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The employment status challenge: Key considerations for employers in Italy

20 April 2022

With labour supply a top priority for employers, our employment experts in Italy consider the importance of the distinction between different employment statuses. 

When engaging the workforce how does the law distinguish between different categories of employment status?

The workforce usually falls under one of the following two main categories of employment status: subordinate employees or self-employed persons.

The Italian Civil Code provides for a definition of each category of employment status and its key elements, while specific employment regulation and the collective bargaining agreements provide for additional elements, protections and guidelines for the performance of the related activities as subordinate employees.

On the other hand, self-employment relationships are regulated almost exclusively by the Italian Civil Code.

As far as general definitions of these category are concerned:

  • Under article 2094 of the Civil Code, "A subordinate worker (Employee) is a person who undertakes to collaborate in the company by means of remuneration, providing his/her own intellectual or manual work in the employ and under the direction of the entrepreneur".
  • Pursuant to art. 2222 of the Italian Civil Code, "When a person undertakes to carry out a work or a service in return for payment, mainly on his/her own account and without being subordinate to the client, the provisions of this chapter apply, unless the relationship is governed by special regulations in Book IV".
  • Under article 2230 of the Italian Civil Code, "A contract for the provision of intellectual work is governed by the following rules and, insofar as they are compatible with them and with the nature of the relationship, by the provisions of the previous chapter".

The key distinction between the mentioned categories of employment status is the "subordination" of the employee (instead of the self-employed person). Due to the general definitions provided by the Italian Civil Code, court decisions have highlighted some specific criteria for identifying whether a person is a subordinate employee:

  • fixed monthly salary
  • fixed and continuous working hours
  • continuity of service
  • being the individual subject to the organisational, directive and disciplinary powers by the employer, with subsequent limitation of his/her autonomy
  • inclusion of the individual within the company's organisation

We would also like to point out two "hybrid" forms of employment status, which are very common in the Italian labour market, namely the agency contract and coordinated and continuous collaborations.

The commercial agency contract is regulated by the Civil Code and by the collective economic agreements of the sector (AEC), while coordinated and continuous collaborations are regulated mainly by labour legislation.

What are the different rights and protections for each employment status?

The status of "subordinate employee" grants him/her the application of stronger protections (compared to the self-employed person) arising from the law and, specifically, regulations regarding:

  • Maximum working time schedule (depending on the employee's level)
  • Minimum base salary
  • Vacation, leave and sick leave
  • Maternity Leave
  • Social security contributions
  • Mandatory termination payments
  • Protection in the case of unlawful dismissal

With specific reference to this last point, there are mandatory cases that allow the employer to lawfully terminate the relationship, and failure to comply with them entails the application of protections in the employee's favour, which, depending on his/her length of service, level and the reasons behind the dismissal, may range from reinstatement in the workplace to an economic compensation only.

In relation to the other working relationships indicated above, it should be noted that the commercial agency contract provides for:

  • Payment of social security contributions in favour of the agent
  • The payment of a series of severance indemnities, in favour of the agent, when certain conditions provided for by the Civil Code and/or the AEC are met.

What are the current themes with regard to employment status?

Due to the different rights and protections linked to the employment status, the most current themes relate to the qualification itself of the relationship

Indeed, it is quite common for the self-employed person (and the agent / the coordinated and continuous collaborator) to claim the reclassification of the self-employment relationship into a subordinate. The court will then check - regardless of the "title" given by the parties to the contract - the concrete everyday modalities of the working activities performance (and the existence of the elements above mentioned).

Get an insight into the current situation in other jurisdictions from our global legal team.

 

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