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Italy - Employment supporting measures and the COVID-19 pandemic emergency

30 March 2020
The worsening of the health emergency involving the entire Italian territory and the inevitable related impact on the national economic system have led to the approval of measures necessary to support, among other things, the two main players of the entrepreneurial scenario.

The measures enacted at a local level first and, thereafter, (duly supplemented) also at a national level in the light of the definition of “red zone” (zona rossa) clearly aim at supporting the business system and its workforce, which both share the primary need to health protection.

Law Decree of 17 March 2020 (so called "Decreto Cura Italia" – the “Decree” which entered into force on the same date of publication in the Official Gazette) provides, under its Title II, significant efforts to protect and balance both employers and employees needs and rights, by introducing extraordinary measures supporting employment, or by expanding existing rules (already in force due to other extraordinary pieces of legislation).

Among the several provisions, we deem opportune to draw the attention to the following:

Reduction of the working time and support to employees

Extraordinary leaves 

By reason of the suspension of the school system (currently applying until 3 April 2020, but already extended to 15 April 2020 in the Lombardy Region as a consequence of an administrative order issued on 21 March 2020 by local government), the legislator has introduced a special extraordinary leave of max 15 days. This is granted to working parents of the private sector, and can be taken also on a continuous way or partially. 

The age of the children has an impact on the indemnity to be granted in the case the extraordinary leaves are taken: indeed, (i) in respect of parents with children who are up to 12 years old, this will be a paid extraordinary leave, with the payment of an indemnity equal to 50% of the employee's salary while (ii) these will be unpaid leave in the case of children aged between 12 and 16 years. Furthermore, in the first case, the employee would benefit from social security coverage (contribuzione figurativa), while this is not granted in the second case, being the employee entitled to the maintenance of his/her working position (so he/she cannot be dismissed). 

Furthermore, any employee currently on paternal leave, such leave is automatically converted by operation of law into the extraordinary leave here recognised by the Decree, being the employee entitled to the allowance so granted.

We note that the extraordinary leave at stake is attributed alternatively to both parents, for an aggregate period of 15 days and is conferred subject to the condition that, in the relevant family, there is not another working parent who already benefit from income supporting measures (strumenti di sostegno al reddito) for the case of suspension or closure of the working activity, or the other parent is unemployed.

The children-age threshold referred to above does not apply in the case of the children with heavy disabilities certified according to the applicable legislation.

The extraordinary leaves are granted to employees-foster parents (genitori affidatari), while specific provisions are set for self-employed persons enrolled into the special pension fund called Gestione Separata managed by Italian Social Security Institute (INPS) and to self-employed persons enrolled into INPS.

The extraordinary leave at stake will apply for the year 2020, starting from 5 March 2020.

(alternatively) Baby-sitter contribution

In line with legislative provisions implemented in the last, the employees entitled to the extraordinary leaves above summarised can benefit – as an alternative measure to the extraordinary leaves – to a state contribution of EUR 600 granted for the purpose of covering baby-sitting services. It is granted to the employee through the so-called "family book", being the baby-sitting services to be provided where the extraordinary leave is in force and be taken by the employee.

This contribution is granted also to self-employed persons not enrolled into INPS, provided that their competent social security institute communicated the number of self-employed persons willing to obtain this contribution.

This measure necessarily requires that the baby sitter is hired in accordance with applicable law, and the existence of this relationship shall therefore be available to available to the competent authorities through the mandatory communication to be electronically sent upon hiring.

Active monitoring period of employees of the private sector and Law n. 104/1992

Quarantine, fiduciary domiciliary-staying with active monitoring and "sickness"

The Decree equates the period of time spent under a quarantine with active monitoring or under a fiduciary domiciliary-staying with active monitoring (which are situations connected to the outbreak of the COVID-19) to the sickness leave.

