The Supreme Court of Cassation, with its ruling no. 24145 of 30 October 2020, confirmed that, in the event of transfer of a company, the worker has the right to maintain the distinctive component of remuneration included in the individual employment contract.
Facts of the case
The Court of Appeal of Catanzaro upheld the appeal filed by a worker, with the qualification of anaesthesiologist, who transferred to employment with another company due to a company transfer.
Specifically, the worker, had claimed his right to maintaining the distinctive component of his remuneration (called “EDAPR”) attributed to him by the transferor and used for more than a decade (from 4 January 2001 to 27 May 2011), asking, based on this, to sentence the transferee to pay the sums due for this purpose during the period from 27 May 2011 to 31 January 2015.
On this point, the District Court had considered that (i) the worker be accredited with the amount for “EDAPR” as a flat rate payment for any overtime work performed (so-called “flat rate overtime”) and (ii) the same if it was transformed, over the course of employment, into an extra allowance constituting an integral part of the worker’s remuneration.
Thus the local court had recognised the right to maintaining the distinctive component of remuneration and seniority matured by the worker as a correct application of art. 2112 Italian Civil Code, when it provides that the transferor’s employee maintains all of the rights resulting from the original employment, excluding, at the same time, the impossibility of referring to paragraph 4 of the same article as a foundation for unilateral changes of employment by the transferee.
Objecting to the lower court’s ruling, the losing company appealed to the Cassation Court.
The Supreme Court of Cassation’s ruling
The Court of Cassation, in rejecting the company’s appeal, reiterated the particularities contained in art. 2112 of the Italian Civil Code confirming verbatim that it “guarantees in favour of employees of the employer that transfers the company or its business unit the guarantee of maintaining all of the rights resulting from employment with the transferor and aimed at protecting credits the worker already matured and compliance with the treatments in effect”.
Moreover, the Supreme Court also pointed out how in the case in hand the compensation was correctly identified as remuneration functional to the overall job and that “the flat rate compensation of the service rendered beyond normal work hours granted to the worker for a long time, where not correlated to the presumable amount of overtime rendered, is an allowance that, over time, assumes a different function from the original one, typical of overtime compensation, and becomes a monthly component that is part of ordinary remuneration and not unilaterally related to the employer”.
According to the Court, the employer can opt for recognition of a flat rate compensation – all-included and not restricted to the number of hours actually worked beyond normal hours – aimed at paying the worker for services of an overtime nature. The relative amount is not the consequence of a final measurement of the overtime hours performed multiplied by the relative increases. Its measurement is determined beforehand based on an agreement between the parties to compensate a number of overtime hours that are “presumed” to be rendered through constant delivery over time.
This remuneration, thus becomes an ordinary component of the worker’s pay and cannot be unilaterally revoked by the employer.
With these motivations, the Court of Cassation rejected the appeal submitted by the employer, sentencing it to pay court costs.
The Court of Udine with its ruling no. 106/2020, confirmed that an employer that is forced to dismiss an employee for unjustified absence has the right to withhold from the post-employment benefits due to the same the amount paid to INPS for the purposes of unemployment tax (known as “NASPI ticket”).
Facts of the case
In the specific case a worker orally indicated to the employer’s legal representative his intention to resign due to his father’s health problems and asked to be formally dismissed in order to obtain monthly unemployment benefits, i.e. NASPI.
After being refused, the worker threatened to remain absent from work. Despite this, the company decided to grant him a lengthy period of holiday in order to help his father. Once the holiday period ended the worker did not return to work and did not justify his absence in any way despite repeated requests.
Due to the continuation of the unjustified absence, after having attempted the disciplinary procedure as per art. 7 of Italian Law 300/1970, the company dismissed the worker for just cause. But there is more. The company then also withheld the amount of the dismissal tax due to INPS from the amount owed for post-employment benefits as well as other sums as compensation for damages sustained due to the employee’s failure to perform his job.
The worker submitted an appeal for injunction in order to have the sums withheld returned to him expecting that the unilateral decision to terminate employment would have been made by the employer.
The company objected to the injunction handed down against it so it would be revoked. The worker challenged it asking for rejection of the appeal submitted by the same and, thus confirmation of the decision in question.
The Court’s decision
The Court’s opinion was adequately proven, within the performed inquiry, that the decision to termination employment was taken unilaterally by the worker. He – faced with the company’s refusal to proceed with the requested dismissal – had, deliberately remained absent in order to be dismissed.
Therefore, according to the Court, “the expenses sustained by (editor’s note by the company) to carry out (involuntarily) the decision to withdraw made by the worker can only be borne by him and, specifically, the (editor’s note the worker) shall be required to pay the plaintiff the sums it spent for the purpose of the so-called dismissal ticket. The so-called dismissal ticket is an expense that the (editor’s note the company) had to sustain exclusively because the (editor’s note the worker), instead of resigning, without costs for the company, deliberately placed it in a position of having to terminate the employment relationship”.
