Italy: The Temporary Employment Agreement… Is it a Good Choice?

Last Updated: 15 July 2008
Article by Andrea Gangemi
  • Introduction

  • Limits under Italian Law

  • Recent Legislative Changes

  • Practical Effects

Introduction

A temporary employment agreement is a contract whereby the employer and the employee specify the duration of the employment relationship in writing. At the end of this period the employment relationship is automatically terminated.

Italian law has always considered the temporary employment agreement as an exception to the rule on employment contracts, to be allowed only in cases provided for by specific laws (ie, Law 230/60 and Decree-Law 368/2001) and by applicable national collective agreements. Such agreements frequently trigger disputes between employers and temporary employees seeking to be reclassified as permanent employees.

Law 247/2007 and Decree-Law 112/2008 recently introduced significant changes to the regulation of temporary employment agreements and a recent Supreme Court illustrates the kind of employment relationship that could be affected.

Limits under Italian Law

Parties may enter into a temporary employment agreement only:

  • in order to meet technical, organizational or production needs and replace absent employees (eg, while employees are on sick leave, maternity leave or secondment) pursuant to Article 1 of Decree-Law 368/2001; or

  • if the employment of a temporary employee complies with the applicable national collective agreement (which caps the number of temporary employees as a percentage of the number of permanent employees already employed).

Recent Legislative Changes

Law 247/2007 recently modified these limits with two new provisions.

First, a temporary employment relationship automatically becomes a permanent employment relationship once the aggregate duration of the temporary agreements signed by the employee exceeds 36 months (except for seasonal workers).

Second, the law gives temporary employees priority over other candidates if a permanent position becomes available. A temporary employee who has been employed for six months or more must be given priority if the employer wishes to hire a permanent employee for the same position within one year of the temporary agreement being terminated.

This recent intervention seems intended to be the government's final word on the subject; and Decree-Law 112/2008 provides that national collective agreements may in part override the provisions of Law 247/2007.

Moreover, the decree-law has extended the scope of Article 1 of Decree-Law 368/2001, which previously restricted temporary agreements to circumstances of "exceptional need". As a result, parties can enter into a temporary employment agreement to meet technical, organizational or production demands and to replace absent employees if the need arises in the course of the employer's ordinary activities.

Practical Effects

The temporary employment agreement is clearly a useful tool for employers – which is why Italian law carefully regulates its use. The employer is under obligation to the employee only for a limited time, after which it can assess the temporary employee's performance and decide whether to continue the employment relationship (either with a further temporary agreement or a permanent agreement) or terminate the relationship when the term expires.

However, such agreements often trigger complaints from employees seeking reclassification as permanent employees. Employers must be careful to comply with all of the legal conditions for temporary employment agreements, as failure to do so may result in a temporary employment relationship being automatically reclassified as permanent.

Temporary employees often succeed in disputes because their employers are unable to (i) substantiate the supposed reason (eg, the business need) to employ an employee or a temporary basis, and (ii) show that the temporary employee performed duties which were directly related to the need in question. However, the new provisions in Decree-Law 112/2008 may allow employers to reduce the risks connected with temporary employment agreements, as a recent Supreme Court decision demonstrates.

In Decision 17053, issued on June 23 2008, the court ordered that a temporary employment agreement between Italian television broadcaster RAI and an employee be reclassified as permanent because several temporary agreements signed by parties were found not to comply with Article 1 of Decree-Law 368/2001. Although the agreements indicated the specific television programmes in connection with which they were signed, the duties to be carried out by the temporary employee were ordinary and were not specifically connected to the programmes.

If the temporary agreements had been signed after Decree-Law 112/2008 had extended the scope of Article 1, the court's decision would probably have been different, as parties can enter into a temporary employment agreement if the reasons for doing so are based on the company's ordinary activities, rather than on exceptional need. Therefore, in the case before the court, the fact that the duties carried out by the temporary employee were not specifically connected with the named television programmes would not have been decisive.

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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