Ministry of Labour: new CIGO reasons resulting from the Ukraine crisis

The Ministry of Labour and Social Policies, under Ministerial Decree no. 67 of 31 March 2022 (the “Decree“), made a significant addition to Ministerial Decree no. 95442/2016 due to the ongoing Ukraine war that is creating a humanitarian crisis, and significant economic and market difficulties.

Two new reasons to access the Ordinary Redundancy Fund (“CIGO”) were introduced – “lack of work, orders and market crisis” and “lack of raw materials or components.”

The Ordinary Legal Framework

Legislative Decree no. 148/2015:

• defines the CIGO scope of application to companies belonging to precise product sectors, including companies in the industrial sector;
• identifies employees (including apprentices under a professional apprenticeship contract) as recipients, excluding managers and home workers. Recipients must have 30 days of work seniority at the production unit for which the payment is requested at the application submission date. This requirement is unnecessary if the CIGO application is due to “objectively unavoidable” events. 

CIGO access is subject to the event’s transience and temporariness, and its non-attributability to the company and employees. 

Ministerial Decree no. 95442/2016 identified the following as possible reasons for granting the CIGO:

1. lack of work and orders – periodic reduction of work; 
2. market crisis; 
3. end of the construction site, end of work or work phase; 
4. lack of raw materials or components; 
5. weather, fire, flood, earthquake, collapse, etc.; 
6. amending or supplementary appraisal to the original project; 
7. machinery breakdowns; 
8. extraordinary maintenance; 
9. impracticability of the premises including due to a public authority order; 
10. suspension or reduction of activity by order of public authorities; 
11. departmental strike. 

For the reasons under points a), b) and d) of the above list, Ministerial Decree no. 95442/2016 allows CIGO access for:

• “lack of work or orders and market crisis” if the applicant company proves that the work reduction derives from a drop in orders that compromise the economic-financial budget indicators by providing a detailed technical report to be attached to the application;
• “market crisis” if the applicant company proves that the work suspension or reduction results from the market trend or the product sector; and
• “lack of raw materials” if the applicant company proves that the work suspension or reduction derives from market trends or the product sector. This is done by providing a technical report documenting “the way the raw materials or components were stocked, the order date and the useful initiatives to find raw materials or components of equivalent quality, including market research based on suitable means of communication, which did not provide positive results.”

The new exceptional reasons

The Russian-Ukrainian crisis is having a strong impact on the markets and to cope with this economic uncertainty, the Ministry of Labour introduced the following provisions for 2022.

• the “market crisis” case is supplemented with “the work suspension or reduction because the Ukrainian crisis restrictions make it impossible to conclude agreements or trade”;
• the case of “lack of raw materials or components” “exists when it is attributable to unforeseeable, temporary financial difficulties, unattributable to the company, to obtain energy sources, functional to the processing of raw materials necessary for production.” The Ministry specified that “the technical report details the objective financial difficulties and related unpredictability, temporariness and non-attributability to the company.”