On 1 May, the Italian government’s Council of Ministers approved a new “Labour Decree” that will make significant changes to current employment law provisions. The final text of the Decree has not yet been published in the Official Gazette, but below is a summary of the main provisions that will affect employers based on the current draft.   

• Simplification of the rules governing fixed-term contracts: The Labour Decree will introduce changes to the grounds on which fixed-term contracts can be validly extended beyond 12 months, with the aim of giving employers more flexibility. Fixed-term contracts will be permitted for longer than 12 months (up to 24 months) if one of the following conditions is met: (i) in circumstances provided for by the applicable collective agreement; (ii) for technical, organisational or production needs identified by the parties, pending activation of the grounds set out in the applicable collective agreement – this condition only applies until 30 April 2024, although we are waiting for clarification of the date by the Council of Ministers, as the press release relating to the new Decree refers to 31 December 2024;  or (iii) to replace employees who are absent from work.  

• Simplification of information to be provided to employees on terms and conditions (the “Transparency Decree”):  Employers will be treated as having complied with their obligations to provide certain information in writing to employees about their terms and conditions of employment (e.g. the duration of the probationary period; duration of holidays and other leave, notice periods; remuneration and its constituent elements; scheduling of working hours; etc.) if they refer employees to the relevant legal provision or collective bargaining agreement where those details can be found. The Labour Decree places an obligation on employers to hand over or otherwise make available to employees (including publication on the company’s website) the collective agreements and regulations applicable to the employment relationship. 

• Reduction in social charges:  The Labour Decree provides for a reduction in contributions payable by employees by 7% for employees with a gross income of less than €25,000 and by 6% for employees with a gross income of less than €35,000.  The aim is to reinvigorate the cuts to social charges that were introduced with effect from 1 January 2023 under the Budget Law. These further reductions will apply from 1 July to 31 December 2023.

• New hiring incentives: Provided certain requirements are met, employers will be granted financial incentives for new hirings of younger workers which take place between 1 June and 31 December 2023.  To be eligible, the new hires must be under 30 on the date of recruitment; not currently working or in education or training; and registered in the Youth Employment Initiative (“Iniziativa Occupazione Giovani”).  A cap of €80 million has been placed on the amount that is available under this incentive for employers for 2023. 

• Fringe benefits: The government will increase the non-taxable threshold for fringe benefits for employees with one or more dependent children from €258 to €3,000 until the end of 2023.    

• Strengthening of health and safety rules: The Labour Decree introduces: (i) a new obligation on employers to appoint a competent doctor if required by a risk assessment; (ii) new protections for self-employed workers on construction sites; and (iii) a new obligation on employers to provide specific training on how to use certain equipment for professional activities, together with new sanctions for non-compliance.