In its ruling no. 1099 of 14 January 2022, the Court of Cassation outlined the specification requirement of the probationary clause and its inclusion in the individual employment contract.
The facts of the case involved a worker bringing proceedings to obtain a nullity declaration of the probationary clause attached to her fixed-term employment contract with an employer. The employer terminated the contract for failure to pass the probationary period. The worker claimed that the termination was null and void and the company should be ordered to pay damages, proportionate to the wages she would have received until the natural expiry of the employment relationship. This compensation was partly due to the difficulty in finding other employment, given her 46 per cent disability status.
The first instance ruling upheld the worker’s claims and this was confirmed on appeal.
Both instances established that there was “a lack of specification in identifying the tasks for which the worker was employed in the probationary clause.”
According to the court of appeal, the employment contract between the parties did not specify the tasks to which the worker would be assigned. The individual contract referred to a “person in charge of jobs that are not part of the production cycle.” This meant “the tasks specification lacked practical meaning.” Similarly, the reference made by the contract to “level 3” of the applicable National Collective Labour Agreement “did not specify the tasks to be performed because the collective provision mentioned that level 3 included “jobs similar to cleaning”, without further specification or example.”
A further element of uncertainty related to the tasks under probation was the clause in the individual contract according to which the tasks and objectives assigned would be specified only after recruitment.
The employer appealed to the Court of Cassation against the ruling, on several grounds. The company argued that “the need to specify the duties for probationary clause purposes does not require them to be detailed and their identification can be made by reference to the declaration of the collective agreement.”
According to the employer, the National Collective Labour Agreement provided detailed evidence of the reference tasks of the worker classification level in addition to the general declaration. The position was identified by the National Collective Labour Agreement as related to “transport work, manual loading and unloading, cleaning and similar work. This includes using mechanical means.”
The employer considered that the reference made “per relationem” in the individual contract and referred to the National Collective Labour Agreement was appropriate, to meet the specification requirement.
In its appeal, the company explained how the clause in the individual contract, according to which duties and objectives would be specified later, did not lend itself to being interpreted, as held by the Court, as a “lack of specification of the duties under probation”, but rather as a “reference to necessary service “micro-specifications” which the employer would use to specify the duties daily based on their performance.”
The employer’s appeal was not upheld by the Court of Cassation, which pointed out that the probationary clause reason must be found “in the protection of the common interest of both parties to the employment relationship, as it is intended to implement a probation through which employer and worker can verify the mutual convenience of the contract. The employer verifies the worker’s capabilities, and the worker assesses the extent of the service required and relationship conditions.”
The Supreme Court observed that “the need for specifications, which in the case of a partially invalid worker must be assessed rigorously […] is functional to the proper conduct of the probationary period and the assessment of its outcome, which must be carried out based on the performance and duties described in the individual contract. The specification may be made […] by referring to the declarations of the collective agreement for the worker classification, provided that this reference is sufficiently specific and ascribable to the most detailed classification concept. This means that if the category of a given level includes several profiles, specification of the individual profile is necessary, while mentioning the category alone would be generic.”
According to the court, the ruling under appeal did not theoretically exclude the possibility of supplementing the clause in the individual contract by referring to the worker’s collective agreement classification and level. However, such a reference cannot apply “in this case to provide specification of the duties on which the probation should have been carried out.” This is because “the collective classification for the worker’s professional position, mentioned, among the assigned tasks, “similar” duties”, in addition to cleaning. This indefinitely broadened the scope of the tasks which could be assigned to that level. The employer’s appeal was rejected since it was not possible to establish any automatic mechanism between reference to collective bargaining and assessment of the probation clause specification.
In circular no. 12 of 26 January 2022, INPS explained the scope of application of Ministerial Decree 23 December 2021, which identified the contractual remuneration to be used for calculating contributions due for the compulsory insurance of Italian workers working abroad.
Scope of application
For social security purposes, contractual remuneration must be taken as a reference to calculate social security contributions due by workers operating in non-EU countries not linked to Italy by social security agreements. This remuneration applies to Italian and foreign workers, with a regular residence permit and an employment contract in Italy, who are sent by their Italian employer to a non-EU country.
Contractual remuneration is applied, residually, to workers sent to countries that have a social security agreement with Italy, only for insurance not included in applicable social security agreements.
Calculation and adjustment
INPS stated that “the contractual taxable remuneration for workers who belong to a pay range, is determined by comparing the corresponding national pay range”, as referred to in the tables for national collective labour agreements for the different categories.
To implement the provision on pay ranges, “national pay” means “the remuneration provided for the worker by the collective agreement, including the emoluments under an agreement between the parties, but excluding the foreign allowance.” The amount calculated must be divided by 12 and the pay range, taken as a reference for contribution obligations purposes, must be identified by comparing the calculation result with the tables of the corresponding sector.
The contractual values identified using the INPS calculation can be adjusted daily only for recruitment, employment termination or transfer during the month. In such cases, the monthly taxable amount must be divided by 26 days and, subsequently, the value obtained must be multiplied by the number of days included in the fraction of the month concerned, excluding Sundays.
Special cases and contribution regularisations
The remuneration determined according to the above criteria may vary if:
In these two cases,” INPS stated that “the contractual remuneration corresponding to the change with the same starting date of the new qualification or the change in individual remuneration must be applied.
