Library of Congress

Law Library of Congress

The Library of Congress > Law Library > News & Events > Global Legal Monitor

Italy: New Law Amends Rules on Fixed-Term Employment Contracts, Delocalization of Companies, and Determining Taxpayer Income

(Aug. 30, 2018) On July 14, 2018, a new law amending rules on fixed-term employment contracts entered into force in Italy. (Decree Law No. 87 of July 12, 2018, Urgent Provisions for the Dignity of Workers and Companies) (D.L. No. 87), GAZZETTA UFFICIALE (G.U.), July 13, 2018 (in Italian), G.U. website.)

Covered Contracts

The new provisions apply to fixed-term employment contracts executed after the effective date of the new law and to the renewals and extensions of contracts in effect on that date. (Id. art. 1(2).) Excluded from the new provisions are contracts entered into by government agencies, which continue to be governed by existing legislation. (Id. art. 1(3).)

New Duration of Fixed-Term Employment Contracts

The new law establishes that employment contracts for a fixed term may have a duration of up to twelve months but not exceed twenty-four months, provided that certain criteria are met. (D.L. No. 87, art. 1(1)(a)(1).) In any employment contract for a fixed-term whose duration exceeds twelve days, the clause for the termination of the contract must be in writing under penalty of nullity. (Id. art. 1(1)(a)(3).) A copy of the contract must be furnished to the workers within five days from the beginning of the employment relationship. (Id.) Fixed-term employment contracts may be extended freely within the first twelve months, after which period they may be extended only if the company has been in compliance with certain requirements established in the law. (Id. art. 1(1)(b)(1).)

Indemnification for Unjustified Dismissals

The new legislation increases the minimum indemnification owed to workers subject to fixed-term employment contracts from four to six monthly payments, and the maximum from twenty-four to thirty-six monthly payments. (Id. art. 3(1).)

Employment Contracts in the Education Sector

In order to ensure that adequate financing for the 2018–19 school year exists throughout the national education system, the law postpones for 120 days the enforcement of judicial decisions imposing the termination of fixed-term or permanent employment contracts with respect to teachers who hold a master’s degree. (Id. art. 4(1).)

Termination of Benefits for the Delocalization of Companies

Delocalization is defined as the transfer of an economic activity or a part thereof by the benefitting company or by a controlled or connected company from the productive site that received the government incentive to another site. (Id. art. 5(6).)

Under the new legislation, Italian and foreign companies operating in the national territory lose the government assistance granted to them as a condition of their carrying out productive investment within an EU country when they delocalize from EU territory to non-EU territory within five years from the date of the benefit. (Id. art. 5(1).)

Italian or foreign companies operating in the national territory are entitled to receive different forms of financial assistance from the Italian government. Such financial assistance is aimed at supporting the generation of employment by the beneficiary companies. Upon receiving the financial assistance, beneficiary companies must declare the employment levels (that is, the number of workers employed) allocated to each productive unit or activity affected by the financial assistance. Under the amended legislation, beneficiary companies are obligated not to reduce such employment levels by more than 10% of the total workforce allocated to the respective productive unit or activity within ten years from the date when the respective investment was completed. Beneficiary companies may submit claims justifying a reduction in  employment levels. The new legislation reduces the aforementioned term from ten to five years. (Id. art. 6(1); Franco Canna, Aiuti di Stato e Delocalizzazioni, nel Decreto Dignità Confermate Revoca dei Benefici e Sanzioni [State Assistance and Delocalization in the Dignity Decree Confirms Revocation of Benefits and Penalties], INNOVATION POST (July 3, 2018).)

Additionally, when a beneficiary company transfers subsidized assets (that is, assets that have been acquired through government financial assistance) for value or allocates them to production facilities located abroad, even those belonging to the same company, the government agency may recover the depreciation cost of such assets. (Id. art. 7(1).)

Tax Credits for Research and Development Investments

Tax credits for research and development investments exclude costs incurred for the purchase of intangible assets, including usage licenses, incurred by companies belonging to the same holding company. (Id. art. 8(1).) The new law reiterates the requirement that, for tax credits for research and development investments to apply, the concerned assets must be utilized directly and exclusively in the carrying out of such activities. (Id. art. 8(3).)

Measures Against Gambling Addiction

The new law prohibits any type of publicity, even if indirect, for games and betting involving any type of money awards, including at sporting, cultural, or artistic events; on television and radio and in newspapers; and any other publications including billboards and the internet. (Id. art. 9(1).)  Effective January 1, 2019, the prohibition also applies to the sponsoring of events, activities, programs, products, or services and any other form of communications with a promotional content. (Id.) The sole exceptions are national lotteries established by law, and the logos on safe and responsible gaming approved by the Customs and Monopolies Agency. (Id.) The law sets forth administrative fines for each violation. (Id. art. 9(2).)

Measures on Fiscal Simplification: The Redditometro

The Redditometro is an instrument through which the state determines the presumed income of taxpayers on the basis of their expenses during the fiscal year. (Redditometro, CORRIERE DELLA SERA (last visited Aug. 27, 2018).) The law amends existing legislation to add that in the determination of the presumed income through the Redditometro, the respective government agencies must include the opinion of the National Statistical Institute (ISTAT, in Italian) and the most representative consumer associations. (Id. art. 10(1).)