In consideration of the above, the Court revoked the injunction issued against the opponent and verified, in terms of what interests us, the existence of credit of the same for the amount of the dismissal ticket, since the withdrawal is attributed to the employee’s omissive conduct.
◊ ◊ ◊ ◊
The ruling in question (no precedents have been found to date) basically reaches the conclusion whereby the employer, forced to dismiss a worker for unjustified absence, has the right to compensation for the damage sustained and corresponding to the amount of the NASPI ticket paid to INPS.
Italian Legislative Decree no. 122/2020, published in the Official Gazette no. 229 of 15 September 2020, adopted the EU Directive 2018/957 concerning transnational posting: the new provisions are contained in Legislative Decree no. 136/2016, the current reference for this institution in the Italian legal system, where a series of amendments were made.
The intention of the European government – right from the first measures made on the matter – are aimed at the various cases of transnational posting in order to prevent and eradicate distortive phenomena of the EU job market, such as dumping and unlawful temporary employment.
Examining the new provisions established by the Legislative Decree no. 122/2020 there appears to be a general tightening of the regulations, made stricter in terms of numerous areas of interest. First of all, it is possible to see how the legislation’s field of application has been expanded: in particular, the regulations regarding transnational posting are also applied to posting cases that are more complex, such as those by temporary employment undertakings or placement agencies, which in the past were excluded from the regulations.
More specifically, this is the case of temporary employment undertakings or placement agencies located in another Member State different from Italy that, for transnational provision of services, post workers to their own production unit or to another company, including belonging to the same group, with registered office in Italy to then hire them out to Italian user companies. In this case, the new legislation has established that workers in these situations are to be considered as posted in Italy directly by the temporary employment undertaking or placement agency with which they have an employment relationship.
Moreover there is a precise information obligation for the Italian user company to inform the posting temporary employment undertaking about the working and job conditions that need to be applied to the posted workers.
The legislative decree under review also clarified how – in terms of guaranteeing a complete protection of the rights and working conditions – the posted workers must be recipients of the same rules and guarantees applied to workers of the destination country. For this purpose, the text of the decree contains a clear list of matters where the Member State laws where the job is performed must be applied, if they are more favourable.
For example, the law states institutions such as maximum work periods and minimum rest periods, the minimum paid annual leave, remuneration, including increases for overtime, health, safety and hygiene at work, etc. Specifically referred to remuneration institutions, the items that compose individual remuneration must be perfectly separated and identifiable in order to discourage payment of simulated reimbursements, with the sole purpose of getting around social security contribution payment obligations on the actual remuneration received by the worker.
The Government’s intervention also involved the maximum posting duration: specifically, the maximum duration of 24 months is reduced to 12, with the possibility of a 6 month extension subject to motivated notice to the Ministry of Labour and Social Policies. The legislation now states that once this period has elapsed and the concerned worker has not returned from the posting, all of the work and employment conditions provided for in Italy under the law and regulatory provisions and under the national and territorial collective bargaining agreements, save for those concerning the procedures and the conditions for ending and terminating the employment agreement, non-compete clauses and sector supplementary pension schemes, shall be automatically applied. This overall maximum duration also refers to the case where one or more posted workers are replaced to perform the same duties in the same place. The identity of the duties performed by the workers is assessed case by case, also taking into account the nature of the service provided, work to perform and place where the job is performed.
Source: Sintesi
In Norme & Tributi Plus Diritto of Il Sole 24 Ore, an article written by our employment advisor Andrea Di Nino on the opinion of the Italian Tax Authority, intervening regarding the tax treatment applied to the social security contribution paid by the employer to INPS for the university years of some workers involved in a trade union agreement to incentivise leaving early. The article can be downloaded here by subscription.
Read more in the downloadable subscription article by Norme & Tributi Plus Diritto de Il Sole 24 Ore.
The HR Breakfasts of De Luca & Partners are returning to webinar mode.
Last 19 November, HR Capital and De Luca & Partners organised the HR Virtual Breakfast with a technical and legal focus on the latest developments in employment.
Our Employment Advisor Nunzio Lena and Alessandra Zilla, Senior Associate of De Luca & Partners took stock of the situation on the recent emergency decrees with the moderation of the Managing Partner of De Luca & Partners, Vittorio De Luca.
The event was held from 9:00 am to 10:00 am using the Zoom platform.
AGENDA:
Attendance is free subject to registration
For information: comunicazione@hrcapital.it
Following the evolution of the coronavirus situation, the government approved a new decree containing help for companies and workers.
Specifically. Italian Law Decree no. 137/2020, also called the Ristori Decree, strengthens the wage guarantee schemes and wage integrated fund, which will be available to companies for 6 additional weeks from 16 November 2020 to 31 January 2021, as long as they already benefited from the 18 weeks allocated by the August Decree. Moreover, it introduces a new contribution exemption for companies that have used social safety nets for the COVID-19 emergency in the month of June and do not intend to use these additional 6 weeks.
The decree also introduces the suspension of INPS contribution and INAIL premium payments for employers effected by the restrictive measures of the DPCM of last 24 October, such as bars/cafes, restaurants, cinemas and theatres: thus these employers may make payments due in November 2020 by 16 March 2021 or, alternatively, in 4 instalments starting from the same date.
