New regulations set out under the Labour Decree

At a glance

• On 5 May 2023, Law Decree no. 48 dated 4 May 2023 (the Decree) was published in the Italian Official Gazette.
• This article highlights a summary of the main provisions that will affect employers and employees.

---

Key provisions

Fixed term contracts

Prior to the enforcement of the Labour Decree, fixed-term contracts were permitted for a duration of up to 12 months. These could be extended / renewed (not exceeding a duration of 24 months) only in the case of special circumstances. The special circumstances related to the employer's temporary and objective needs, not taking into consideration the company’s need to substitute other employees for ordinary activities and / or requirements connected to a temporary, significant and unforeseeable increase in the company’s regular activities.

The Decree changes these grounds on which fixed-term contracts may be validly extended beyond the 12 month period, offering employers more flexibility. 

According to the Decree, fixed-term contracts will be permitted for longer than 12 months (up to 24 months) if one of the following conditions occur:

• In the cases provided for by the collective agreements referred to in article 51 of the Legislative Decree no. 81/2015 (National Collective Bargaining Agreements, Territorial or Company Agreements which are comparatively more representative, and the company collective agreements signed by their work councils);
• In the absence of regulation provided by the collective bargaining agreements listed above, for technical, organisational or productive needs identified by the parties (this condition only applies until 30 April 2024);
• To replace employees who are absent from work.

The Decree did not include any reference to new regulations governing the extension of the fixed term agreement period. Therefore, any extension to the fixed term agreement is permitted only within the first 12 months of the agreement and provided it meets the criteria mentioned above.

Information to be provided to employees on terms and conditions (the Transparency Decree)

The Decree provides that information obligations (including those related to the different types of leaves, notice period etc) introduced by the Transparency Decree (Legislative Decree of 27 June 2022, no. 104) can be fulfilled by referring to the legal or collective bargaining provisions that regulate the employment relationship instead of providing employees with long and complex information notices, as was previously required by the Decree. 

However, it is important to note that in any case, employers are still obliged to deliver to the employees electronically or, at least make available, the national, territorial and company collective agreements and any regulations applicable to the employment relationship. 

Reduction in social charges 

The Labour Decree provides for a reduction in contributions on the employees by 7% for employees who receive a gross salary of less than EUR 25,000 and by 6% for employees with a gross salary of less than EUR 35,000. These reductions apply from 1 July to 31 December 2023.

Inclusion allowance

Citizenship Income (Reddito di Cittadinanza) has been removed and will expire at the end of 2023, being replaced by an “Inclusion Allowance” (or Reddito di Inclusione) for families with vulnerable people, such as minors, disabled people and people over 60. Other eligibility requirements include:

• Being resident in Italy for at least five years; and
• An economic family condition (ISEE) not exceeding EUR 9,360.

The Inclusion Allowance is granted for 18 months and can be extended for a further 12 months. Recipients who are employable will participate in training, re-training and / or community projects and will lose this benefit in the event they refuse a reasonable job offer.

Hiring incentives

New financial incentives have been put in place for employers hiring employees between 1 June and 31 December 2023. 

These incentives are applicable if the “new joiner”:

• Is under 30 at the date of their hiring;
• Is not working nor attending educational or training courses; and
• Is registered in the Youth Employment Initiative (Iniziativa Occupazione Giovani).

In this event, the incentive is equal to 60% of the employee’s salary for 12 months. 

Other incentives are provided for employers who hire, on a permanent basis, those who are in receipt of an Inclusion Allowance. Where this is the case the employer is exempt from paying 100% of the relevant social contribution for 12 months, with a “cap” equal to EUR 8,000.

Fringe benefits

According to the Decree, the non-taxable threshold for employees’ fringe benefits with one or more dependent children has been raised from EUR 258 to EUR 3,000 until the end of 2023. The new threshold, for 2023, also includes the sums paid or reimbursed for domestic utilities such as water, electricity and gas.

Health and safety

The Decree also introduced:

• A new obligation on employers to appoint a Company doctor if this is required by the relevant risk assessment (Documento di Valutazione dei Rishi);
• New protections for self-employed workers on construction sites; and
• A new obligation on employers to provide specific training on how to use working equipment.