Jobs Act: the most significant changes introduced by this decree

The most significant changes introduced by the legislative decrees, which have implemented the so-called “Jobs Act” (Law no. 183/2014), and which should enter into force soon, regard the following matters:

• so-called “progessively protective” employment contracts;
• new settlement offers;
• collective dismissals;
• Naspi, Asdi e DIS-Col.

PROGRESSIVELY PROTECTIVE EMPLOYMENT CONTRACTS

From the date of entry into force of the decrees (whose publication in the Official Journal should occur over the next few days), all employees, independently from their age and from the sector of industry their employers operate in – and excluding executive-level employees – can be hired on a “progressively protective” employment contract. With this type of contract, after the decree will enter into force, the employee is hired on a permanent basis, including in the case in which a fixed-term contract is converted into an open-ended one.

The particularity of this type of contract lies in the new protection it affords to employees in case of unfair dismissal, which becomes progressively more protective as the employee’s length of service increases.

We have summarized here below the different cases of unfair dismissal, which the decree takes into consideration.

1. Disciplinary dismissals
   If an employee is served a dismissal for just cause or which is grounded on a “subjective justified reason”, which is deemed unfair (i) because the facts the dismissal is grounded on do not exist or (ii) because the dismissal is considered discriminatory or (iii) because the dismissal was served orally, independently from the number of employees in the workforce, the employee has to be reinstated and compensated for damages in an amount equal to the salary accrued from the moment of the dismissal and in any case equal to a minimum of 5 months of salary, plus social security contributions; the employee can choose whether to be awarded an indemnity in lieu of reinstatement (exempt from social security) equal to 15 months of his last salary.
   Outside of these cases, should the Labor Tribunal ascertain that the dismissal is unfair, only the following protection can be awarded to the employee:
   – for employees in companies with up to 15 employees, an indemnity equal to one month of his total gross salary is due for each year of service, in a measure between a minimum of 2 months up to a maximum of 6 months;
   – for employees in companies with over 15 employees[1], a minimum indemnity equal to 2 months is due for every year of service, in a measure between a minimum of 4 months up to a maximum of 24 months.
   In case of merely procedural irregularities regarding the warning letter sent to the employee or in the motivation of the dismissal:
   – for employees up to 15 employees, an indemnity equal to ½ a month of the last salary received is due for each year of service, in a measure between a minimum of 1 month up to a maximum of 6 months of salary;
   – for employees in companies with over 15 employees, an indemnity equal to 1 month of the employee’s last salary is due for each year of service, in a measure between a minimum of 2 months up to a maximum of 12 months.
2. Dismissal served for reasons based on the activity of the company (objective reasons)
   Where a dismissal is not considered justified by an objective reason:
   – for employees in companies up to 15 employees, an indemnity equal to 1 month of the employee’s last salary is due for each year of service, in a measure between a minimum of 2 months up to a maximum 6 months;
   – for employees in companies with over 15 employees, an indemnity equal to 2 months of the employee’s last salary is due for each year of service, in a measure between a minimum of 4 months up to a maximum of 24 months.
3. If the workforce of the employer exceeds the legal threshold after new hires are made (or following the conversion of fixed-term contracts into permanent ones)
   The dismissal of employees who are already in force at the moment the decree enters into force will be subject to the new rules if the employer’s workforce exceeds the legal threshold set out under art. 18 (i.e., more than 15 employees in the business unit or in the same municipality, or more than 60 in the entire company) as a consequence of any new hires which are made.
   Pursuant to the “Stability Law”, moreover, in case of new hires, employers will benefit from an exemption on social security contributions up to Euro 8.060 per year for a maximum of 36 months and upon condition of existing financial funds.

SETTLEMENT OFFER

In order to avoid any objections or in any case in order to immediately settle a possible dispute, the employer, within 60 days from communication of the dismissal, may offer the employee an amount equal to a month of salary for each year of service, in a range between a minimum of 2 up to a maximum of 18 months (these amounts are reduced by half for employers with less than 16 employees). This amount is not subject to income tax (IRPEF) nor to social security contributions. The payment of this amount has to be made with a banker’s check, which has to be delivered to one of the so-called “protected offices”, set out under law (i.e., union associations, the local public labor office, agencies provided for under the collective bargaining agreements, etc.). The acceptance of the amount entails the termination of the employment relationship and the waiver of any claims against the dismissal, even if the employee has already made a claim.

Any further amount which may be agreed upon by the parties and which exceeds the aforementioned limits is subject to the ordinary fiscal and social security regime.

This particular type of settlement procedure does not substitute the ordinary ones set out under law.

COLLECTIVE DISMISSALS

With the entry into force of the aforementioned decree, the violation of the procedure or of the selection criteria of the redundant employees in a collective dismissal will only entail the payment of an indemnity in a measure between 4 and 24 months, with termination in any case of the employment relationship.

Reinstatement is possible from now only in cases of dismissals served orally after a collective dismissal has been carried out.

• NASPI, ASDI e DIS-COL
  Three new forms of welfare aid have been introduced:
  – NASpI: new social insurance for employees (NASpI), paid in cases of unemployment which occur starting from 1 May 2015 and to those employees who have lost their job and who have already paid 13 weeks of social security over the last 4 years and who have worked at least 30 days over the last 12 months. The amount of the indemnity is established on the basis of the employee’s salary and cannot exceed Euro 1.300. This welfare aid is paid for a duration equal to half of the number of weeks of social security over the last four years of work. After the first 4 months, the amount of the NASpI is reduced by 3% each month. The payment of this welfare measure is subject to the condition that the unemployed person participates in professional requalification or new employment initiatives.
  – ASDI: unemployment check for those persons, who have already benefited from the Naspi, but who are still jobless and in need of financial aid. It lasts 6 months and is equal to 75% of the last NASpI indemnity which was received. This form of welfare is paid until public funds are available.
  – DIS-COL: new type of welfare aid for self-employment workers enrolled in the “Gestione Separata” social security fund. It requires 3 months of social security calculated from 1 January of the year before the worker became unemployed. The amount is based on the last salary received and is reduced by 3% starting from the 4th month of payment. This welfare aid is granted for 6 months.

[1] More than 15 employees in the business unit or more than 15 in the municipality, or more than 60 in the entire company.

Written by Roedl & Partners