_Dignity Decree has been published on the Italian Official Journal: green light to the reform under the beach umbrella

Dignity Decree has been published on the Italian Official Journal: green light to the reform under the beach umbrella
By Paola Gobbi and Marilena Cartabia


The name of the Decree recently published on July 13th 2018 on the Italian Official Journal, may let you think that the Decree has nothing to do with employment relationships, but this is not the case!
Many are the changes that companies shall bear in mind in the next weeks, in particular, those who have fixed-term contracts close to expiration or prorogation date or those who will dismiss employees recently hired.
Hereinafter the major changes of Dignity Decree in force as from the day after its publishing on the Italian Official Journal and during the following 60 days, until its conversion into law by the Parliament.

Fixed-term contracts. The maximum duration for a fixed-term contract with the same employee is 24 months (previously 36 months), but as long as the first contract has a maximum duration of 12 months, it can be entered into without specific reasons. However in case the contract has a longer duration, specific reasons prescribed by law are required (namely temporary and objective needs, not related to the ordinary activity or to replace other employees; needs related to temporary and relevant increases of the ordinary activity, which cannot be planned).
Prorogations of the fixed-term contract allowed have been reduced from 5 to 4 in 24 months, so that in case of further prorogations the fixed-term contract will be converted into an open-ended contract. Prorogations are free (no specific reasons are required) only in the first 12 months, but then specific reasons are required also for prorogations.
Renewals of the fixed-term contract are allowed only as long as grounded on specific reasons.
The new rules for renewals and prorogations will not apply to contract entered into for seasonal activities.
Lastly, the additional social security contribution, which the employer shall pay for each renewal of a fixed-term contract (also for temporary agency work), has increased by 0.5%; currently it is 1.4% of the taxable salary for social contributions purposes.
In addition, the terms to challenge the fixed-term of the contract (out of court) have risen from 120 to 180 days.

Temporary agency work. All the new rules for fixed-term contracts apply also to temporary agency work, except for percentage limits to fixed-term contracts and priority rights.
In brief, also temporary agency work contracts are subject to: the maximum duration of 24 months, the stop&go period between the first and the second fixed-term contract of 10 or 20 days (when the first contract last respectively less or more than 6 months) and the reduction from 5 to 4 possible prorogations.

Dismissals. Damages have increased in case of unlawful dismissal of an employee hired with a so called employment contract “at increasing protection” (when the Court ascertains that the dismissal is not grounded on just cause or subjective or objective reasons). The minimum damages have increased from 4 to 6 months’ salaries, while the maximum damages have increased from 24 to 36 months’ salaries. In any case, damages are always calculated on the salary used to calculate the TFR (i.e. the severance payment)

Only a final clarification: these new rules on fixed-term contracts will apply to contracts but also to renewals and prorogations stipulated after that the Decree has entered into force.