A further case is when variable remuneration accrues during the year, due, for example, to overtime and bonuses. Since these amounts do not determine the applicable pay range, it is necessary to recalculate such remuneration, including the above remuneration items, and divide the value obtained by 12 months’ salary.
If, as a result of that recalculation, a monthly salary entails a change in the range to be taken as reference for the year for contribution calculation compared with the range adopted, it will be necessary to adjust the previous periods, as from January of the current year.
INPS concluded by requiring compliance for employers who, in January 2022, acted contrary to the circular instructions. To comply, the employers involved have until the 16th day of the third month following the publication of the circular, i.e. until 16 April 2022.
In its answer to question no. 85/2022, Inland Revenue confirmed that an employee hired under a contract governed by local law by a foreign subsidiary to which they had been initially seconded and returned to Italy to be hired by the company that had originally seconded them, could benefit from the repatriated workers favourable tax regime.
The applicant was an Italian citizen residing abroad who asked the Inland Revenue whether he could benefit from the favourable tax regime for repatriated workers provided under Art. 16 of Italian Legislative Decree no. 147/2015 on his return to Italy, following his employment under an open-ended contract by an Italian company that employed him before his expatriation.
The applicant declared:
The Inland Revenue, based on the clarification made in Circular no. 33/E of 28 December 2020, stated that the benefit for “repatriated workers” is not available to taxpayers returning to Italy following a secondment abroad under the same contract and employer. According to the Agency, “if work carried out by the repatriated worker constitutes new work, by signing a new employment contract, different from the contract in force in Italy before posting, the repatriated worker assumes a different corporate role compared to the original. In this case, the worker can access the benefit from the tax period in which they transferred their tax residence to Italy.”
The tax authority specified that the benefit “is not applicable if the worker is in a situation of “continuity” with the previous work position held in the country before the expatriation at the time of repatriation, even if there is a new contract for a different company position.”
The Agency clarified that there are precise conditions that demonstrate substantial continuity of the new employment relationship compared to the one carried out before posting, namely:
The Inland Revenue considered that the Applicant may benefit from the favourable tax regime. This was because the ALFA employment relationship was new and did not meet any of the above conditions. The Agency pointed out that contractual relationship autonomy within a corporate group was not an obstacle for using the tax benefit.
In its ruling no. 37905 of 2 December 2021, the Court of Cassation ruled on the sanctions provided for cases where there is a failure to include a deadline in a fixed-term employment contract.
In this case an employee appealed to the Court of Pescara, suing his former employer. The appeal aimed to confirm that the employment relationship between the parties from 28 February 2013 to 30 March 2013 was open-ended, that an oral dismissal served on the employee by the employer in April 2013 was ineffective, and an order that the employer pay compensation in lieu of reinstatement of 15 months of the employee’s last salary, and damages of one month’s salary from the notice of default date until the proceeding’s start.
The court hearing the case, by order of 17 July 2017, partly upheld the appeal. It was found that the employment relationship was open-ended, and that the oral dismissal was ineffective. The employer was ordered to pay the employee indemnity in lieu of reinstatement of 15 months’ salary, in addition to compensation for damages quantified at six months’ salary.
The local court partly upheld the employer’s appeal against the first instance ruling and partially reformed the ruling under appeal, after verifying the existence between the parties of an open-ended employment relationship ab origine, ordered the employer to reinstate the employee and pay damages for 2.5 months’ salary from the last salary.
The dispute moved to the Court of Cassation, where the parties appealed to have their rights protected. The employer complained of breach or misapplication of art. 1, paragraph 2 of Legislative Decree no. no. 368/2001 (which provides for the nullity of fixed-term employment relationships in the absence of a written document) and Art. 32, paragraph 5, of Law no. 183/10 (which laid down the criteria for determining the compensation owed to the employee in cases of a fixed-term contract conversion), in that the local court erred in finding that a non-written fixed-term contract was punishable by the indemnity referred to in Art. 32 paragraph 5.
The Supreme Court held that this ground of appeal was well-founded, since “an unsigned fixed-term contract cannot be considered to exist (before being valid), under Art. 1, paragraph 2, Legislative Decree no. 368/01 (in this case, the alleged employment contract was not signed by either party).” According to the court, this is recognised by the ruling appealed against, which verified the “ab origine” existence of an open-ended employment contract, “the termination of which is not sanctioned by Art. 32, paragraph 5 Law no. 183/10 (which presupposes the conversion of a temporary employment relationship, even though unlawful).”
The Court of Cassation noted that the relevant indemnity is subject to interest and monetary revaluation from the date of the ruling converting the employment relationship – which, in this case, never occurred.
According to the Supreme Court, “the challenged ruling is affected by an irremediable flaw of reasoning (absolutely contradictory).” It stated that the employment relationship had to be considered an open-ended employment contract from the beginning, however, it sanctioned the employer termination with the compensation scheme under Art. 32, paragraph 5, for cases of conversion of an unlawful fixed-term contract into an open-ended contract. The ruling under appeal was revoked since there was an ab origine open-ended employment contract.
The case was referred to the relevant Court of Appeal with a different composition.