The Supreme Court of Cassation, by Order no. 16135 of 28 July 2020, confirmed that meal vouchers do not constitute remuneration and, consequently, the employer may suspend their monthly distribution to employees at any time, including unilaterally.
The facts of the case involve a worker who instituted legal proceedings against his employer, aimed at having the company’s decision to suspend meal voucher distribution to its employees ruled as unlawful. Specifically, in his appeal the worker claimed the function of meal vouchers as a supplement to the contract, a component of remuneration including based on the legitimate expectations of workers following the repeated and generalised company practices from 1999 to 2006. Consequently, meal voucher distribution should be linked to the principle of irreducibility of remuneration.
The Supreme Court judges – in upholding the ruling of the Court of Appeal – first confirmed that meal vouchers do not represent an element of ordinary worker remuneration and thus, are not considered as distribution of a remuneration nature.
According to the Supreme Court, meal vouchers are classifiable as a benefit of a predominantly welfare nature and related to employment by a link that is merely occasional in nature.
In terms of the remuneration nature of meal vouchers, the repeated distribution of the same over time by the employer is not significant, even if such distribution constituted a consolidated company practice. Therefore, since meal vouchers are not part of remuneration in the strict sense, the employer may decide unilaterally regarding their distribution, because it is a company measure of a discretionary nature and completely unrelated to contractual or bargaining agreement provisions.
Given the above considerations, the Court of Cassation rejected the worker’s appeal and confirmed the lawfulness of the employer’s actions.
With Circular 105/2020, INPS, has provided initial clarifications for the management of social security contribution exemption obligations for employers who do not need further wage subsidies due to the COVID-19 epidemiological emergency.
August Decree provisions
Article 3 of Decree Law no. 14 August 2020 no. 104 ( “August Decree”), converted, with amendments, by Law 13 October 2020 no. 126, outlines an economic incentive, in the form of social security contribution exemptions, for employers who (i) do not require further wage subsidy periods under the same decree and (ii) have already benefited from wage subsidies in May and June under Decree Law 17 March 2020, no. 18 ( “Cure Italy” Decree).
The contribution exemption can be used for up to four months, by 31 December 2020, and up to double the hours of wage subsidy already obtained in May and June 2020.
Employers who have benefited from this exemption are subject to the prohibitions against collective and individual dismissals for justified objective reasons, referred to in Article 14 of the August Decree. Violation of this provision shall result in the contribution exemption’s retroactive revocation and losing the right to apply for wage subsidies under the same Decree.
INPS clarifications
In its circular, INPS, made it clear that, other than the agricultural sector, private employers, including non-entrepreneurs, can benefit from the reduction in contributions, if they:
INPS specified that employers who applied for social security benefits based on the “Cure Italy” Decree before 15 August (date of the August Decree’s entry into force), or alternatively after 14 August, may still benefit from this exemption. This is conditional on the subsidy periods starting before 13 July and ignoring wage subsidies that may partially accrue after 12 July.
Wage subsidy payments are based on individual production units belonging to the same employer (INPS number), and the employer can choose between the social shock absorber or contribution exemption for each production unit.
The incentive is equal to the employer’s unpaid contribution, excluding INAIL premiums and contributions and other minor contributions (such as, the 0.30% contribution for financing interprofessional funds. The contribution due to the “Fund for the payment of severance indemnities to private sector employees under Article 2120 of the Italian Civil Code”) – for double the hours benefited under social shock absorbers during May and June 2020 and regardless of the number of employees for whom wage subsidies have been paid.
The total incentive must be recalculated and applied on a monthly basis (within the maximum limit of the contribution theoretically due in the month by the beneficiary employer) for a maximum of four months and by 31 December 2020 which is the final deadline to use the benefit.
The Institute specified that the contribution exemption is subject to compliance with (i) the conditions to access contribution benefits and (ii) the ban on dismissals under Article 14 of the August Decree, with the approval of the European Commission.
Since it is addressed to a target group, it is considered as “State aid” for which prior authorisation by the European Commission is required, as underlined by the INL (National Labour Inspectorate) note of 16 September 2020, no. 713.
For the benefit’s effective application, we are waiting for the necessary authorisation from the European Commission and subsequent operating instructions from INPS.
With Resolution no. 55/E/2020, of 25 September, the Inland Revenue responded positively to a request submitted by a Company intending to activate a Welfare plan using two separate company regulations under which employees would be granted a Welfare credit to be used through a specific web platform, upon achievement of a minimum turnover target.
The Company asked:
Inland Revenue Considerations
For tax regime applicability under art. 51 paragraphs 2 and 3 of the TUIR, the Inland Revenue stated that the amounts granted as Welfare credit were not considered as part of income if the benefits were made available to all employees or categories of employees.
This was confirmed by Circular no. 28/E/2016, when the Inland Revenue had underlined the possibility of bonus-related welfare plans, even if provided to all or similar employee categories.
