Italy is going through significant political, social and legal
changes at the moment. As employment lawyers, we are seeing
first-hand how these changes impact employers and their Italian
workforce. Italy is a work in progress and the end product will
hopefully be worthy of the prestigious label "Made in
The Jobs Act: making the Italian labour market more
The Jobs Act (the name was taken from Obama's American Jobs
Act 2011) is designed to simplify existing employment law in Italy
and to encourage employers to hire new staff.
What changes are being introduced?
Historically, the legislation provided that if the court made a
finding of unfair or wrongful dismissal, the sole remedy was
reinstatement. Now the goal posts are shifting, and the remedy of
reinstatement will practically disappear and be replaced by an
award of damages which will be calculated on the basis of length of
The remedy of reinstatement will apply only in very specific
unlawful dismissal (where the facts on which the dismissal are
based are found to be non-existent)
defective disciplinary dismissals
A very controversial aspect of the reform is that it applies
only to new hirings, and will therefore create two tiers of
employees and leave companies wide open to claims not only for
discrimination, but worse still, unconstitutional action.
The other revolutionary feature of the Act is the introduction
of a new type of open-ended contract for new recruits, which will
have "gradual" protection directly linked to length of
service. Critics of the new law say that this is a mechanism to
introduce what is in effect an extended probationary period during
which the employer can dismiss employees without giving any reason
and only pay minimal damages.
Disappointingly, yet again the Italian legislature has failed to
seize the nettle and put poor performance as a reason for dismissal
on the statute book. This is a real bone of contention,
particularly for foreign companies operating in Italy which often
have to resort to a more convoluted reason for dismissal, albeit
that they have a well-documented case for dismissal for poor
performance where this impacts negatively on the business.
What impact will the Act have?
This Act is without doubt innovative - it has been the subject
of much discussion throughout the country, which is a sure sign of
its importance to Italian businesses. We will have to wait and see
to what extent the Act provides momentum in helping to turn around
the Italian economy, although the Act will not have an immediate
impact as the new provisions on dismissal only apply to employees
recruited from 2015. Over time, however, the Act should result in
lower dismissal costs, and potentially greater ease in recruiting
All change for Dirigenti (Executives) in the collective
What rights did Dirigenti have?
In Italy, although Dirigenti (top level managers) are
employees, they enjoyed less protection than ordinary employees,
including being excluded from the whole collective redundancy
process. However, thanks to a decision of the European Court of
Justice in February 2014 and ensuing European legislation, Italy
has recently passed its own law which gives Dirigenti
What are the changes and what do they mean in practice?
Dirigente must be included in:
the calculation that triggers collective redundancies, i.e.
where a company with more than 15 employees dismisses at least five
of them within a period of 120 days
the information and consultation process with the unions, and
the application of the legal selection criteria
(technical/organisational needs of the company, family dependants
and length of service)
This means that companies will need to set up separate
negotiations with the Dirigente unions and (so it appears)
apply the selection criteria. However, such criteria do not take
into account the special characteristics of the Dirigente
relationship, in particular the bond of trust and their fiduciary
In addition, if an employer fails to follow the process
correctly, Dirigente would be entitled to damages of up to
24 months' salary, thus effectively extending rights to them
which were previously only enjoyed by employees.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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