qualitative dimension of the service, it cannot be inferred that there is a subordination in the established relationship between the employee and the employer company, even in the presence of other indexes external to that relationship.



This document is delivered for information purposes only. It does not represent any reference for contracts and/or commitments of any kind. For any further clarification, please contact the following professionals:

Avv. Matteo Di Francesco
Head of Labour Law department
+39 02 778031


Dott. Nicola de Falco
Associate Labour Law department
+39 02 778031


Originally published on 22 November 2018 by Jenny Avvocati


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