The expression “categories of employees” is to be understood broadly and not limited to the categories provided for by the Italian Civil Code. For example, employees of a certain “level”, “classification” or with a certain “seniority” are considered “categories.”
According to the Inland Revenue, the regime under art. 51 paragraphs 2 and 3 applies to bonus or incentive-related Welfare plans where the provision goods and services is linked to the achievement of a company objective, and when goods and services are provided as employee bonuses.
In this case, the Agency has considered employee “loyalty” as a prevailing aspect, which does not cease to apply when the distribution of benefits “is not based on the evaluation of the employee’s work, either individually or collectively, i.e. on evaluations strictly related to the work performance.”
According to the Inland Revenue resolution, a welfare plan must follow paragraphs 2 and 3 of article 51 of the TUIR, reward employees if the company’s turnover increases, with benefit payments based on the gross annual salary of each employee and ensure benefits do not replace the fixed or variable salary.
The Inland Revenue has not shown any issues in applying art. 95 of the TUIR for deductibility of the Welfare Plan costs for IRES purposes, if the welfare credits are provided to employees under a contract, an agreement or a company regulation which includes the fulfilment of a contractual obligation.
The Inland Revenue, with Circular no. 28/E of 15 June 2016, clarified that for a regulation to constitute the fulfilment of a contractual obligation, must not be revocable or modifiable autonomously by the employer. In this case, the welfare plan costs incurred by the employer are fully deductible for IRES purposes and not only limited to the five per thousand provided for by art. 100 of the TUIR.
Art. 1 of Decree Law no. 14 August 2020 no. 104 ( “August Decree”), converted, with amendments, by Law 13 October 2020 no. 126, has reviewed the period of ordinary and extraordinary wage subsidies and ordinary allowance that can be requested in the second half of 2020 to deal with the current health emergency.
The employer could have access to a maximum period of 18 weeks (nine plus a further nine) from 13 July 2020 to 31 December 2020.
INPS guidelines
The operating guidelines for wage subsidies for the Ordinary Redundancy Fund (CIGO), Wage Subsidy Fund (FIS) and Extraordinary Redundancy Fund (CIGD) for COVID-19 reasons, are laid down in INPS circular no. 115 of 30 September.
In this circular, the Institute set a 31 October 2020 deadline to submit applications for wage subsidies for July and August. It should be noted that the original legal deadline was 30 September 2020.
The August Decree confirmed that consultation with trade unions and a joint examination by the most representative trade union organisations was preparatory and mandatory to apply for the subsidy to the Institute. Employers who have less than five employees are exempt from this obligation.
The operating procedure requires two separate applications to be sent to INPS.
Employers are granted 18 weeks, divided into two distinct nine-week periods, to be used during 13 July and 31 December 2020.
For the first nine weeks, the wage subsidy application can be sent using the INPS platform and the “COVID- Nazionale” reason using the same method for wage subsidy applications under the “Cura Italia” and “Relaunch” Decrees.
For the additional nine weeks of wage subsidy, the August Decree introduced an additional contribution to be paid by the employer, making the use of social shock absorbers for COVID-19 reason “on a payment basis”, under turnover conditions as described below.
In addition to the explanatory circular on the August Decree provisions, with message no. 3525 of 1 October 2020, INPS issued the application procedures with the new “COVID 19 con fatturato” application reason for additional nine weeks, which may apply to periods before 14 September 2020 and completed by 31 December 2020.
Requests for the additional nine weeks, starting from 14 September 2020, requires the employer to send the self-certification attesting the turnover decrease for the first half of 2020 compared to the first half of the previous year.
The employer must self-certify the existence of one of the following conditions: not having suffered a drop in turnover, having had a reduction in turnover of less than 20 per cent, having suffered a drop in turnover of 20 per cent or more or, having started a business after 1 January 2019.
Access to the second period of nine weeks of wage subsidies without charges to the requesting employer will only be possible for employers who (i) have suffered a reduction in turnover in the first half of 2020 of at least 20 per cent compared to the first half of 2019 or (ii) have started a business after 1 January 2019.
When there is a reduction in turnover of less than 20 per cent, the employer will be subject to the payment of the additional contribution of nine per cent of the salary that would have been due to the worker for the unworked hours during the business suspension or reduction.
If there is no reduction in turnover, the additional contribution due will be 18 per cent.
To identify the rate of the additional contribution referred to in art. 1 of the August Decree, the requesting employers must attach the INPS application for wage subsidy with a declaration of responsibility, made under art. 47 of Presidential Decree no. 445/2020. With this declaration, employers must alternatively self-certify the existence and index of any turnover reduction and the right to exemption from the payment of the additional contribution if the business started after 1 January 2019.
As expressly stated in message no. 3131 of 21 August 2020, if the application is unaccompanied by the self-certification, the additional contribution requested will be a maximum of 18 per cent of the total remuneration that would have been due to the employee for the unworked hours during the suspension or reduction of work.
If the employer is unable to advance the wage subsidies and opts for direct payment by INPS, they will be required to send the Institute the data necessary for the wage subsidy payment or balance by the end of the month following the month to which the wage subsidy period refers (SR41 form).