Hence, any of these periods benefit from and be considered for all legal and contractual purposes as sickness leave, including the employee's entitlement to the sick allowance in line with the provisions of the applicable bargaining agreement: however, they shall not be relevant for the purpose of calculating the maximum period of sickness leave (after which the employer can dismiss the employee), the so-called periodo di comporto.

The employer is therefore burdened with the duty to verify that this special event of sickness is not erroneously included when calculating whether the maximum period of allowed sickness leave has been reached (and superseded), so to limit the possibility that any exceptions are raised in any judicial proceedings relating thereto.

Moreover, until 30 April 2020 the period of absence from work required by the competent authorities, involving employees (whether public or private employees) with an ascertained heavy disability, a certified risk deriving from immunosuppression, forms of oncological conditions or from the undergoing of life-saving therapies will be deemed to be a hospitalisation.

As a further derogation to the existing legislation, the costs borne by the employer in connection with the safeguards introduced by this extraordinary measure are to be borne by the State, within certain approved expenditure limits.

In order to apply correctly this new provision, the medical certificate must be issued by the attending doctor (or by the public health system officer, as the case may be) by specifying the relevant measure originating the quarantine or the fiduciary domiciliary-staying with active monitoring.

This last formality together with the sick period stated in the medical certificate would actually put the employer in the position to understand the reason of the employee's absence, impacting on his/her privacy. However, we have to stress that the employee should voluntary share with the employer the reasons of his/her absence from work, so to allow the employer to implement any measure necessary for cleaning working spaces, also in the interests of the rest of the workforce.

Permits pursuant to Law 104/1992 

Under a situation of health emergency and for the clear purpose to further safeguard those employees that are already affected (directly or indirectly) by heavy disabilities, the Decree increases the number of special permits (commonly known as "104 permits") available on a monthly basis to address the need to assist a family member (provided that the family relationship is comprised among those specifically identified by the legislation) affected by heavy disability, or for the worker itself, should the worker be in the same conditions. 

In March and April 2020, the permits pursuant to Law n. 104/1992 are increased from 3 to 15 days, subject to the original terms and conditions required for the use of such permits, as specified in the applicable legal and contractual framework.

Dismissal for redundancy and the (non-)suspension of dismissal challenging procedures

Starting from 17 March 2020 and for a period of 60 days, the employer is prohibited from starting a collective dismissal procedure and, for the same period, pending procedures started after 23 February 2020 are suspended.

As to the individual dismissals, the employer cannot dismiss employees for redundancy, and such prohibition applies until the above mentioned deadline expires.

The above provision, even if apparently limiting the exercise of the employer’s right, is inherent to the balancing of certain guaranteed constitutional rights, just as the right to health and the right to work. Also in the light of the provisions implemented by the Decree as to matters of social safety nets (please see the paragraph below), this provision would have the purpose of limiting certain company costs (linked to the workforce). Indeed, since the employer is prohibited from dismissing employees for redundancy reasons, it shall not bear connected costs in terms of mandatory termination payments. 

Some preliminary notes should be drawn to the readers' attention in respect of this provision. Firstly, the recalled section does not contain any suspension in relation to the terms applicable in the case the employee decides to challenge the dismissal already communicated (or that will be in any case notified in the future for disciplinary reasons), notwithstanding the fact that this is mentioned in the title of the section itself.

Secondly, this provision does not regulate the relationship between this new extraordinary measure and, if applicable, the pre-emptive procedure set out in section 7 of Law no. 604/1966 (i.e., the legislation applicable to employees working for "big" companies, hired before 7 March 2015), also with reference to those proceedings already commenced on the date on which the Decree entered into force.

Moreover, even though the mentioned provision makes reference to the (individual) dismissal for redundancies in accordance with section 3 of Law no. 604/1966, we should remind that such last provision does not apply to executives (dirigenti). Consequently, it should be necessary to reconsider whether the new provision would apply to executives' positions (given the common objective underneath the dismissal) or not. 

