_Dignity Decree: first Circular Letter of the Ministry of Labour

Dignity Decree: first Circular Letter of the Ministry of Labour

By Olimpio Stucchi and Marilena Cartabia

On October 31, 2018, last day of the transitional period, the Ministry of Labour issued the Circular Letter no. 17, providing more clarifications on the so-called “Dignity Decree”.

As regards to the fixed-term contract, the Ministry provided further details on formal requirements, on extensions of contracts, renewals and derogations that can be introduced by collective bargaining; on the other hand, it did not provide any clarification, interpretation or exemplification on the new so-called “causali” (i.e. justifying reasons).

As for the formal requirements, the Ministry specified that contracts’ expiration date, when not provided, cannot be assumed on the basis of elements external to the contracts themselves; however, an exception is provided for replacement contracts, when it is not possible to establish the exact return date of the replaced employee (e.g. in case of maternity leave replacement).

After reiterating that the maximum duration of fixed-term employment contracts’ is 24 months, the Circular Letter, as regards to extensions and renewals, specified that it is necessary to provide a justifying reason for contracts exceeding 12 months; such provision applies also when extending a fixed-term contract that was originally shorter than 12 months.

When renewing a contract, it is always necessary to provide a justifying reason, even when the renewal takes place before 12 months.

The Ministry specified that, when extending the duration of a contract, the justifying reason provided shall remain the same. If the justifying reason changes, the contract is meant as renewed, and it is therefore necessary, before entering into the new contract, to respect a time interval of 10 up to 20 days (so-called “Stop&Go”), otherwise the employment relationship will be automatically converted into an open-ended one.

The obligation to provide a justifying reason also applies to fixed-term contracts entered into before the competent ITL (i.e. “Local Labour Inspector”) after exceeding the 24 months’ maximum duration.  Lastly, as regards to the possibility of the Collective Bargaining (including company level-negotiations) to introduce derogations, the Circular Letter confirmed that collective agreements can establish a longer duration exceeding the 24 months’ limit: however, the collective bargaining cannot derogate the justification requirement.

As for the temporary agency work, the Circular provided further clarifications on the 24 months’ maximum limit, the justification requirement and the percentage limits for these kind of contracts.

With regard to the 24 months’ maximum duration limit (which can be derogated by Collective Bargaining), such limit applies not only to the employment relationship between the employee and the temporary-work agency, but also to the relationship with the single user undertaking. This implies that the user undertaking cannot employ a temporary agency worker with whom had already entered into a fixed-term contract for the same job title.

As for the justifying reason provided from the user undertaking, the Ministry specified that such reason is necessary not only when the assignment exceeds 12 months, but also when the Company had already entered into a “direct” fixed-term employment contract with the user undertaking.

As we know, the Dignity Decree establishes that the total of fixed-term agency workers plus all employees hired under fixed-term contracts cannot exceed 30% of the number of open-term employees. The Circular Letter specified that such limit (which applies to new hirings after August 12, 2018) can be derogated by Collective Bargaining (including Company-level negotiations); therefore, the user undertaking can apply different limits established by the applied Collective Agreement.

There is no doubt that the new legal framework is quite different from the previous one that, after 4 years, was starting to become more and more “familiar”; in short, the companies’ new challenge is to combine flexibility needs with more employment within a legislative framework which is more rigid, but that does not totally exclude operative spaces.