To simplify the bureaucratic process to access the extraordinary redundancy fund, which required sending the wage subsidy application to the relevant Region and INPS, the August Decree ordered the transmission of applications to be carried out using the same methods used for CIGO and FIS, i.e. using the INPS platform directly.
The Supreme Court of Cassation, under Order no. 18955 published on 11 September 2020, stated that in cases of dismissal due to reaching the age limit, the employee is due notice or related pay in lieu.
Facts
The case facts concern an employee, classified as a manager, to whom the National Collective Labour Agreement (CCNL) for managers in the industrial sector was applied. The manager (who was entitled to an old-age pension from 4 February 2009, the date on which he turned 65) had received an initial employment termination notice on 26 March 2008 with effect from the following 30 June.
On 14 January 2009, the company notified the manager of the employment termination on 4 February 2009, and amending the notice sent on 26 March 2008.
The manager referred the matter to the judicial authorities and, as the losing party , appealed.
The Court of Appeal before which the case was brought held that there was an employer’s obligation to give notice, noting that art. 2118 of the Italian Civil Code did not place any restrictions, nor did art. 22 of the National Collective Labour Agreement exclude such an obligation for employment termination due to age limits.
As for the quantum, the Court of Appeal observed that the notice received by the employee was only 18 days, from 14 January 2009 to 4 February 2009, not even remotely in line with the collective bargaining agreement, which has consequences in terms of indemnity payment for the period not granted. For this reason, the Court of Appeal ordered the employer to pay the manager the indemnity in lieu of notice referred to the difference between the 12 months due under the national collective bargaining agreement and the 18 days of notice received.
The employer appealed the Court ruling, and the manager replied with a counter-claim.
The Supreme Court of Cassation’s ruling
According to the Supreme Court, the ruling under appeal specified that the employer’s conduct confirmed that reaching an age limit did not exempt it from an obligation to give the employee notice, even though it authorised the company to proceed with the ad nutum dismissal. This was in line with a correct interpretation of art. 22 of the National Collective Labour Agreement.
The same Court stated on several occasions that “the typical and peremptory nature of employment termination reasons excludes automatic termination upon reaching a certain age or the attainment of pension requirements.” This is unlike what happens, for example, for mandatory retirement in the public administration employment.
In the absence of a valid termination measure by the employer, the Court felt that the relationship “continues with the employee’s right to receive wages even after reaching the age of 65. In private employment, relationship termination due to age limits, the employer must give notice.”
Contrary to what was ruled on appeal, the Court considered the employer’s first notice sent to the employee dated 26 March 2008, valid instead of the second notice sent on 14 January 2009. According to the Supreme Court of Cassation’s judges, the second notice did not extinguish the first, as it “was only aimed at bringing forward the originally fixed employment relationship termination date without prejudice to the expressed termination intention.”
However, the deadline applicable in this case (12 months from 26 March 2008) was not fully complied with, with the consequence that the Court of Cassation granted the employee the right to an indemnity in lieu of notice corresponding to the unbenefited period, equal to a month and twenty-two days (from 4 February 2009 to 26 March 2009). This solution was considered consistent with art. 1231 of the Italian Civil Code, which excludes novation (and an extinguishment) if there are modifications concerning the application or cancellation of a term.
◊ ◊ ◊ ◊
The ruling concludes that in the private employment field when terminating the relationship due to the employee’s age limit, the employer can proceed with an “ad nutum” termination while complying with contractual notice obligation.
Decree Law no. 125 of 7 October extended the current COVID-19 pandemic emergency to 31 January 2021. The previous deadline was 15 October 2020.
Simplified smart working follows a different timeline from the emergency extension. Previous provisions of the “Relaunch” Decree, stated that simplified smart working is to be extended until 31 December 2020.
Until that date, employers can grant workers smart working arrangements without having to enter into individual agreements. However, electronic communication to the Ministry of Labour using the “Cliclavoro” portal is still required within the usual terms. Further measures could be issued to regulate smart working and related deadlines.
With Circular No. 116 of 2 October 2020, INPS has given the relevant operational instructions on the ways in which employees may benefit from the so-called Covid-19 leave in case their school-age children are in quarantine.
As is well known, article 5 of Law by Decree No. 111/2020 has introduced an indemnified leave in favour of parents who are employees (the so-called COVID-19 leave for the school quarantine of their own children) to be used in order for them to be able to be absent from work, either totally or partially, for the period of quarantine of the cohabitant child of less than fourteen years of age, ordered by the Prevention Department of the territorially competent Local Health Authority (ASL) following the relevant contact to said extent inside the school complex.
Both parents may alternatively benefit from the aforesaid leave if they cannot do their respective job on a smart working basis.
In its Circular, the Italian National Social Security Institute has shown the cases of compatibility and incompatibility between the Covid-19 leave under examination and other types of absence.
For example, benefitting from the aforesaid leave is incompatible with types of absence like sick leave, maternity/paternity leave, holidays, unpaid leave, as well as the days off and leaves under Law No. 104/1992.
