Budget Law 2021, COVID-19 and employment contracts: additional measures for achieving programme targets

Budget Law No. 178 of 30 December 2020 (in force from 1 January 2021) introduced further provisions aimed at counteracting the negative effects on companies and workers by the prolonged epidemiological emergency of COVID-19.​

Ordinary Wage Guarantee Fund, Ordinary Allowance and Exceptional Wage Guarantee Fund

Employers who suspend or reduce work activity due to events attributable to the COVID-19 epidemiological emergency can apply for a concession from the Ordinary Wage Guarantee Fund, Ordinary Allowance and Exceptional Wage Guarantee Fund for a maximum duration of 12 weeks (Article 1, paragraph 300).
 
For ordinary Wage Guarantee Fund treatment, the 12 weeks must be collocated between 1 January 2021 and 31 March 2021 and, for the Ordinary Allowance and Exceptional Wage Guarantee Fund, in the period between 1 January 2021 and 30 June 2021.
 
The 12 weeks constitute the maximum duration that may be requested under COVID-19.
The periods of the Wage Guarantee Fund treatment previously requested and authorised, and then collocated, even partially, after 1 January 2021 are applied, where authorised, to the 12 weeks.
 
Applications for access to treatments must be submitted to the National Institute for Social Security (INPS) by the end of the month following the one in which the period of suspension or reduction of work activity began. For the first phase of the application, the deadline is set at the end of the month following the month in which the Budget Law comes into force (Article 1, paragraph 301).
 
In case of direct payment of benefits by the INPS, the employer is required to send the Institute all the necessary data for the payment or balance of the salary integration. Failing this, the payment of the benefit and related burdens remain the responsibility of the defaulting employer (Article 1, paragraph 302).
 
Such benefits are also granted in favour of employees hired after 25 March 2020 and in all cases are in force from the effective date of the Budget Law (Article 1, paragraph 305).

Exemption from payment of contributions

Private employers are also granted exemption from the payment of social security contributions for a further maximum period of eight weeks, which can be applied by 31 March 2021, but within the limits of the hours of salary integration already used in the months of May and June 2020, re-priced and applied on a monthly basis (Art. 1, paragraph 306), and excluding the National Insurance for Labour Accidents (INAIL) premiums and contributions.
 
Private employers who have requested exemption from the payment of social security contributions in accordance with the "Ristori " decree may waive the fraction of exemption requested and not used, and at the same time submit an application for access to salary integration treatments (Art. 1, paragraph 307).

Contribution exemptions for new hires of specific categories of employees and for the south

In order to promote stable youth employment, a 100% contribution exemption is granted for new hires of individuals up to 35 years of age on open-ended contracts and for the transformation of fixed-term contracts into open-ended contracts carried out in 2021 and 2022. The exemption is for a maximum of 36 months within the maximum limit of EUR 6,000 per year (Article 1, paragraph 10).
 
This exemption is available to employers who have not dismissed employees for justified objective reasons or collective dismissals of employees with the same qualifications in the same production unit. The exemption is for six months preceding the hiring, but should not exceed beyond nine months following the hiring (Article 1, paragraph 12).
 
For fixed-term hires of female employees in 2021 and 2022, the exemption is granted for 100% of the social security contributions paid by employers, but excluding premiums and contributions to the National Insurance for Labour Accidents (INAIL). The exemptions are granted for the duration of 12 months, which can be increased to 18 in the case of hiring or conversion to open-ended contracts, up to a maximum of EUR 6,000 per year (Article 1, paragraph 16).
 
In the case of recruitment at a head office or production unit located in Abruzzo, Molise, Campania, Basilicata, Sicily, Puglia, Calabria and Sardinia, the exemption from social security contributions is granted for a maximum period of 48 months (Article 1, paragraph 11).
 
In addition, the following partial exemptions from social security contributions are provided for private-sector employers operating in the Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily regions for the period 2021 to 2029:

• 30% of social security contributions to be paid until 31 December 2025;
• 20% of social security contributions to be paid for the years 2026 and 2027;
• 10% of social security contributions to be paid for the years 2028 and 2029 (Article 1, paragraph 161).

Collective and individual dismissal for objective reasons

The initiation of collective redundancy procedures is precluded until 31 March 2021, and pending procedures initiated after 23 February 2020 remain suspended, except in cases where the employees affected by the termination were already employed in a service contract and are rehired following the takeover of a new contracting company by virtue of law, NCBA or a clause in the service contract (Article 1, paragraph 309).
 
Until 31 March 2021 regardless of the number of employees, the employer is also precluded from terminating the contract for objective reasons, and the procedures under art. 7 of Law 604/66 remain suspended (Article 1, paragraph 310).
 
The above suspensions and exclusions do not apply in the following cases:

• dismissals motivated by the definitive cessation of the company's activity, resulting from the liquidation of the company without continuation of the activity, even partially, in cases where during the liquidation there is no transfer of a group of assets or activities that could configure a transfer of the company or a company branch;
• collective company agreement, stipulated by the representative trade unions at a national level, as an incentive to terminate the employment relationship, limited to workers who adhere to the aforementioned agreement (these employees are entitled to the unemployment allowance and NASpI);
• redundancies announced in the event of bankruptcy, when there is no provision for the provisional running of the company, or when its cessation has been ordered; in the event that provisional operations has been ordered for a specific branch of the company, redundancies relating to sectors not included in the same branch are excluded from the prohibition (Article 1, paragraph 311).

Fixed-term contracts

As a result of the COVID-19 epidemiological emergency, until 31 March 2021 fixed-term employment contracts can be renewed or extended only once without indicating any reason (Article 1, paragraph 279) for a maximum period of 12 months (without prejudice to the maximum overall duration of 24 months).

Paternity leave

Mandatory and optional paternity leave has also been extended to cases of perinatal death (Article 1, paragraph 25).
 
The compulsory duration of paternity leave for 2021 has been raised from seven to ten days (Article 1, paragraph 363, letter b).

Expansion agreements

The applicability of the expansion contract has also been extended to 2021 for companies with a minimum workforce of 500 employees instead of the 1,000 provided until now. The minimum limit is lowered to at least 250 units in the event that companies combine new hires with early retirement agreements for older employees (Article 1, paragraph 349).
 
For companies employing more than 1,000 employees, the cost associated with early retirement has been further alleviated if the employer commits to hire one worker for every three employees leaving.