This ban measure applies to all employing entities, regardless of the number of employees hired and, as always, it relates to open-term employment relationships (including apprenticeship contracts), being not possible to terminate for redundancy fixed-term employment contracts.

Further funds for social safety nets ("ammortizzatori sociali")

The most awaited measure under the Decree relates to funds for social safety nets. 

We recall that, under Italian law, in certain case of crisis having an impact on the business activities and requiring a suspension or reduction of the working activities (being the employees requested to stay home with no salary), certain employing entities are entitled to apply for a special allowance (granted by INPS) in favour of the suspended employees. This allowance has the purpose of granting a percentage of the salary not granted by the employing entity during the employees' suspension from work. 

Access to this special allowance depends on the reasons of the crisis and activities' reduction, which must fall within certain hypothesis set out by the law. If the reason is so serious to jeopardize the business (e.g., restructuring process, company crisis) the allowance is an extraordinary measure and it s called Cassa Integrazione Guadagni Strarordinaria (CIGS), while this allowance is called Cassa Integrazione Guadagni Ordinaria (CIGO) where the crisis is temporary and linked to external events (different from the employing entity's fault).  Italian law also regulates the employing entities allowed to apply for these allowances (it mainly depends on the business carried out and the workforce employed), their maximum duration, formalities, etc. 

The Decree intervenes in this special matter, through three types of economic supports towards employing entities. In brief:

New reason for "CIGO"

Employers who are already entitled to apply for the CIGO allowance can now benefit from a special new CIGO: indeed, the new piece of legislation has added a new reason for accessing to the CIGO allowance (and this is “COVID-19 emergency”) in the case of suspension or reduction of working activity by reason of the current health emergency.

The applicability of the measure is limited in time to the periods starting from 23 February 2020 and for a (maximum) duration of 9 weeks and, in any case, available only within August 2020.

The CIGO periods under this new reason are not calculated for the purpose of the maximum duration of CIGO allowed under all other circumstances, and are neutralised in relation to any subsequent requests.

This provision is applicable therefore only to those employers already authorised – for the type of activity carried out and by reason of the occupational thresholds – to submit a request for the granting of the CIGO, and this measure applies for these employees already in workforce as at 23 February 2020.

We note that certain substantial and procedural aspects connected to the request for this CIGO, as well as the formalities including the trade unions are exceptionally simplified, provided that the request must be submitted within the end of the fourth month following the one on which the suspension or reduction of the working activity has started.

Upon request of the employer, such treatment can also be granted with direct payments by the National Social Security Institute.

Employing entities currently resourcing the “CIGS”

Employers who as at 23 February 2020 are employees benefiting from CIGS can request the granting of the special treatment under the CIGO connected to the "COVID-19 emergency".

In this case, similarly to the formalities for the request of the CIGO described above, the availability period cannot exceed 9 weeks and the granting of the CIGO suspends and substitutes the CIGS treatment already pending.

The provision specifies that the concession of the CIGO may extend to the same employees who are currently benefiting from the CIGS allowance and being totally suspended from any working activity.

The granting of the CIGO is subject to the suspension of the effects under the CIGS previously authorised and the related period for the ordinary treatment of salary integration granted by reason of the COVID-19 emergency is not computed for the purpose of the limits provided by the legislation for the maximum duration of the CIGO and CIGS.

Extraordinary additional fund: "Cassa integrazione in deroga"

Italian Regions and the Autonomous Provinces may authorise employing entities - not having legal requirements for accessing to CIGO / CIGS in the case of suspension or reduction of activities – to have access to a special fund similar to the CIGO.

This is an extraordinary measure, as addressed to those employers in respect of which – by reason of their dimensional thresholds or of the sector – the economic support (CIGO / CIGS) provided to their employees suspended from work does not apply.

This is a salary integration treatment applicable to the workforce of employers, whose activity is suspended or reduced by reason of the COVID-19 pandemic emergency, and will operate for a maximum period of 9 weeks.