Furthermore, the Italian National Social Security Institute has shown the cases of incompatibility between the leave at issue and other types of absence concerning the other parent cohabiting with the child. Amongst same, it is possible to find parental leave, the daily rest of the mother or of the father, as well as the relevant income support measures upon suspension of work.
The Circular has also specified that the application must exclusively be filed through the Internet, (I) through the www.inps.it Web page, if one is a holder of the PIN issued by the Italian National Social Security Institute or (ii) through the Integrated Contact Centre of the Italian National Social Security or through the services offered by the relevant Benevolent Funds.
The application may concern periods of benefit from the leave prior to the date on which any such application is submitted, provided that falling within the period running between 9 September 2020 and 31 December 2020.
The application must mention the details of the quarantine decision ordered by the Prevention Department of the territorially competent Local Health Authority (ASL).
Following the August decree provisions, with the 18 September circular no. 105, INPS has provided the first instructions about the contribution exemption for employers who do not require further wage supplements.
Aid will be available to employers who have already benefited from the Covid-19 emergency wage supplement measures in May and June 2020.
INPS has specified that this is a total exemption, with the exclusion of INAIL premiums and other minor contributions and is equal to the unpaid contribution for twice the hours of wage supplement obtained during May and June 2020.
The exemption amount shall be recalculated and applied monthly for up to four months and may not exceed the due monthly contributions for each month.
To apply the exemption, it will be necessary to wait for the European Commission authorisation and an additional INPS message.
It is well known that the August Decree earmarked a further 18 weeks of supplementary wage support (cassa integrazione) to be used between 13 July and 31 December 2020. These are split into two separate periods of 9 weeks, as the INPS clarified in its message 3131/2020. Any weeks already used since 13 July based on the previous decrees will be taken into account in calculating the first 9 weeks. Applications for the two periods should be submitted to INPS separately.
More particularly, the Decree provides that the last 9 weeks can availed of only if the entire previous 9-week period has been used. When submitting the application for the last 9 weeks, the employer will also have to self-certify any reduction in turnover occurring as a result of the COVID-19 emergency during the first six months of 2020. Without such self-certification, the company will be obliged to pay the INPS an additional contribution of 18% of the pay that would have been owed to the worker for hours not worked.
The Supreme Court of Cassation, in case No. 11005 of 9 June 2020, gave judgment on the dismissal of a worker who stole two company brushes which were recovered in his bag.
The Rome Court of Appeal ruling of 30 May 2018 had upheld the original Court of Cassino decision rejecting the worker’s application against his employer for a declaration of unlawful dismissal. The circumstances of the case reveal that the employer’s withdrawal from the contractual relationship was based on the fact that two brushes, which were considered to be company property due to their similarity to those used in the company and kept in storage, were discovered in the worker’s bag at the end of his shift.
The worker’s reasons justifying his possession of the brushes were not accepted as a demonstration of ownership, and the only rational conclusion was that the brushes had been unlawfully removed in order to profit illegitimately to the company’s detriment. Against the worker’s interpretation, witnesses confirmed that the brushes were identical with those used in the company, and thus the circumstances referred to in Article 32 of the applicable National Collective Labour Agreement (CCNL) – which provides for dismissal as a proportionate sanction in these circumstances – were held to be applicable in this case. Although the brushes were of low economic value, the incident was held to breach the relationship of trust between employer and employee, thus triggering the prompt application of the aforementioned sanction.
More specifically, according to the Supreme Court judges, the lower court based its conclusion that the company owned the brushes on an item of photographic evidence which reproduced the image of two generic brushes in use in the company, which were not exactly the same as those found in the employee’s bag. According to the Supreme Court, the photograph did not have the merit of actually identify the stolen objects, but it did establish – based on the employees’ testimony – whether or not the generic brushes shown in the photograph corresponded to the brushes found in the worker’s bag.
Finally, the Supreme Court, rejecting the worker’s appeal, attributed to the worker the absence of the brushes due to theft, which is one of the circumstances referred to by the collective bargaining agreement that justifies the maximum penalty that can be imposed. The judgement of proportionality expressed by the lower Court – based on the potential of the alleged unlawful conduct to undermine the bond of trust between employer and employee – is therefore an accurate one, as this bond of trust is precisely what the employer relies on if he is to be confident that future contractual services can be carried out properly; accordingly, the fact that the stolen goods are of low economic value is of no relevance.
The Official Gazette No. 223 published (on 8 September 2020) the Decree Law 111/2020 entitled “Urgent provisions to tackle the unavoidable need for funding and support for the start of the school year, associated with the COVID 19 epidemiological emergency”. The Decree came into force on the following 9 September.
Let’s look in greater detail at the main regulatory changes in the labour law field.
Smart working rights
The right to smart working has become an established entitlement for employees, for all or part of the period corresponding to the length of time during which a child below fourteen years of age is required to quarantine at home, as ordered by the Prevention Department of the competent Local Health Authority, following contact inside the school complex.