In order to benefit from this treatment, the employer must reach an agreement with the trade unions (also through telematic means), with the exception of employers with a staff headcount up to 5 employees.

This provision specifies also that the treatment would paid to the involved employees directly by INPS, subject to the prior verification that the legislative requirements (including monetary limits) are satisfied, according to a criterion which privileges the requests first-arrived through time.

It is important to stress that executives and certain employees working from their domicile (as identified by Law no. 877/1973) do not benefit from CIGO and CIGS treatments, and they would not therefore benefit from the extraordinary measures above summarised.

Forms of income support for other workers

In line with the previous analysis, the Decree provides for an una tantum indemnity of EUR 600 applicable to the month of March 2020 in favour of certain categories of workers (who do not benefit from other income support measures due to the applicable type of contract).

The addressees of this provision are self-employed persons with a VAT opened as at 23 February 2020 and self-employed persons under a coordinated and continuing collaboration contract that are active as at the same date – both enrolled with the special pension fund called Gestione Separata managed by INPS, who are not holders of a pension and are not registered with any other mandatory social security contributions systems.

A similar measure is provided for (self-employed persons registered with the special management section of the "Assicurazione Generale Obbligatoria" (Ago), seasonal employees of the touristic sector and of thermal establishments, who were terminated in the period comprised between 1 January 2019 and 17 March 2020 (the latter on the condition that they are not pension recipients or employed as at 17 March 2020), as well as fixed-term agricultural employees (who are not pension recipients) that during the year 2019 carried out at least 50 effective days of agricultural working activities.

The indemnities mentioned above are not cumulative and are not available to those persons who already receive the income of the citizenship (reddito di cittadinanza).

Finally, self-employed persons even with a VAT code, that are enrolled with private social security systems, are excluded from the scope of this income support measure.

** * **

The measures contained in the Decree supplement the several measures already enacted by the existing legislation. In this respect, the Presidency of the Counsel of Ministries originally intervened with the decree dated 11 March 2020 (published on the Official Gazette on the same date) pursuant to which certain measures have been extended to the entire national territory for the purpose of containing the COVID-19 outbreak, the duration of which had been fixed up to 25 March 2020 (in the face, however, of a state of  emergency having a current expected timeline extending up to 31 July 2020). 

On the basis of the suspension of certain type of commercial activities, the issue arose as to the treatment of the leave of absence from such activities (and the related legal basis) of the staff hired thereunder. By focusing on the labour law issues, the Decree re-confirmed the recourse to the smart working with simplified activation procedures.

The decree, with reference to the production and professional activities not falling under the scope of the suspension, recommends:

where possible and due regard being had to the tasks to be carried out, the recourse to the smart working; 

to grant holiday periods (already accrued) and the paid leaves for employees, as well as the further means provided by the applicable bargaining agreements (such as, e.g., leaves for cancelled festivities);

the suspension of activities of company departments not essential for the production.

In all working contexts which are not impacted by the order of suspension, it has been recommended the setting of anti-contagion security protocols (minimum distance between persons and, where not possible, also the adoption of instruments of individual protection), as wells the promotion of sanitization measures of the working places.

The productive activities have been subject to specific recommendations relating to the conclusion of agreements with the trade unions, the limits of the shifts within the sites and the quota for the access to the common areas.

Since these are recommendations, the decree inevitably assigned to the employer any concrete decisions, to be assessed together with the persons covering the roles specified in the Health and Safety at Working Places Code (Legislative Decree n. 81/2008), in furtherance of the employer’s duty to safeguard and guarantee the physical integrity of the employees in the working place (article 2087 of the Italian civil code).

In connection with the current implementation of further measures restricting the movement of persons with full respect of the health protection, so to limit the outbreak of the COVID-19 pandemic, we may not exclude that further measures will be implemented also as to matters of labour law and for the support of workers and enterprises generally.

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