Covid leave
If, however, smart working is not possible then one of the parents is entitled to absent him- or herself from work for all or part of the period corresponding to the length of their child’s quarantine.
For the periods of leave, an allowance is granted of 50% in lieu of full pay, calculated according to the same ratios applicable to maternity/paternity leave, i.e. first by identifying the INPS-taxable wage of the monthly period prior to that in which the worker absents him- or herself..
This value will be divided by 26 in the case of “blue-collar workers” and by 30 for “white-collar workers”: the result of the ratio will identify the “average daily pay”, to be re-proportioned to 50% and multiplied by the number of days on which the worker is absent.
It should also be noted that these allowances are subject to a 50 million euro expenditure ceiling for the year 2020 and, therefore, the INPS itself will monitor the available resources and suspend them if that spending threshold is reached.
◊◊◊◊
The aforementioned periods are covered by notional contributions.
These allowances will be available until 31 December 2020.
The two measures cannot be availed of if, during the period when the child is in quarantine, the other parent is already smart working or is not working.
The Supreme Court of Cassation, in its ordinance No. 18245 of 2 September 2020, upheld the principle that carrying out a working or non-working activity while absent from work due to illness may constitute a serious breach of the worker’s contractual obligations, if it compromises or delays the recovery.
The facts
The case originates from a legal action taken by an employee against his dismissal for just cause by his employer, in which he claimed the right to be reinstated in his job and also to receive compensation for loss.
The lower court and subsequently the Court of Appeal with territorial competence ascertained that the worker – unable to work for three days due to “acute dermatitis of the hands” – worked at his wife’s pastry shop during his days of absence from work. Among other duties, he washed dishes and prepared coffee, thereby exposing his hands to heat sources.
In the lower court’s view, the worker had violated obligations of honesty and good faith which apply during the illness period, whose purpose is to ensure the worker’s prompt recovery and restoration of his/her energies which can then be made available to the employer.
The worker appealed to the Supreme Court of Cassation.
The Supreme Court of Cassation’s ruling
The Supreme Court of Cassation, rejecting the worker’s appeal, confirmed the appropriateness of the allegation against him for disciplinary purposes. This is because its purpose was “not so much to challenge the lack of justification for his absence from work, but rather to sanction the worker’s deliberate abnegation of his work obligations and of his contractual obligations in general”.
This conclusion, continues the Supreme Court of Cassation, is “in line with the consistent case law of this Court in the field, according to which the employee’s performance of other work activities while ill infringes the specific contractual obligations of diligence and loyalty, and also the general duties of honesty and good faith, and also if such external activity tends towards the presumption that the illness is feigned, and also where the same activity – examined from an “ex ante” point of view in relation to the nature of the pathology and of the worker’s job duties – could compromise or delay the worker’s recovery or return to service” (see, among others, Supreme Court of Cassation 19.10.2018, no. 26496, Supreme Court of Cassation 27.4.2017, no. 1041).
According to the Supreme Court of Cassation, “if a worker performs working or non-working activities while ill, this can entitle the employer to withdraw from the employment contract (only) if it transpires that the activity in question is indicative of a careless attitude on the part of the worker to his or her health and to the obligation to look after it, and to get better without delay.”
◊◊◊◊
This judgment, accordingly, concludes that if an employee on sick leave carries out a working or non-working activity, this can entitle the employer to withdraw from the employment contract based on the infringement of the general duties of honesty and good faith and the specific contractual duties of diligence and loyalty, if the activity in question aggravates the illness as well as the healing time and delays the return to work.
One of the most discussed regulations in recent years is that related to fixed-term contracts, and the numerous innovations have without doubt influenced employers’ choices and also affected the current regime of employment rules.
The provisions of the Dignity Decree
Lastly, the most significant structural changes were made by Decree Law No. 87 of 12 July 2018, converted by Law No. 96 of 9 August 2018 (the “Dignity Decree”), which amended a number of provisions introduced by the Jobs Act (Legislative Decree 81/2015).
More particularly, the Dignity Decree permits the first contract to be signed without the employer being required to specify the reasons justifying a fixed term contract, provided that the contract does not exceed 12 months in duration.
However, it may be extended (if the total duration exceeds twelve months) and/or a contract renewal may be signed extending it to twenty-four months provided that at least one of the following justifying reasons are present:
Therefore the fixed-term contract may not last longer than twenty-four months, including any extensions and/or renewals. This is without prejudice to the different or alternative provisions of collective labour agreements (territorial or corporate) signed by trade unions that are comparatively more representative at national level.
The legislation also set the maximum number of extensions allowable, by allowing for the fixed term contract to be extended at most four times. It also confirmed that the contract extension must relate to the same work activity for which the fixed-term contract was initially signed, and that the reason for a fixed term contract must be specified only if the contract is for longer than 12 months.
If the contract is renewed, however, one of the aforementioned reasons must be specified regardless of the duration of the contract originally signed.
The provisions of the August Decree
The Decree Law No. 104 of 14 August 2020 (the “August Decree”) introduced important regulatory changes in order to deal with the current resumption of activities following the COVID-19 health emergency underway, and to ensure greater flexibility for employers in the use of fixed-term contracts.
More specifically, Article 8 of the August Decree, in derogation from the provisions of the Dignity Decree, enables private employers to renew or extend fixed-term contracts until 31 December 2020, subject to the maximum duration of 24 months, without the need to indicate a justifying reason.
On this point, the National Labour Inspectorate clarified, in its Memorandum No. 713 of 16 September 2020, that the 31 December 2020 deadline refers exclusively to the formalisation of the extension or renewal. The employment relationship may be extended also during 2021, subject to the maximum duration of 24 months.
Lastly, the August Decree provided that renewals and extensions that do not specify justifying reasons are permitted only once.
This provision initially generated opposing views as to whether or not employers who exhausted the maximum number of extensions would be able to further extend the fixed term contract. The National Labour Inspectorate clarified this doubt in the same Memorandum No. 713 of 16 September 2020.
More specifically, the National Labour Inspectorate stressed that employment contracts could be extended once only, without the need to indicate a justifying cause, also if they had already reached the maximum limit of 4 extensions under previous contracts.
◊◊◊◊
Note finally, for the sake of completeness, that according to the prevalent interpretation, these new provisions also apply to fixed-term staff leasing contracts, given the equivalence of both types of contract as confirmed by the Dignity Decree’s provisions.
By Resolution No. 46 of 14 August 2020, the Revenue Agency gave its opinion on the use of fringe benefits for tax and contributions purposes in relation to vehicles granted to employees for company and personal (i.e. “heterogenous”) use.
Regulatory references
The Revenue Agency’s intervention follows the amendment of Article 51.4 a) of Presidential Decree 917/1986 (Income Tax Consolidation Act (TUIR)) by Law 160/2019 (the “Budget Law” 2020) in force since 1 January of this year. This amendment revised, with effect from 1 July 2020, the quantification of the fringe benefit taxable based on CO2 emissions per kilometre, to the benefit of less pollutant vehicles in contrast to vehicles that produce more carbon dioxide.
More specifically, the new wording of the regulatory provision provides that for newly-registered vehicles, motorbikes and mopeds with carbon dioxide emission values not exceeding 60 g/km of CO2, which are allocated to employees for heterogenous use in contracts signed since 1 July 2020, 25% of the amount corresponding to a conventional distance of 15,000 kilometres – calculated based on the kilometre cost for the year deducible from ACI tables and net of any amounts withheld by the employer for this employee benefit – should constitute the assessable base (for taxation and contributions purposes).
The aforementioned percentage is increased to 30% for vehicles with carbon dioxide emission values higher than 60 g/km but below 160 g/km; if the values are higher than 160 g/km but below 190 g/km, the percentage is increased to 40% for 2020 and to 50% with effect from 2021; for vehicles with carbon dioxide emission values in excess of 190 g/km, the percentage is 50% for 2020 and 60% with effect from 2021.
Contracts already in force at that date are excluded and are subject to the old rules, which set the fringe benefit at a fixed rate of 30%.
The Revenue Agency’s clarifications
In relation to the new provisions, the Revenue Agency – in response to a petition for a clarificatory tax ruling filed by an employer – provided important clarifications regarding the correct identification of the number of vehicles, motorbikes and mopeds subject to the new rules.
More specifically, the petitioner asked:
The Revenue Agency replied, on this point, that the term “new registration” is attributable to vehicles, motorbikes and mopeds registered since 1 July 2020, and the date of entry into force of the 2020 Budget Law (1 January 2020) is of no relevance to this. The tax authorities did not consider it feasible, for logical-systematic reasons and also for reasons of temporal consistency of the new regime, to hypothesise two different moments in time for the purposes of the regulation’s operation, i.e. 1 January 2020 for purposes of compliance with the registration deadline and 1 July 2020 for purposes of compliance with the deadline for the signing of the contract by which the benefit is allocated for heterogeneous use.
Moreover, in order for the new wording of Article 51.4 a) of the Income Tax Consolidation Act (TUIR) to be applied – motor vehicles, motorbikes and mopeds must be “allocated for heterogeneous use by contracts entered into with effect from 1 July 2020“. This is because – according to the Agency – the allocation of a car to the employee for heterogeneous use is not a unilateral act but rather an actual contract between employer and employee.
Finally, the tax administration gave its opinion on the tax rules applicable in the event that the contract allocating the vehicle for heterogeneous use is signed after 1 July 2020, but the vehicle is registered before that date. In this case, the taxable base is quantified by reference to the general principles governing the determination of income from employment.
Here, the Revenue Agency made reference to Resolution 74/2017 where it indicated that, if the legislation gave no default criterion for the valuation of a benefit, costs incurred by the employee exclusively for the employer’s benefit should be identified based on objective elements ascertainable by documentary evidence. This is in order to ensure that the full “ordinary value” of the asset allocated does not go towards determining income from employment. Consequently, the benefit should be assessed for tax purposes solely for the part attributable to the vehicle’s private use, separating the vehicle’s use for the employer’s benefit from its normal value.